The Domestic Agenda To Renew and Strengthen the U.S. from Council on Foreign Relations –

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November 4, 2022

by Hank Boerner – Chair & Strategist, G&A Institute

How about attending to some critical domestic issues that could help to determine the USA’s Global Influence

The United States of America “in” the world and “of” the world. Where do we as a nation and where do our people stand on domestic and global issues? Where should we stand on policies and practices (and what should the U.S. “stand for”)?

We monitor the work of, and the shared perspectives of a good number of organizations here at G&A Institute, including the Council on Foreign Relations (CFR).

As the COP 27 gathering nears (the Conference on Parties / UN climate talks), what are the concerns of the citizens of the U.S. – and what are the concerns of citizens of other nations about the U.S.?

Most important, what should our top line domestic concerns be so that the United States is well positioned to continue to lead as the world’s largest economy? And project influence abroad?

The Council set out its “Renewing America” agenda recently, with the noble aims of “fortifying the political, economic, and societal foundations fundamental to national security and international influence” (it’s our Top Story selection for you).

Nine critical domestic issues are on the agenda.

The CFR concerns address issues that likely keep CEOs and board rooms up at night as they strategize and chart the way forward for their company:

• Energy and climate change [the concerns about the effects of domestic wildfires, severe storms, other extreme events, transitions/shifting to cleaner energy and energy efficiency];
• the future of the world of work;
• trade and finance [needed sensible policies, fixing the supply chain];
• democracy and [public sector] governance [ability to project power in the world];
• education [and the need for skilled workers, the long-term need for educated workforce];
• immigration (and attracting talent for the American workforce);
• infrastructure (investment to address crumbling infrastructure);
• innovation (R&D, China posing challenges to U.S. technology]:
• and, social justice and equity (think: long-term injustices to be considered).

On Energy and Climate Change: the Council experts share a “filter” of perspectives on the topics, including the perspectives of the U.S. ambassador on climate, Secretary of State John Kerry (“COP 27 and International Climate Action – a Conversation”).

Other “filtered” perspectives include “How the Inflation Reduction Act Will Help the U.S. to Lead in Clean Energy Economy”; “California Capitalism’s Successes and Challenges:, and, a webinar on “Climate Justice.”

If you have not followed the Council on Foreign Relations, the web link we provide will help you to learn more about the topics that we headline above.




Top Story:  https://www.cfr.org/programs/renewing-america


Going Green and Still Pumping Oil? The Challenges of Climate Change and Potential “Solutions” For Fossil Fuel Producers

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October 19, 2022
by Hank Boerner – Chair & Chief Strategist, G&A Institute

We were thinking the other day about the enormous challenges posed by climate change to our global society — and therein of the challenges of meeting the ambitious goals being set by governments, the private sector, and investors to achieve “a net zero economy” by mid-century. That’s not so far away.

And so the pumping of tens of millions of gallons of crude oil every day by OPEC countries and other nations (like the U.S.A.) to meet the insatiable demands of society is not helping in the short term.  But we need the oil!

Not so far back the United States was a very different country (meaning, at the end of the 19th Century). Not so dependent on “oil” from below the ground (yes, we did rely on kerosene lamps and before that whale oil!)

The majority of people lived outside of cities, mostly on farmlands and ranches and wilderness places. Horses and boats provided the main means for transport of people and goods. (Remember stage coaches and canal boats towed by mules?) Homes were heated by wood and coal fuels.

Coming into their own in the early 20th Century: miracle developments like electric power, telephony, radio, gasoline-powered cars & trucks, powered flight, modern chemicals, modern medicines. And people were moving en masse to rapidly-expanding cities and the newly-identified “sub-urban” communities.

One such place was Queens County, New York, where some of the G&A team live and work or grew up in (today home of JFK International).  After World War One ended, 100,000 people a year (!) moved in to the new suburbs, rapidly replacing farms that dated back to Dutch settlement in the 1600s.

After World War Two ended, neighboring Nassau County (where some of us live and work today) saw the same growth pattern – in just four years “Levittown” replaced the sprawling farmlands of the former Island Trees (NY) on the largest prairie in the Eastern U.S.. (That was the Hempstead Plains.)

Which required more railroads and roads for autos & trucks to move commuters to city-center offices and factories. And so, more more more drilling for oil & gas and mining of coal.

All of this dramatically changed how Americans today live, work, and play, and s0 many aspects of our family and business lives. The same things were happening in Europe, the British Isles, Japan, and many other places.

And here we are in the 21st Century enjoying the fruits of all of this progress and at the same time trying to undo the negative sides of the sweeping progress made over the past 125 years or so.

To put some of this change and resulting challenges in perspective: TIME magazine had an essay recently about Saudi Arabia, its state-owned oil company (Saudi Aramco) and the ambitions of the world’s leading oil exporting sovereignty to lean toward green while still pumping 12 or more millions of gallons of oil per day (to help meet global demand of 100 million BBLs a day!).

Today, Saudis talk of the dreams of carbon capture, of moving to hydrogen power for autos, of building a new “green” city (NOEM) from scratch.  The Saudi goal is Net Zero emissions) by 2060!

The dreams include the desert blooming with new green (cities)…and yet that Saudi oil keeps moving to distant points on Earth through pipelines and on oil tankers. Missing: the plan to reduce oil & gas production by 2030.

To help companies around the globe to meet ambitious 2030, 2040, and 2050 (net zero!) goals. Challenging. 

To contrast the astonishing changes of the recent decades: The Saudi Arabia we know today as a top oil & gas producer was a desert kingdom populated by Bedouin tribes and often shown on maps as “the Empty Quarter”.

Discovery of oil reservoirs changed all of that – today the kingdom has a Sovereign Wealth Fund (the SWF is the Public Investment Fund) with US$600+ billion and more in treasury thanks to oil & gas pumping and invests in many publicly -traded companies like Netflix (so dependent on fossil fuels to ever more power servers!).

About the impacts of climate change and the inherent challenges of our present society to achieve solutions – we see the story-telling of this everyday now in our favorite media!

Our editors and G&A team members carefully track and curate the coverage for you in the issues of our Highlights newsletter and here in our G&A Institute Sustainability Updates blog.

In our newsletter we regularly feature many news and feature stories about the efforts of public and private sector organizations taking actions to protect the planet and help the global society achieve a sustainable (and livable) planet in the decades ahead.

That’s the good news we try to share.  At the same time, as we think about the world’s progress from wilderness1800s to dramatic changes of the 1900s and into challenges of the 2000s and the negative aspects of progress…we cheer on the strategies, policies, actions, actions of leaders of organizations in the capital markets, corporate community, activist organizations, multilateral organizations, and more to address climate change challenges.. 

Ah, to save the planet while still making progress – that’s the ambitious goal of so many now.  After all, there is no Planet B for we, the billions on Earth (at least not yet).  

Top Story:

We bring you the fascinating story of Saudi Arabia and its plan to go green while remaining the world’s number one oil exporter over the coming years: https://time.com/6210210/saudi-arabia-aramco-climate-oil/

And a personal note:  A  durable book that has been around telling the story of the first half of the 20th Century (since 1952) may be of interest to you. This is “The Big Change, American Transforms Itself, 1900-1950” by Frederick Lewis Allen. He was the long time editor of Harper’s Magazine and authored such books as “The Lords of Creation” (about key capitalists like the Rockefellers, Morgans, Vanderbilts, and other of the Gilded Age wealthy). 

Highlights of Climate Week NYC 2022

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by Lauren Snyder, Ph.D., Sustainability Analyst at G&A Institute

“Global Citizen Festival NYC” featured big-name musical artists to cap the 14th annual Climate Week NYC, a week of multi-stakeholder events focused on climate change in New York City.

Climate Week NYC brought together leaders, decision-makers and activists from government, civil society, and the private sector for discussions, encouragement and collaboration on how to keep the climate issue at the top of political and business priorities.

Organized by Climate Group, the week featured a variety of in-person, hybrid and virtual events all focused on a call-to-action of “getting it done.”  The opening ceremony, began by setting the current geopolitical contexts for the need to deliver on promises made, which was followed by Hub Live, bringing together over 1,000 voices in the climate space to collaborate, share ideas and promote workable solutions.

This year’s Climate Week revolved around ten themes: the built environment, energy, environmental justice, transport, sustainable living, finance, industry, nature, policy, and food.

Beyond these events, many others were held alongside the main New York City-based events. Climate Week NYC is scheduled each year to run concurrent with the opening week of the UN General Assembly. This year Climate Week included a 90-minute, high-level “SDG Moment” session, designed to keep focus on the 17 SDGS.

For those unable to attend the in-person events, the hybrid and virtual ones emphasized two key themes. A panel of journalists on the second day focused on the question:  “Are we looking up? Climate communications at a pivotal moment”, highlighting the need to move away from the alarmist nature of climate communications to one that focuses on “co-benefits.”

Rather than storytelling, for example, one presenter noted the need to shape climate change conversations to reach as many people as possible. In this example, energy opportunities that advance cheaper, reliable fuel supply can help to convince even climate skeptics who might oppose the usual climate-speak ideas.

The theme of spelling out the “co-benefits” also percolated in a public sector-oriented session: “The Paris Agreement and the Ambition We Need.” This session included Environment ministers from various countries such as Canada and the Maldives.

The Minister from Canada stated it is “vital to sell the dream,” to show that current solutions and technologies are available to make a difference in mitigating and adapting to climate change.

The ministers presenting also emphasized the need for granular data and transparency – a theme that also could be found in the two opening ceremony  events – “Climate in the Geopolitical Context of Today” and “The cold truths for a warming world: what’s stopping us from ‘Getting It Done”?

Some of the more promising events for businesses were held in-person, including “Corporate Disclosure: Understanding Investor Perspective on Climate Risk sponsored by Agendi; others were organized by Morningstar, Sustainalytics, and The Wall Street. Journal.

The panel on “Preparing for the SEC’s Climate Disclosure Rule” provided interesting comparisons between the TCFD-based rules already implemented in the United Kingdom and the proposed SEC rule that will require companies to disclose climate-related risks and actions they will take to mitigate them.

While the multitude of events was overwhelming for some, everyone could find a topic of interest during the week-long series of sessions. While there was a lot of talking, presenting and chatter, these events do inevitably excite, encourage stimulating debates, and allow for exchange of ideas. The true test in the end for actions to be taken will be judged in the weeks and months to come.

The next climate summit (COP27) gathering is less than two months away, where world leaders, NGOs and private business decision-makers will gather for further climate action. The goal of keeping the 1.5C limit “alive” – this, the temperature threshold needed to avoid the worst climate catastrophe — does at times seem like a dream. The act of making that dream a reality depends on all of us — and perhaps was the most salient point of Climate week NYC 2022.

About the Author

Dr. Lauren Snyder joined G&A Institute in May 2022 as a Sustainability Analyst. She previously worked at the United Nations Global Compact Environment and Climate team where she launched a high-level external newsletter to promote corporate engagement on all aspects of climate change. Dr. Snyder also co-led with Accenture on the CEO Study on Sustainability “Climate Leadership in the Eleventh Hour.”

A native of South Korea, Dr. Snyder came to the U.S. as a child. She obtained her B.A. in German Literature and Linguistics from New York University and lived in Germany and Sweden for two years as a part of her undergraduate studies. Lauren also holds a master’s and Ph.D. in International Relations from the London School of Economics.

Dr. Snyder also holds a master’s degree in Public Administration and Sustainability from the Marxe School of International Affairs and Public Administration at Baruch College.

Dr. Snyder resides in New York City and enjoys time spending with her daughter. She also enjoys singing, theater and tennis. Although Dr. Snyder is legally blind, her disability does not stop her from achieving her goals.

Systemic Racism in Corporate America

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by Janis Arrojado, G&A Institute Analyst-Intern
Note: This is the third post in the blog series by Janis:

In the wake of George Floyd’s tragic murder in May 2020, corporate America took action to fight racism. Collectively, by August 2021, America’s 50 largest public companies and their foundations committed at least $49.5 billion to causes and initiatives that advance racial equity. However, 90% of that amount is apportioned as loans or investments that these companies can earn profits from. A total of $4.2 billion pledged is in the form of grants, which represents less than 1% of the profits earned by those companies in the most recent year. Although it is good to see that corporate America is taking strides to address racism, these numbers show how companies run the risk of performative activism, and raises questions of whether companies are making efforts internally in their workplaces to address issues of racism and inequity.

Systemic Racism

Issues of racial inequity are not new to the workplace. Corporate America operates under systemic racism, which is defined as referring to: “the complex interactions of large scale societal systems, practices, ideologies, and programs that produce and perpetuate inequities for racial minorities.” The most important component of systemic racism is that it operates on a large scale independent of individuals, meaning inequality can persist for racial minorities even if individual racism is not occurring. In the workforce, this may manifest itself in racial bias leading to discriminatory policies that impact hiring, starting pay, and professional upward mobility for people of color, especially Black Americans. People of color may face microaggressions, which are subtle behaviors impacting marginalized groups. Professional standards relating to language, dress code, and communication are rooted in white and Western ideals. People of color can face isolation and a lack of support in their workplace.

Representation Gap

Discriminatory policies contribute to a racial representation gap in the workforce. There is an underrepresentation of Black/African American and Hispanic/Latino workers at every career level above the support staff level when comparing representation in the general population. There is a general pattern showing that representation of people of color decreases as career levels rise, with Asians/Pacific Islanders being an exception, as shown in a global equality report released by Mercer in 2020.  In addition to impacting representation, racial bias impacts the advancement and experience of people of color in the workforce.

Benefits of Racial Diversity

Changing the norm of systemic racism is integral for minorities to feel welcomed and included in their workplace. Having a diverse workplace offers different cultural perspectives that can inspire innovation and foster collaboration. Additionally, cultural insight and local knowledge can create more informed and targeted marketing and production of products. Addressing the gap in racial representation is also financially beneficial, as companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns higher than their competitors.

What Companies Can Do

Corporations have power in fighting systemic racism in their workplaces. Devoting resources toward enhancing the experience of minorities through training in topics such as racial equity, unconscious bias, and microaggressions is a start. Inclusion is an integral component for minorities to feel a sense of belonging in the workplace. Through initiatives such as employee resource groups (ERGs) for different identity groups, employers can create a space for employees to feel supported and raise issues with work environments. Incorporating more equitable hiring processes is also important, which can look like asking all prospective employees the same exact set of questions in the same order. Corporations can also recruit candidates from historically Black colleges and universities (HBCUs) and minority-serving institutions (MSIs) to gain diverse talent.

Conclusion

Although discussing racism outright may be a taboo topic, it is important to understand how companies operate within systemic racism and how systems of racial inequity negatively impact workers of color. Being proactive in addressing systemic racism can improve the experience and livelihood of people of color and is integral to creating a more diverse and equitable workforce.

ABOUT THE AUTHOR

Janis Arrojado is a senior at the University of North Carolina at Chapel Hill, studying Environmental Science and Geography.  Her interests include corporate sustainability, environmental justice, and sustainable development. She currently is an analyst-intern at G&A Institute.

 

 

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Sustainability Challenges and Reporting Frameworks in the Chemical Industry

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Chemical Industry Challenges

By Lauryn Power, G&A Institute Analyst-Intern

Overview:

The chemical sector faces the third-highest number of environmental and social risks of all sectors, based on a 2020 analysis published by S&P Global. In the U.S., the chemical sector generates around $758 billion annually, contributing 25% of the U.S. GDP and providing many raw materials for industries including agriculture, consumer goods, and pharmaceuticals.

Major Sustainability Challenges:

According to a report from Ecovadis partner DFGE, the chemical sector faces a large number of sustainability challenges including scrutiny over impacts on water quality and discharge of effluents. It can be very costly to remove impurities from wastewater.

Chemical production is often energy intensive and leads to significant GHG emissions. There are many chemical processes which require high temperatures often generated by fossil fuels.

There is major concern over worker and consumer health and safety in producing and using the products. There are chemicals which are still being used despite being hazardous. These chemicals are often supplied to other industries and can be polluted into water streams, causing health problems for workers, local residents, and ecosystems. The products themselves can remain in the environment for centuries, possibly forever.

In 1985, the International Council of Chemical Associations (ICAA) created the Responsible Care program. This initiative’s main goals are to promote safe chemical management, promote environmental health and safety, and contribute to sustainable development. By 2021, 580 chemical companies (96% of the industry) had committed to the program globally. Many of the Council’s sustainability recommendations align with chemical companies’ plans. They are often focused on prevention rather than mitigation. They have extensive plans for spills, contaminations, and waste disposal which are all regulated in the United States. These plans also include details for worker health and safety, which require hours of training before workers can perform hazardous work.

Many chemical companies are working towards improving the composition of plastics so they are more readily recyclable, as well as developing more accessible methods of recycling to more efficiently recycle the plastics that already exist. They are pushing to use renewable energy in as many operations as possible and to continue innovating in that sector. Additionally, they are focusing on creating strong plans for wastewater disposal, whether it is disposed carefully or if it is treated to be reused.

ESG Reporting:

All chemical manufacturers in the U.S. are required to report certain practices and metrics to the U.S. Environmental Protection Agency, including the types of chemicals they are producing.

In terms of voluntary ESG reporting, there are many different frameworks chemical companies can use to build their reports.

Sustainability Accounting Standards Board (SASB):

SASB provides sector-specific recommendations for disclosures on ESG metrics for chemical companies. These disclosures are what SASB considers to be financially material topics to the industry. They require disclosure of global Scope 1 greenhouse gas emissions and a discussion on plans to manage emissions both short-term and long-term. Air quality emissions of key hazardous air pollutants should be disclosed. Energy, water, and hazardous waste management require the specification of the amount used/generated. The water disclosure requires a further discussion of the company’s strategy to reduce potential damages from wastewater.

Global Reporting Initiative (GRI):

GRI is the most common sustainability reporting framework. While it does not currently provide specific chemical sector disclosures, it is planning on expanding the list of sector specific disclosures to include chemicals in the next few years. Still, many of the general disclosures are applicable to chemical companies and touch on some of their most critical issues. Chemical companies should first perform the GRI’s materiality assessment to help them determine which disclosures are most impactful to their business.

Some general disclosures chemical companies may report on are: GRI 303: Water and Effluents requiring companies to state the amount of water withdrawn, by source and the amount discharged; and GRI 403: Occupational Health and Safety requiring companies to state the type of required trainings for workers to do certain hazardous work, the number of work-related injuries, a description of the company’s strategy for managing worker health and safety, and other key information/metrics on this topic.

Other potentially important disclosures include: GRI 306: Waste which covers hazardous waste disposal methods; and GRI 307: Environmental Compliance which would involve chemical companies required disclosures by the EPA and other actions taken to keep operations within legal standards. Note: The updated 2021 GRI Standards, officially in effect in 2023, include environmental compliance as a general disclosure, meaning reporting on this topic will be required for accordance with the Standards.

Task Force on Climate-related Financial Disclosures (TCFD):

While TCFD does not provide chemical-specific disclosures, the general disclosures about climate-related risks and opportunities are applicable to chemical companies. The TCFD framework as a whole approaches sustainability from a risk perspective, which helps chemical companies directly state the most critical components of their businesses and their action plans to mitigate that risk.

In 2019, TCFD held a forum with five major chemicals companies to discuss how to improve sustainability reporting in the chemical sector. One finding was that disclosures should include more specific metrics to measure sustainable development and that companies need a stronger approach to governance with sustainability in mind. For example, given that TCFD is focused on financial risk disclosures, the forum suggested adding metrics such as revenues from low-carbon products and low-carbon solution R&D expenditures. For strategy disclosures, the forum recommended having more scenario analysis to better understand the impact of different climate-change strategies.

United Nations Sustainable Development Goals (SDGs):

Chemical companies can play a major role in contributing to the success of the UN SDGs. The goals that the World Business Council for Sustainable Development (WBCSD) has identified as most critical for the chemicals sector are shown here.

How can the sector impact these goals? For Goal 2 – Zero Hunger, the chemical sector can make a huge impact on sustainable food development by producing more efficient fertilizers to boost crop yields. For Goal 7 – Affordable and Clean Energy, the sector can develop important materials used for solar panels, wind turbines, and carbon capture technology. More information on how the sector can support the SDGs can be found here.

Lauryn PowerABOUT THE AUTHOR

Lauryn Power is a G&A Institute Analyst-Intern, currently pursuing a MS in Sustainability in the Urban and Environmental Planning department at Tufts University. She has a BS in Chemistry from the University of Virginia where she also earned a minor in Mathematics. She also received a certificate in Business Fundamentals at the McIntire School of Commerce at the University of Virginia.

She has worked in various chemistry research labs and has a scientific background on climate change. She also has experience in sustainable fashion. She interned for the U.S. Green Chamber of Commerce doing research on current issues with fast fashion globally.

Through her educational background and experiences in the industry, she hopes to work in the intersection of sustainability and business, helping corporations to improve their practices and find ways to make their business more sustainable.

Is Your Mutual Fund or ETF Really “Green” or “Sustainable”? How Do You Know? More Disclosure by Fund Managers and Advisors May Be Coming…

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by Hank Boerner – Chair & Chief Strategist – G&A Institute

What is it about an investable product – a mutual fund, an exchange traded fund (ETF) – that would qualify it as an “ESG” or “sustainable investment” offering to the retail or institutional investor?

That’s a question getting more attention recently.

S&P Global has issued a report that says only 12 percent of so-called “green” or “environmental” investment funds are on track to meet the global climate goals agreed to at the Paris Agreement / COP 21 meetings in 2015.

The goals agreed to by the community of almost 200 nations at that time: try to limit the global temperature to below 2 degrees Centigrade above pre-industrial levels and aim for limiting the increase to 1.5C.

We are sharing some analysis of the S&P report by Mark Segal as published in ESG Today (he’s the founder of the web site).

He explains: S&P Global looked at about 12,000 equity funds and ETFs with US$20 trillion in total market value. Findings: about 300 funds (with $350 billion total valuation) used “green” in their name or investment objectives.

Looking then at the holdings (equities of corporations) using the S&P Global Trucost Paris Alignment Data for 17,000 companies in the universe of 12,000 funds, only 11% were really aligned with the Paris Agreement goals.

What about the smaller universe of 300 (the “green” funds)? Only about 12% were on track to meet Paris goals.

S&P Global noted that some funds are screening out publicly-traded fossil fuel companies for portfolios, including renewable energy companies, and some are engaging with portfolio companies to urge the firms de-carbonize their operations.

Conclusion: “Our analysis,” reports S&P, “points to a systemic issue. Few funds, even those that describe themselves as using green or climate-specific language, are on track to meet the goal of the Paris Agreement. Understanding the trajectory is an important step toward planning for a low-carbon future.”

The marketing of mutual funds and ETFs as “green” is being closely looked at by the Securities & Exchange Commission. SEC is focused on “enhancing ESG investment practices” of certain capital market players.

The agency in May proposed amendments to rules and reporting requirements of investment advisors and investment companies (that manage mutual funds and ETFs) to “promote consistent, comparable, and reliable information for investors” about funds’ and advisors’ incorporation of ESG factors.

The proposed rule would aim to categorize types of ESG investment strategies and require funds and advisors to be more specific in disclosures (such as in prospectuses, annual reports, brochures) to inform investors about ESG strategies being pursued.

Funds with strategies focused on the consideration of environmental factors would be required to disclose the greenhouse gas emissions associated with their portfolios. (That is, the GHG emissions of companies in the assembled portfolios of the mutual funds or ETFs.)

And, funds that use proxy voting and engagement with corporate issuers would be required to disclose their voting and engagement with companies on ESG-related matters.

Morningstar rates “sustainable mutual funds” among the thousands of funds rated by the firm’s analysts and its Sustainalytics unit.

Here’s a look into the challenges fund companies may face if the SEC rules are adopted: “This year has been difficult for many ESG funds,” writes Morningstar’s Katherine Lynch. “After years of solid performance, sustainable investing mutual funds have been roughed up, but a handful of strategies have been able to outperform.”

Which ones? Those holding energy stocks, which some investors in ESG try to avoid. Energy stocks are now outperforming, and most sustainable funds hold little or no oil companies in portfolio because of the connection of oil and gas consumption and climate change.

The conversation about “sustainable investing” and the criteria used by mutual fund management companies is sure to get more complicated in the days ahead.

Our G&A Institute team will continue to monitor developments and keep you updated on the changes to the mutual fund / ETF disclosure requirements.

Here are Top Stories for you to learn more:

  1. Less Than 10% of Climate Funds are Aligned with Global Decarbonization Goals: S&P (ESG Today )https://www.esgtoday.com/nearly-90-of-green-funds-are-not-aligned-with-global-climate-goals-sp/
  2. SEC Proposed to Enhance Disclosures by Investment Advisors and Investment Companies About ESG Investment Practices: https://www.sec.gov/news/press-release/2022-92
  3. 2022’s Top Sustainable Fund Weather a Tough Market: https://www.morningstar.com/articles/1097780/2022s-top-sustainable-funds-weather-a-tough-market



ESG from a Corporate Vantage Point – Anniversary Update

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Important Perspectives shared by Pamela Styles, Fellow G&A Institute

Foreword by Hank Boerner, Chairman & Chief Strategist, G&A Institute
One year ago, the National Investor Relations Institute (NIRI) IRUpdate quarterly magazine published its Winter 2021 edition that was dedicated to ESG topics and issues — which G&A Institute shared with publishers’ permission.  G&A’s executive leaders and IR professional and G&A Fellow Pam Styles each contributed an article to the edition to provide three different perspectives and vantage points.

It is with great pride that we congratulate our IR Fellow, Pam Styles, for being named Gold Winner of the DeWitt C. Morrill Editorial Excellence Awards for her article in that magazine, titled: “A Practical Approach to ESG From a Corporate Vantage Point”.

She was be honored by NIRI and presented the award in-person at the NIRI Annual Conference which held June 5-7 in Boston, MA.

G&A Institute coverage of many rapid changes across ESG-related issues bridges two important spheres of influence in our modern economy – the corporate sector and capital markets.  

To that end, Pam has taken time to summarize and briefly update three topics touched on in her original article – SEC, ESG Raters and Voluntary Frameworks – to highlight some major announcements and trends in the last year that should be useful to corporate executive and investor relations perspective.  Here is Pam’s April 2022 award-winning commentary:

Anniversary Update
The full title of my original article one year ago, “A Practical Approach to ESG from a Corporate Vantage Point”, started with “A Practical Approach…” and continued with “…to ESG from a Corporate Vantage Point”.

The reason for this was and still is that the ESG landscape has been changing so rapidly as to be humanly impossible for any one person or company to stay on top of without practical focus and strategy of approach.

Much of that article about launching and maintaining a successful company ESG reporting program, including supporting strategies and resources, remains relevant today.  The most important thing is for companies to be organized and deliberate to make sure that, no matter how much or how little ESG-related policies, disclosure or other communications they can provide, it all can be easily found via the company’s website by human stakeholders and AI research tools alike.  This is to make sure that the company is getting as full credit as possible for all it is doing and communicating with regard to ESG matters.

The article goes into far greater specifics and, even one year later, is worth the (re)read.

Three topics warrant brief update to highlight some of the major announcements that have occurred just in the one year since the article was published – as listed in the table below.

Major Announcements in One Year
Roughly Spanning Winter 2021 to Winter 2022
(Partial list only)

Securities and Exchange Commission (SEC) Major ESG Raters and Rankers1 Voluntary Reporting Frameworks1
May 20, 2022 – deadline for comment letters on Pending rule proposal on climate risk and GHG disclosure.  Proposes TCFD-like reporting requirements within Reg S-K and financial metrics within Reg S-X, with phase-in 2023-2026 based on registrant filer status. Additional Highlights. April 24, 2022 – Crowded ESG Ratings Landscape Sows Confusion for Investors, the days of largely unregulated ESG ratings providers may be numbered. January 2023 – GRI “Universal Standards” will go into effect, which will include supply chain. Additional Highlights.
March 9, 2022 – Pending rule proposal on cybersecurity. Summary sheet.  (Data Security and Privacy falls under “S” of ESG) February 2022 – call for ESG ratings regulation in ESG Ratings and ESG Data published by Accenture UK and the International Regulatory Strategy Group (IRSG).  Reason: due to huge variation and significant inconsistencies, lack of transparency, frustration and confusion for reporting companies, conflicts of interest with fee models, and a low correlation for ESG ratings (as low as 0.38) compared to credit ratings (as high as 0.99), all which impact investment decisions. March 24, 2022 – The IFRS Foundation and GRI announce they are taking the latest step toward a more closely aligned set of global ESG reporting frameworks.  Part of global moves toward consolidation.
July 26, 2021 – earlier call by International Organization of Securities Commissions (IOSCO) initiate for ESG ratings regulation. GRI and IFRS are just one example of multiple frameworks that have been announcing collaborations and harmonization efforts.  A common reporting standard may not happen for a while.  Additional Highlights.

1 As defined in “The Complexity of ESG Reporting and Emerging Convergence Trends”, by Louis Coppola, EVP & Co-Founder, Governance & Accountability Institute

Rapid Changes
The U.S. has been rapidly catching-up with the UK and EU in terms of ESG public discourse in general.  As simplified in his article “The Surging Volume and Velocity of ESG Investing”, Hank Boerner, Chairman & Chief Strategist of Governance & Accountability Institute, indicated 2020 was the year of Human Capital Management focus and 2021 would be the year of Climate Change/ Climate Crisis focus.

Looking ahead, I predict that 2022 may end up being a year of Practical Stress Testing. Global dislocation (economic, human, energy, security, etc.) brought on by protracted pandemic conditions in China and the Russia-Ukraine military conflict with implications to energy, natural and agricultural resources, are both critically affecting the global supply chain and have opened a lot of eyes as to the speed at which ESG net-global progress may actually be being made.

Certain realities and practicalities seem to have been missed in haste to press ESG initiatives that need to be addressed.  Here’s to hoping honest brokers can be up to the task.

In the meantime, a lot of companies are still in ESG journey catch-up mode, especially in the U.S.  With ESG here to stay, it is important for companies to make as much progress as they can in areas of ESG strategy, execution and disclosure that make sense to address at this time.  But keep an eye on major announcements and build flexibility into your company’s ESG communications and disclosure capabilities – as a lot of changes are yet to come.

About the Author
Pamela Styles is long-time Fellow of G&A Institute and principal of Next Level Investor Relations LLC, a strategic consultancy with dual Investor Relations and ESG / Sustainability specialties.

The Working Woman’s Dilemma: A Look into Women in Corporate America

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by Janis Arrojado, G&A Institute Analyst-Intern

Note: This is the second post in the blog series by Janis.  Click here to read the first post.

Although corporate America has made strides in promoting gender diversity in the workplace, there is still significant progress to be made. In the United States, a gender wage gap still exists, with on average women making 84 per cent of what men make. 85.8% of Fortune 500 CEOs are white men, showing a clear underrepresentation of women in corporate leadership positions.

The underrepresentation of women not only hurts women but also impacts corporate performance. Research has shown that companies with well-represented gender diversity in leadership are 50% more likely to perform better than their peers.

More inclusion of women can bring varied approaches to problems, increase employee satisfaction, and foster collaboration. Women in leadership positions benefit company culture as they are more likely to incorporate employee friendly practices and speak out about the importance of gender and racial diversity than senior-level men.

Causes of Underrepresentation

Unconscious gender bias can impact the perception of women in the workforce. Traditional notions of women being warm and nurturing can prevent women from moving up the corporate ladder, and on the flip side if women take charge and are assertive they are often perceived as overly angry or aggressive. These gender-role expectations can negatively impact hiring and promotion opportunities, which can impede a woman’s career progression.

Women also face the challenge of being more likely to have more demands at home, as mothers are three times more likely than fathers to do most of the housework and caregiving in their home. Research has also shown that women are significantly more likely to reduce their hours for child care compared to men. Women with these increased demands at home have increased risk of burnout and negative biases, also impacting career progression to a higher role in a company.

COVID-19’s Impact

COVID-19 has only exacerbated the increased demands at home for women. 50% of mothers who quit their job due to the pandemic said that one of the reasons was closure of their children’s school and/or daycare. Women are also more likely to care for elderly family members due to an overloaded health care system. Time spent doing unpaid labor of watching children, assisting with schooling, and taking care of family members can cause women to take time away from work or quit their jobs.

What Companies Can Do

Corporations have an important role to play in increasing the inclusion of women in the workforce. Opting in for gender-based unconscious bias training and shifting performance reviews to be more measurable and attainable is a start.

Transparency
Another step towards equity is for companies to disclose their gendered wage gap. Research has shown that the gender pay gap shrinks when companies are transparent about wage discrepancy between men and women. Choosing to communicate the difference between men and women’s earnings can spark the momentum for initiatives and policies to close the wage gap.

Clear Boundaries and Flexibility
The move toward remote working during the pandemic can cause women to always feel the need to be responsive and available. Companies communicating clear boundaries and establishing set times for work and meetings is a way to decrease burnout and exhaustion. Additionally, having flexible work and scheduling options can promote wellbeing amongst working women.

Accommodations
Providing accommodations for working mothers is integral to supporting women at work. Initiatives such as having a designated space for new mothers to breastfeed or pump, providing financial assistance with childcare or on-site childcare facilities can foster an inclusive environment for working mothers.

Paid Parental Leave
Offering paid parental leave for men and women is another important component of supporting women in corporate America. Mothers are more likely to return to their employer when they have paid maternity leave, and offering paid paternity causes a more even distribution of childcare and household responsibilities among mothers and fathers.

Paid maternity leave amongst members of the Organisation for Economic Co-operation and Development (OECD) averages around 14 weeks, excluding the United States. The United States is one of few countries that does not have a nationally mandated paid parental leave law, despite clear benefits. Establishing paid parental leave is a way for companies to promote gender equity, contribute to infant and maternal health, and foster familial economic security.

Mentorship
Creating a formalized women’s mentorship program provides a safe environment to discuss the challenges of navigating the workplace for working women. Mentorship is a way for mentors to serve as role models and representation, while fostering connections and career advancement. By recruiting women from all positions and having intentional pairings, mentorship gives women relationships and spaces that contribute to a positive working environment.

External Initiatives
Companies dedicated to advancing gender equality can sign the UN Women Empowerment Principles, which “are a set of Principles offering guidance to business on how to promote gender equality and women’s empowerment in the workplace, marketplace and community.” Corporations can signal to stakeholders and the public their commitment to empower women through business practices that promote gender equality.

Companies can also get involved with organizations that are taking initiative to increase representation of women in corporate leadership such as 30% Club, 50/50 Women on Boards, and Women Business Collaborative. Supporting NGOs that are striving to improve working conditions for women around the world like WIEGO and Care International is another way for businesses to empower and support working women.

Conclusion

Women make up nearly half of entry level roles in organizations across the nation, but the percentage of women decreases significantly moving up the corporate ladder. Companies need to address this underrepresentation and take initiative to cultivate a supportive and inclusive culture for women in the workforce.

ABOUT THE AUTHOR

Janis Arrojado is a senior at the University of North Carolina at Chapel Hill, studying Environmental Science and Geography.  Her interests include corporate sustainability, environmental justice, and sustainable development. She currently is an analyst-intern at G&A Institute.

 

Sources & References For More Information

Emerging Trends in Electric Vehicle Industry

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By Noelani West, G&A Institute Analyst-Intern

No doubt you’ve noticed the increase of electric vehicles (EVs) on the road over the last few years. With more than 10 million EVs on the road as of 2021, compared to around 2 million in 2016. Some projections are that by 2050, EVs will account for over 60% of new car sales. With gas prices now at their highest since 2008 and increase concern over the use of fossil fuels, this is no surprise.

Tesla Motors might be the first company to come to mind when thinking of EVs. In 2008, Tesla released its first all-electric vehicle to the public – the Roadster. At the time, the vehicle’s bas price was around $100,000 USD, making the EV market quite exclusive. Now, one can purchase a Tesla Model 3 for half the price. At their 2020 shareholder meeting, Tesla’s CEO Elon Musk announced the company’s plan to produce EVs for prices in the future for as low as $25,000 – making it far more accessible to a wider range of consumers.

Now with a slew of other car companies jumping onto the EV bandwagon, and many at more affordable prices, it’s easy to say that the popularity of EVs will continue to soar.

These trends aren’t emerging solely due to consumer demand and a growing sense of environmental responsibility. Substantial government actions have been made to aid in the transition of the auto industry to EV. Part of President Biden’s Build Back Better Agenda and the Bipartisan Infrastructure Deal includes an Executive Order which sets a target of making half of all sold vehicles in 2030 zero-emissions vehicles. Actions under this order include supporting the development and deployment of EV charges throughout the country and increasing domestic manufacturing of EV batteries.

EV production slowed down during the Covid-19 pandemic as the entire auto sector severely hindered by decrease in demand and supply chain disruptions. Still, in 2020 the global EV stock increased 43% from 2019. China continues to lead the EV market, accounting for half of all EV sales. Europe has seen significant growth within the industry, more so than in many other regions. This is due to some substantial government propositions, such as the UK proposing a sale ban on all polluting vehicles by 2035.

The U.S. has overall had lower EV sales than in many other major regions, with Tesla being responsible for almost half of EV sales in the country. However, that trend can easily change with the new government regulations in the pipeline and car manufacturers vowing toward a more electric future. With the nationwide deployment of more charging stations and EVs being supplied at more affordable rates, car buyers can expect EVs to become more accessible. Global trends project an ongoing increase in demand and supply for EVs for the coming decades.

About the Author

Noelani West is a G&A Analyst Intern and currently a senior at Columbia University in the City of New York, pursuing her undergraduate degree in Sustainable Development. Through an array of interdisciplinary coursework, she has been able to explore how sustainability is applied to in various fields and sectors. This has reinforced in her just how crucial and relevant these topics are.

She hopes to launch a career in corporate sustainability, helping companies develop and implement ways to become more equitable and sustainable. Noelani is especially passionate about environmental sustainability as well as sustainability technology.

Role of Green Building Certifications in Telling Your ESG Story

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By Kavya Dhir, G&A Institute Sustainability Analyst

With climate change at the forefront of today’s environmental, social, and governance (ESG) discussion, and corporate ESG disclosures in focus, companies are being held more accountable for their overall environmental impact.

These impacts include the carbon footprint of their operations — such as office space, business travel, and packaging of consumer goods.

For office buildings, third-party certifications such as the WELL Building Standard (WELL) managed by the International Well Building Institute (IWBI), and, Leadership in Energy and Environmental Design (LEED) managed through the US Green Building Council (USGBC), have ushered in a new era of sustainability transparency and accountability.

Green building standards have served as a foundation for more than two decades to make buildings become more energy efficient, less polluting, and healthier for their inhabitants. The USGBC was created in 1993 in the boardroom of the American Institute of Architects (AIA), with representatives from over 60 corporations and organizations.

Today, investment firms and property businesses are raising the bar for “green.” This includes increased greenhouse gas emission reduction targets and supply chain management regulations. Further, these organizations and individual assets are being expected to back up their ambitions with real-world performance data.

Green building standards should be promoted by real estate professionals to work to ensure that the advantages are widely recognized and implemented.

What is a Green Building?
According to the World Green Building Council (WGBC), the definition of a green building is: “a building that, in its design, construction or operation, reduces or eliminates negative impacts, and can create positive impacts, on our climate and natural environment.”

Here is a brief overview of the ESG issues that are involved:

Environmental – Energy, water, and material are three essential environmental components that have a significant influence on the natural environment over the lifespan of any construction.

According to the WGBC definition, the ultimate goal is not just to optimize resource use so that harmful impacts are reduced, but also to ensure that the building itself contributes positively to the natural environment.

Examples of positive impacts are if a building use recycled and reusable materials, has a greywater system that collects and uses rainwater, or has solar panels which feed excess energy back to the grid.

The societal pressure to adapt to meet the goals of The Paris Agreement on climate change has grown considerably. There is also pressure on the construction and real estate sectors to contribute significantly. In the future, making a good contribution to climate protection would include adhering to tight requirements including reducing the net primary energy need in the planning and construction of new buildings by 20% as compared to the ‘lowest energy level.’

Social – A building is designed for occupants; therefore, it must consider their health, comfort, and safety. In office buildings, asking building management if they have engaged in any Indoor Air Quality (IAQ) certifications is a simple way to determine whether the facility has inadequate air quality which may trigger headaches, respiratory irritation, nausea, and allergies. Natural lighting has physiological effects that may be measured. The synchronization of the body’s internal clock – known as circadian rhythm, can be aided by exposure to adequate quantities of natural sunshine.

Governance – Facility managers must design metrics to monitor the health of a building in order to demonstrate effective governance in building operations, maintenance, and management. Furthermore, construction companies and operational managers should be obliged to set quantifiable objectives and demonstrate efforts in advancing the industry toward a beneficial influence on the environment to quantify how a building may do better.

To be considered to be really “green,” a building must serve as a link between people and nature. The ESG of buildings described above aren’t designed to oversimplify the industry’s complexity; rather, they’re meant to raise awareness and start dialogues about acceptable reporting standards. Investors are becoming more demanding in terms of accurate, transparent, and timely account of asset-level performance. The future of ESG reporting in real estate development will move far above entity-level disclosures.

About the Author

Kavya Dhir is a G&A Institute Sustainability Analyst.  Her role consists of conducting materiality assessments, gap analysis and benchmarking research. A researcher and a lifelong learner at heart, Kavya is a LEED GA, WELL AP and holds a bachelor’s degree in Civil engineering and a MSc. In Design and Energy Conservation.

She is involved with many organizations, including ASHRAE, U.S Green Building Council, UN Green (R)evolution and ISHRAE.

She is an optimist who looks towards a future in which our built-environment and energy production exist in harmony with us and the natural world.  Kavya has experience with projects which integrate concepts of net-zero energy and carbon, high performance HVAC and healthy buildings, and general sustainability early in the building design process.

Kavya is committed to accelerating the transition to a more sustainable environment with a continual focus on establishing the integrated bottom line: environmental stewardship, economic inclusion, and social equity.

REFERENCES

Contributor, G. (2021, June 21). Synergies Between LEED, WELL Certifications And ESG Programs. Facility Executive Magazine. https://facilityexecutive.com/2021/06/synergies-between-leed-well-certifications-and-esg-programs/

Dolya, A., Romanin, P., Weise, D., Lupia, F. P., Villani, L. A., & Hemmige, H. (2022, January 11). Boosting ESG Performance in Today’s Energy Supply Chains. BCG Global. https://www.bcg.com/publications/2022/boosting-esg-performance-framework

A Performance-Based Future for Real Asset ESG Reporting. (2019, February 28). GRESB. https://gresb.com/nl-en/2019/02/28/a-performance-based-future-for-real-asset-esg-reporting/

What is green building? (2020). World Green Building Council. https://www.worldgbc.org/what-green-building