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Beware, The Culture Warriors Have New Strawmen: Dangers of “ESG” and “Woke Capitalism”

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End of February 2023

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

New threats to ESG detected in America’s Red-controlled states:  The internal culture wars now include an unlikely frontal assault on the alleged “dangers” posed to institutional investors (state and city pension funds and the states; public financing) by professional asset managers who embrace sustainable investing approaches and who factor ESG analysis for their portfolio decision-making (in the management of client assets).  

Corporate sustainability leaders and savvy investment managers are asking, “huh?  “why”?

The threat of “ESG” joins such current strawmen as Critical Race Theory, “Woke” Capitalism, Don’t Say Gay (in the State of Florida), the allegations of certain “grooming” books being found in school libraries, and other specious arguments set up by political conservatives and Red state public sector leaders to gain points with the Republican base.  And with right-wing media outlets. 

The assault on ESG is mainly focused on the prominent asset management firms that serve state and city public employee pension plans and healthcare plans. These asset management firms are told to abandon ESG principles (and their focus on the risks brought by the climate change crisis to investments) and related portfolio management approaches — or lose the state and/or city investment and capital raising client.

Political leaders in such states as Florida, Texas, West Virginia, Louisiana, and Missouri are openly opposed to “woke capitalism” as they see it and have targeted BlackRock, State Street, Vanguard, and other large asset management firms embracing sustainable investment.  (Consider that these three organizations have significant levels of investments in many publicly-traded companies.)

The leading ESG ratings firms are also in the cross hairs; 20-plus Republican state attorneys general also challenged ISS and Glass Lewis as both advisory firms expanded their traditional governance work to including “S” and “E” issues through a more comprehensive ESG lens. (These firms advise and provide services to public sector pension plans.)

Some Red state leaders are cutting ties with BlackRock and other firms and moving to prohibit the Wall Street organizations from management of state monies (such as their public employee pension systems).

BlackRock CEO Larry Fink fired back at the annual Davos gathering to say that his firm, while losing about $4 billion in the public sector pullback of funds to be managed, has seen the flow of new money into BlackRock to manage dwarfing that – new funds to be managed by BlackRock topped $200 billion in year 2022, he told the Davos crowd.

In his annual letter to corporate CEOs, Larry Fink wrote in 2022 that “stakeholder capitalism is not about politics, it is not ‘woke’, it is capitalism….” Helping clients transition their investments toward a lower-carbon economy is helping BlackRock (with $9 trillion-plus AUM) to attract new assets to manage, CEO Fink explained.

The underlying concern of the Red state officials is really about protecting fossil fuels interests  – like their home states” oil, natural gas, and coal assets. Texas and Louisiana economics are heavily dependent on production of fossil fuels and that no doubt leads to  the political opposition to ESG and minimizing recognition of the dangers posed by the climate crisis.

While BlackRock and other asset managers may not yet eliminating fossil fuels from the assets managed, or in products offered to investors, there is trimming going on (at other major asset management firms and in a number of state investment funds).  There is also pressure being applied to traditional oil & gas firms to innovate and invest in renewable energy production. 

Consider:  in 2022, renewable sources accounted for 22 percent of energy production while coal accounted for 20%. 

Responding to the misguided opposition to ESG in nine states, Democrats in the House of Representatives formed a sustainable investment caucus to advocate for ESG policies and actions.

Said caucus chair Sean Casten of Illinois to The Hill editors: “Given the significant growth of AUM in funds that prioritize ESG factors, Congress has a duty to craft policies that provide investor protection and transparency ofd information to market participants.”

In an opposition move, House Republicans at month’s end moved to block the Biden Administration action on “allowing” pension plan administrator’s to consider ESG factors in their management of fiduciary funds.  The Republicans passed a resolution that would reverse the U.S. Labor Department rule that allows such consideration.  

This is a see-saw event; depending on which party is in the White House, under ERISA rules, fund managers have been allowed to consider ESG/and prevented from using ESG considerations in fund management.  

The House Republicans claim that using ESG would results in higher fees for “less-diversified” investments in “lower-performing” fund portfolios. (Read:  less fossil fuel investments in sustainable funds.)  

The Securities & Exchange Commission has a rule under consideration to mandate disclosure of GHG emissions by publicly-traded companies. It is expected that the Final Rule could be issued sometime in Q1 2023.

This move no doubt will set off a firestorm in Red state territory, and among the congressional delegations from those states. For public companies operating in those states that have, with sizeable operations in the European Union, new ESG disclosure rules are also being put in place in the EU.  

This year we will see significant conflict in the culture wars over climate change measures at the national, state and even city levels. 

The Federal government leads now in addressing the climate crisis, and Red state congressional leaders could challenge to the SEC’s legislative authority (to enact corporate ESG disclosure rules) when the Final Rule is issued (bringing legislative and judicial action).

The G&A team selected the Top Stories (below) on these conflicts.  We’ll keep you updated throughout 2023 on the culture war battles focused on climate change.

We are at an important inflection point in the effort to seriously address the climate crisis, and in ultra-partisan power circles now, the question posed is: which side are you on?

Top Story/Stories

• This group is sharpening the GOP attack on ‘woke’ Wall Street (The Washington Post) https://www.washingtonpost.com/climate-environment/2023/01/30/climate-change-sustainable-investing/
• House Democrats launch sustainable investing caucus (The Hill)  https://thehill.com/policy/equilibrium-sustainability/3830314-house-democrats-launch-sustainable-investing-caucus/
• Disclosure Rules On Track for Issuance by June (Thomson Reuters) https://tax.thomsonreuters.com/news/new-climate-and-sustainability-disclosure-rules-on-track-for-issuance-by-june/
• Politicians Want to Keep Money Out of E.S.G. Funds. Could It Backfire? (The New York Times – subscription required)  https://www.nytimes.com/2023/01/30/your-money/red-states-esg-funds-blackrock.html
• What’s Behind The ESG Investment Backlash (Forbes)  https://www.forbes.com/sites/christinero/2023/01/29/whats-behind-the-esg-investment-backlash/?sh=5929816c3158
• Davos 2023: BlackRock U.S. inflows dwarf $4 bln lost in ESG backlash -CEO (Reuters)  https://www.reuters.com/business/finance/davos-2023-blackrock-us-inflows-dwarf-4-bln-lost-esg-backlash-ceo-2023-01-17/

Springtime in North America – A Time Featuring Corporate-Investor Engagement and Proxy Voting on Critical Issues

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April 20 2021   Spring is in the air!  Proxy Season 2021 getting underway.  So how did we get here?  Some history and springtime news. 

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

Springtime comes to the USA and and the Northern Hemisphere countries with pretty flowers in bloom, trees budding, the onset of warmer weather.  And…

Asset owners and their managers participating willingly or reluctantly in the peak months of corporate proxy voting season in North America.

Typically, the corporate issuer develops the resolution(s) for voting by the shareholder base – for example, election of slate of nominees for the board and approval of the outside auditing firm.

And then… there are the resolutions prepared by the shareholders, and these are usually not to board and executives’ liking.

Thought you might be interested in some of the history of shareholder activism.  In the earlier days of shareholder activism certain “gadflies” would offer up their resolutions for inclusion in the voting (typically then, by individual investors).

Brothers John and Lewis Gilbert and a few others of similar thinking would gin up their resolution drafts and then face the challenge by the target company could be expected.

Some still around remember the ever-present at annual meeting Evelyn Davis, a Dutch Holocaust survivor with strong feelings and lots to say about how companies she invested in were being managed .

The Gilbert siblings operated “big time” in proxy season; they owned shares in 1,500 companies and attended at least 150 corporate annual meetings each year. T

They were often characterized as showmen (kicking up a storm at companies like Chock Full o’ Nuts and Mattel and other companies’ meetings.) Right after WW II John Gilbert got the SEC on the shareholders’ side; the regulatory agency started to require that companies include relevant shareholder resolutions in the annual proxy statement (of course certain conditions applied then and now).

Over time, this process became more sophisticated as many institutional owners put corporate equities in portfolios and steadily a certain number became activist investors. (

It really helped that the US Department of Labor leveraging ERISA statutes and rules  reminded US institutional investors that their proxy was an asset and voting was a clear responsibility of the fiduciary-owner.

In 1988, Assistant Secretary of Labor Olena Berg reminded pension fund managers of the “Avon Letter” that posited that corporate proxies are a pension plan asset and should be taken seriously and voted on.

One of today’s proxy voting / corporate governance experts with wide recognition and respect is California-based James McRitchie (principal of Corpgov.net).

In a communication to the US SEC in November 2018, he explained that he and other investors engage companies on ESG issues “to enhance their long-term value and to ensure corporate values do not conflict with the long-term interests of a democratic society.”

He suggested: “Corporations should welcome shareholders into the capitalist system as participants in major decision.”

In proxy season 2021, the “crisis stories” of 2020 and earlier years continue as public dialogue at least in the form of shareholder requests / demands / expectations of the companies that are in the portfolio on important societal issues.

Climate change action, racial justice/injustice, diversity & inclusion, inequality – these are high on the list for this year’s voting.

We have selected three Top Stories for you on the themes of 2021 voting. The not-for-profit Ceres organization, long active in ESG proxy voting issues, highlights the focus on science-based emissions reduction plans, and corporate policies aligned with the goals of the 2015 Paris Agreement. There are 136 climate-related shareholder-sponsored resolutions submitted to public companies as of April 2nd for 2021 voting.

The good news is that a number of these have been resolved in investor-corporate dialogues at Domino’s Pizza, Citigroup, JPMorgan Chase, and other firms. Others were withdrawn at Duke Energy, CSX, and Valero.

Climate-related themes for resolutions include “Banking on Low Carbon”, “Carbon Asset Risk”, and “Say on Climate”.

Long-time shareholder activist Tim Smith is Director of ESG Shareowner Engagement at Boston Trust Walden and member of the Ceres Investor Network. Ceres continues to track such resolutions and information is available at www.ceres.org.

The authoritative Pensions & Investments publication shares news about a new website — Majority Action’s “Proxy Voting for a 1.5 C World”.

Four key sectors are in focus: electricity generation, oil & gas, banking, and transportation, with summaries of corporate current emission targets, capital allocations and policy activity relate to climate change. (Reaching net-zero emissions by 2050 is an example of issue in focus.)

The web site offers recommendations for voting against director nominees at companies failing to implement plans “consistent with limiting global warming” by industry/sector.

In banking the web site names Wells Fargo, Goldman Sachs, and JPMorgan Chase. Issues in focus overall include Climate Change, Community Development / Investment, Gender Equality, and more.

Third – the Yield Positive web platform offers excellent background on shareholder resolutions and the current state of affairs following the dramatic events of 2020 – racial inequality highlighted by the killing of George Floyd; worker health and safety protections in the Covid pandemic; climate change issues – with examples of the resolutions coming up for vote in 2021.

These include Home Depot – Report on racism in the company; Target – Report on/end police partnerships; Wells Fargo – report on financing Paris Agreement-compliant GHG emissions cut, and more.

The 2021 spring season of corporate proxy voting and then the voting at company issues to Fall 20231 will be closely followed by business media and of course, the global investing community. We will continue to share news and perspectives about this annual exercise of “shareholder capitalism”.

TOP STORIES – April 2021

It’s Proxy Season 2021: Investors Focus on Climate Action

FYI

 

Confluence: Coronavirus Crisis, Climate Change, Global Warming, Sustainable Investing, Corporate Sustainability & Citizenship…Shaping These Times

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

Over the past several weeks we have been witnessing an important confluence of events, a critical convergence of forces — something we might call reaching a critical inflection point for the sustainability and well-being of our planet, people, plants, and yes, profits going forward. Consider:

The COVID-19 infection has now touched just about every sovereign state on Earth, shutting down the largest economy, that of the United States of America, as well as the economies of many European nations…and of course important parts of the world’s second largest economy, China.

As this was happening, the public conversations about the impacts of climate change and global warming on people, flora and fauna, and planet continued, with the worldwide observance of the 50th Earth Day. Attention on climate change has doubled down even in the face of a frightening disease and resulting economic turmoil.

Numerous conversations among science and climate experts, in media channels, among public sector leaders, and other stakeholders, focused on the possible links between the coronavirus (and other serious infections) and climate change.

Questions are raised:  What new diseases might emerge…what new vectors might we see, moving from tropics to temperate climes and carrying unfamiliar diseases.  What fate awaits humanity as in some countries we see systematic destruction of rain forests (the “lungs of the Earth”) and as populated cities continue to push farther into wilderness areas?  Do we know the effects, short- and long-term, on human, as the arctic tundra warms and releases microbes and other organisms stored there in colder climes for millennia?

As the world’s capital markets were being impacted by the virus crisis and shutdowns of entire economies, the focus on sustainable and impact investing has intensified.

(On one conference call this week, a lecturer pointed to ESG investing trends and explained, look at the more resilient and sustainable companies for opportunity in the crisis and as we emerge. The ESG leaders will be more attractive for investors.)

Early results showed that sustainable investments (especially ESG mutual funds and ETFs) were performing with more resilience than more traditional instruments in the slowdown and in the ongoing adjustments of institutional investors’ portfolios in response to the crisis. (The outflow of ESG ETFs and mutual funds were small than for traditional peers.)

The focus on the corporate sector intensified as the three important sectors of 21st Century economies struggled to adjust to the widespread effects of the virus crisis – that is, public sector (governments), private sector (corporate and business) and social sector (institutions, NGOs, foundations, charities, others, as first defined as the social sector by management guru Peter F. Drucker).

There is considerable public discussion now about what the “new normal” might look like as we emerge from the terrible effects of the coronavirus.  The confluence / convergence of recent events as outlined here will help to shape society in the near term — moving into the post-crisis period.

The G&A Institute team has been monitoring and sharing perspectives on the above and more in our usual communications channels. In these newsletters, in our Resource Guides, on our Sustainability Update blog.

You can check out our blog posts here.

We are offering perspectives in the ongoing series, “Excellence in Corporate Citizenship on Display in the Coronavirus Crisis”  — #WeRise2FightCOVID-19.

We offer here several features along the lines of the above themes of confluence / convergence of factors for you:

Featured Stories

Why we cannot lose sight of the Sustainable Development Goals during coronavirus
Source: World Economic Forum – Our world today is dealing with a crisis of monumental proportions. The novel coronavirus is wreaking havoc across the globe, upending lives and livelihoods.

An Earth Day CEO summit shows how dramatically corporate values have changed
Source: Fortune – This week marks the 50th anniversary of those nationwide environmental celebrations and “teach-ins” that came to be called Earth Day. From the largest 1970 gathering, in Fairmont Park in Philadelphia, to smaller marches and…

The Covid-19 crisis creates a chance to reset economies on a sustainable footing
Source: The Guardian – New Zealand climate minister says governments must not just return to the way things were, and instead plot a new course to ease climate change

50 years later, Earth Day’s unsolved problem: How to build a more sustainable world
Source: MSN/Washington Post – We haven’t quit the fossil fuels scientists say are warming the atmosphere and harming the Earth. Humans use more resources than the planet produces. Society has not changed course.

Examining Corporate Citizenship: How Ride-sharing Companies Respond to COVID-19? What They Promise – and How It Turns Out

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G&A Institute Team Note
We continue to bring you news of private (corporate and business), public and social sector developments as organizations in the three societal sectors adjust to the emergency.  This is post #12 in the series, “Excellence in Corporate Citizenship on Display in the Coronavirus Crisis” – April 6 2020    #WeRise2FightCOVID-19   “Corporate Purpose – Virus Crisis”

By Yuyou Chen – Sustainability Reporting Analyst Intern at G&A Institute

Just four months after surfacing in Wuhan, China, the Coronavirus has been spread all over the world and affected about 1.3 million people in total to date.

Up until April 6, 2020, the Centers of Disease Control and Prevention (CDC) has reported 330,8919 COVID-19 cases and 8,910 deaths in the United States. CDC has recommended statewide citizens to practice social distancing and working from home.

With less on-site working, there is a sharp decline in the usual daily commuter activity. According to the Cities Commuter Activities report by Visual Capitalist, Los Angeles and New York experienced 95% and 97% reduction respectively in commuter activity respectively over the past three months.

The same thing is happening to the driver’s side. Ride-sharing companies face challenges in keeping their drivers at work.

Uber and Lyft in the Crisis

While some Uber and Lyft drivers who work on a part-time basis refuse to take any orders due to infection concerns, other full-time drivers may still stay on the frontlines to serve travelers for basic needs – or, they will face unemployment.

Ride-sharing, featured with convenient apps and affordable prices, has become a popular mode of commuting among people nowadays. With algorithms matching passengers to nearby drivers, the businesses are operated based on sufficient numbers and balance between commuters and drivers.

Uber and Lyft are two leading North America-based ride-sharing companies, both of which are headquartered in San Francisco, California.

For the past month, ride-sharing companies experienced a slight turndown in the stock market: For Lyft, share prices are down 2.00% (Nasdaq: LYFT); for Uber, down 3.63% (NYSE:UBER).

While each company declares that it puts well-being and safety of employees and customers as priority during the COVID-19 crisis, they set out somewhat differentiated business and risk management strategies.

Similarity: both companies state they enforce cleaning practices among their drivers and partially suspend their operations in some cases.

Looking at Uber

Uber says on their official website that they will temporarily suspend the accounts of riders or drivers who “confirmed to have contracted or been exposed to COVID‑19”.

Uber provides drivers with disinfectants to keep their cars clean for free, with manufacturers and distributors keeping enough cleaning supply. In particular, the surfaces being touched most often should be wiped.

In addition, Uber enforces “no contact” policy in their sub-brand – UberEats – specializing in local food delivery.

With the social distancing order from California Governor Gavin Newsom, the state’s residents are encouraged to work at home.

UberEats expects an increase in demand for food delivery given the less commuting population. To support local restaurant businesses, UberEats waived the delivery fee for more than 100,000 restaurants in North America.

For safety concerns, they allow customers to ask for leaving food at the door by leaving a note in the app. Food delivery companies like Doordash and Grubhub undertake similar policies. UberEats also provides free meals to health care workers, according to JUMP website.

Looking at Lyft

Similar to Uber, Lyft also says in their official website that they will distribute hand sanitizers and other cleaning supplies to their drivers.

Further, to comply with California state order of social distancing, Lyft paused shared riding in all metropolitan markets, including San Francisco and Los Angeles. They also enforce cleaning activities in their bikes and scooters.

Lyft has established the COVID-19 fund to help drivers who are diagnosed with the Coronavirus disease survive the individual quarantine. (Uber also builds an employee relief fund for impacted restaurant workers.)

However, it turns out that Uber and Lyft are unable to guarantee their sick leave compensation at this moment, according to CNET reporting.

What Is Happening With the Local Drivers?

CNET recently spoke with three Uber drivers and one Lyft driver — all from San Francisco — who exhibited COVID-19 or other disease symptoms and had asked for paid leave. All of them said their companies need an extended period of time to review and process requests for sick leave.

Similar situations are reported to be happening in New York, Illinois and Washington State.

According to The Washington Post, such delay in unemployment aid issuance resides in the fact that “gig” workers are categorized as independent contractors.

In contrast to full-time laborers, they are not eligible for unemployment benefits such as paid leave and health insurance under the current U.S labor system. Without guaranteed labor protection, the Coronavirus has been posing a threat to their economic survival.

While the U.S. Congress and local government officials seem to be progressing to list self-employed labors to be protected under the Coronavirus Aid, Relief, an Economic Securities (CARES) Act, the realization of unemployment benefit issuance still depends on the corporate themselves.

The Coronavirus infections are increasing at this moment, and the spread across the United States is projected to slow down no earlier than the next two months. It will certainly further affect the economy of the ride-sharing companies financially.

While struggling to maintain financial stability, the ride-sharing companies still need to spend time prioritizing drivers and customers’ interests and concerns in facing up the unprecedented challenge.

In the midst of bad news, a glimmer of good news: The Coronavirus is stressful to all of us, of course, but viewing it from an environmental perspective, the nation’s overall GHG emission would be reduced due to such a large decline in commuting all over the United States.

* * * * * * * *

About the Author
Yuyou Chen works as a Sustainability Reporting Analyst Intern at G&A Institute. She is currently a senior working towards a B.S in Environmental Science and Management and a B.A in Economics at the University of California, Davis. She is interested in ESG investing, Sustainability Reporting, and Urban Mobility. She had previous internship experience in a British environmental consulting firm where she engaged on research and analysis of an eco-labeling project for a China paper making company.

SCARY STUFF: The Fourth Official “Climate Science Special Report” by the U.S. Government’s “Global Change Research Program”

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

November 2018 commentary – with updates (see end)

If you were aware of the mandated National Climate Change assessment of the Federal government of the United States of America…here is what you need to know.

Whether you are an investor, company executive or board member, or an issue advocate, or civic leader, these “high probability” outcomes should keep you up at night:  more superstorms; more drought; increased risk of forest fires; more floods; rising sea levels; melting glaciers; ocean acidification; increasing atmospheric water vapor (thus, more powerful rainstorms)…and more.

How about a potential drop of 10% in the U.S.A. Gross Domestic Product by end of this century?

These are some of the subjects explored in depth in the fourth “Climate Science Special Report” of the U.S. Global Change Research Program.  That is a collaborative effort of more than a dozen Federal departments, such as NOAA, NASA, US EPA, and executive branch cabinet offices of Commerce, Agriculture, Energy, State, Transportation, and Defense; plus the OMB (Office of the President).

The experts gathered from these departments of the U.S. government plus a passel of university-based experts, reported last week (in over 1600 pages of related content) on the “state of science relating to climate change and its physical impacts.”

The CSSR (the Climate Science Special Report) serves as a foundation for efforts to assess climate-related risks and inform decision-makers…it does not include policy recommendations.  The results are not encouraging – at least not in November 2018.

The National Oceanic and Atmospheric Administration (NOAA) is the lead agency working with NASA and other governmental bodies to develop the report – which analyzes current trends in climate change and project major trends out to the end of this 21st Century.  The focus of the work is on human welfare, societal, economic, and environmental elements of climate change.

Each chapter of the report focuses on key findings and assigns a “confidence statement” for scientific uncertainties. There are 10 regional analyses of recent climate change (such as the Northeast, and Southern Great Plains).

Some highlights:

(1) This period is now the warmest in the history of modern civilization.

2) Thousands of studies have documented changes in surface, atmospheric and oceanic temps;

(3) glaciers are rapidly melting;

4) we have rising sea levels;

5) the incidence of daily tidal flooding is accelerating in more than 25 Atlantic and Gulf coast cities.

The various findings, the authors point out, are based on a large body of scientific, peer-reviewed research, evaluated observations and modeling data sets. In this report, we should note, experts and not politicians speak to us in clear terms.

Global climate is projected to change over this century (and beyond) – the report is replete with “likelihoods” of events) and the experts state that with major effort, temps could be limited to 3.6°F / 2°C or less – or else.  Without action, average global temperatures could increase 9°F / 5°C relative to pre-industrial times – spelling disaster at the end of the 2100s.

The Financial Stability Board’s  (FSB) Task Force on Climate-Related Financial Disclosures (the “TCFD”) strongly recommendations that the financial sector companies and (initial) four business sectors begin to test scenarios against (to begin with) 2-degrees Centigrade (3.5°F) temp rise and increase from there.

The four industry groups in the Financial Sector are:  Banks, Insurance Companies, Asset Owners, Asset Managers.

The four non-financial business sectors are:  Agriculture. Food & Forest Products; Buildings & Materials; Transportation; Energy (Oil & Gas).

This new national assessment from the Federal government should be a valuable resource for investors, bankers, insurance carriers and a wide range of companies in their scenario planning (content related to alternative scenarios is in the report).

Click the links below for:

TCFD information is here: https://www.fsb-tcfd.org/

Our Top Story in Sustainability Highlights this week is The Washington Post’s take on the report and its issuance by the Federal government on what some officials considered to be a slow Thanksgiving Friday news period.  The news coverage that followed was anything but “slow”!

Washington Post – Climate story by Brady Dennis and Christ Mooney
Major Trump administration climate report says damage is ‘intensifying across the country’
(Friday November 23, 2018) Source: The Washington Post – Scientists are more certain than ever that climate change is already affecting the United States — and that it is going to be very expensive. The federal government on Friday released a long-awaited report with an unmistakable message: The effects of climate change, including deadly wildfires, increasingly debilitating hurricanes and heat waves, are already battering the United States, and the danger of more such catastrophes is worsening.

* * * * * * * *

The critical work of the U.S. Global Change Research Program is ongoing.  Consider these cautions (warnings!) issued by the organization in March 2020 — looking at the Southwest region of the U.S.A.

  • Water for people and nature in the SW has declined during droughts.
  • Southwest forests and other ecosystems’ ability to provide natural habitat, clean water, and economic livelihoods has declined.
  • Many coastal resources in the region are affected with sea level rising, ocean waters warming, reduced ocean oxygen, and ocean acidification.
  • Indigenous peoples in the region are more and more affected by drought, wildfires, and the changes in ocean waters.
  • Hydropower – so vital in the region – it is now harder and harder to meet energy demands, that is, along with fossil fuel powers as well. The population has been increasing (the rush to the sunbelt and job centers in the region).
  • Food production is vulnerable to the water shortage situation in different places.
  • And of course with all of this there are now rising health risks — think about the impact of heat waves, ozone days with poor air quality, and with warming, pathogen growth, both nasty things always there and with warming, now buggies of all sorts coming in (vectors) along with the diseases they carry.

The Global Change team shares these kinds of findings on an ongoing basis – not waiting for the periodic full reports to be published.

Like to help?  Expert assistance is being requested, with open period to April 26, 2020 – as the Sixth Assessment is in the process.  Information at the Open Sources page: https://www.globalchange.gov/notices?utm_source=Newsletter&utm_campaign=1a2b149f07-EMAIL_CAMPAIGN_2020_03_25_03_00&utm_medium=email&utm_term=0_00fda1a12d-1a2b149f07-296853117

We’ll continue to update this post from time-to-time.  Let’s not lose track of the critical work of this arm of the U.S. government — even as people in high power continue to deny that the climate is changing…or that humankind has a hand in things as the planet warms (with disastrous results for many people).

We Are “Out” of the Paris Accord — Really? What a Year! Signs of Great Progress in the Trump Denial Era

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June 1, 2018

By Hank Boerner – Chair and Chief Strategist, G&A Institute

It was just one year ago – ah,, but it seems much longer…

WASHINGTON — The New York Times – June 1, 2017: “President Trump announced on Thursday that the United States would withdraw from the Paris climate accord, weakening efforts to combat global warming and embracing isolationist voices in his White House who argued that the agreement was a pernicious threat to the economy and American sovereignty.

In a speech from the Rose Garden, Mr. Trump said the landmark 2015 pact imposed wildly unfair environmental standards on American businesses and workers. He vowed to stand with the people of the United States against what he called a “draconian” international deal.

“I was elected to represent the citizens of Pittsburgh, not Paris,” the president said, drawing support from members of his Republican Party but widespread condemnation from political leaders, business executives and environmentalists around the globe.”

What was to follow?

A Year of Significant Progress!

Today — interesting perspectives are shared in The Washington Post on where we are one year after President Donald Trump “withdrew” from the Paris Climate Accord. The United States of America is the first – and perhaps will be the only – nation to join and then withdraw the Agreement. Sort of.

Participation in the agreement for the USA runs to year 2020 so we are “still in” (officially).  The withdrawal process will take the next three years.

By that time, there might be a new occupant in the White House. 

This nation is still in by examination of various other factors that are explained by writer Chris Mooney in the WaPo. (He covers climate change, energy and the environment, reported from the Paris negotiations in 2015, and has published four books on the the subjects he covers.)

The key points we took away from Mooney’s excellent wrap up today:

  • The Trump Administration still has no consistent message about climate change,  and no clear policy, except for the antics of EPA Administrator Scott Pruitt, with his slash & burn attacks on environmental and climate-related regulations.
  • There is a positive development: NASA Administrator Jim Bridenstine embraced climate science.  (See notes at end.)
  • There has been unrelenting attack on President Barack Obama’s skilled moves to protect the country – and the planet! – such as the Clean Power Plan.
  • But, while the White House is the cheerleader for the coal industry, market forces reward renewable energy and natural gas as powerful drivers for change.
  • Other countries are sticking with the Paris Accord, but some of those countries may find it challenging to stay the course without U.S. leadership (says John Sterman of MIT).

Background:  The Obama Administration agreed in Paris with many other nations to the goals of a 26%-to-28% reduction of emissions below the 2005 levels — and today the U.S. and the whole world is off that metric, writes Chris Mooney.

Even if the commitments were realized, there would be a temperature rise of 3.3 degrees Celsius (almost 6% F) over time (according to MIT’s Sterman). So the USA would have to do even more than agreed-to in Paris. (The USA is the world’s second largest GhG emitter.)

Where are we? According to the Climate Action Tracker produced by NewClimate Institute and Ecofys, the USA is on track for an 11% to 13% decrease by year 2025, which is about halfway to the Obama Administration pledge.

What may interfere: the move to rollback auto fuel efficiency standards; an analysis by Rhodium Group projects adding 100 million tons (annually) by year 2035 for auto emissions alone if the rollbacks move forward.

The good news – from the “We Are Still In” front: the states of Virginia and New Jersey are making moves to cut emissions and the states of Colorado and California are developing new electric vehicle policies.

Vicky Arroyo (director of the Georgetown Climate Center is quoted:   At least we are not losing the momentum that was feared (one year ago today).

Kate Larsen, who directs climate change research at the Rhodium Group, thinks that the country is on track to meet or even exceed the Obama-era Clean Power Plan goals — thanks to the use of lower-cost renewable fuel sources and natural gas.

Greenhouse Gas Emissions in the United States are “hardly set to explode” and the country is moving toward lower GhG emissions over time, writes Mooney.

But. What the Trump announcement did last year on June 1 was to create fog about US national policy regarding climate change. The thing we all have to face: the slow progress exhibited and achieving climate change goals (those coming out of Paris) are not compatible.

The WaPo commentary is at: https://www.washingtonpost.com/news/energy-environment/wp/2018/06/01/trump-withdrew-from-the-paris-climate-plan-a-year-ago-heres-what-has-changed/?utm_term=.782d3cb38b3f&wpisrc=nl_most&wpmm=1

Counterpoint!

The EDF – a/k/a Environmental Defense Fund – today trumpeted the Year of Climate Progress (since June 1 2018).

EDF members and environmentalists immediately began the counter-attack in June 2017 and in EDF’s words, that led to a year of extraordinary climate progress. The organization presents a timeline on line.  Highlights:

  • June 5, 2018 – EDF helps launch a coalition of organizations, businesses and state and local civic and political leaders to pledge “We Are Still In!” – today there are 2,700 leaders participating.
  • On to July 2017 – California Governor Jerry Brown signs into law an extension of the state’s cap-and-trade program out to 2030.  The state is the sixth largest economy in all of the world!
  • September – North of the border, Ontario Province links its cap-and-trade program to the California-Quebec carbon market, creating a huge market covering 580 million tons of emissions. Sister province British Columbia intends to increase its carbon tax for April 2018 through 2021.
  • Nine Northeastern US States in the Regional Greenhouse Gas Initiative complete their second program review and agree to reduce emissions by 30% from 2020 to 2030.
  • Halfway around the world in December 2017 China announced its national carbon market (to be largest in the world); this will start with electric power and expand to seven other industrial sectors. (So much for the Trumpian claim China is doing nothing to meet Paris Accord conditions.)
  • We move further into 2018 and the Federal Energy Regulatory Commission (FERC) rejects the DOE coal and nuclear proposal.
  • Despite shouts and threats and Trumpian boasting, the U.S. Congress adopts the 2018 budget in March 2018 that leaves the EPA budget mostly intact (EPA Administrator Scott Pruitt wanted to cut the agency’s budget by 30%. Other environmental / energy agencies see budget increases.)
  • April – the UN’s International Maritime Organization adopts a climate plan to lower emissions from container ships, bulk and oil carriers, by at least 50% below 2008 levels by 2050.
  • Also in April — In the key industrial State of Ohio, the Public Utilities Commission approves AEP’s Electric Security Plan – this, EDF points out, will enhance and diversify the state economy, unlock millions in funding, provide customers with clean energy options and overall, will reduce pollution.
  • Next door, in April, the Illinois Commerce Commission approves the state’s Long-Term Renewable Resources Procurement Plan to have a pathway for electric utilities to produce 25% of power from renewable sources by 2025 and put incentives in play for development of wind and power.
  • April — EDF President Fred Krupp gives a TED Talk, outlining the plan to launch methane-detecting satellites in orbit above Earth to map and measure oil and gas methane emissions. The data and information gathered will help countries and companies spot problems, identify savings opportunities and measure progress.
  • April sure was a busy month – Canada issued policies to cut oil and gas emissions by 40% to 45% at new and existing facilities. This was part of a pledge made in 2016 (when President Obama was in office) for the USA, Canada and Mexico to decreased such emissions in North America by that amount by 2025.
  • On to May – and recently-elected New Jersey Governor Phil Murphy – a former Goldman Sachs exec – signed into law the plan to cut GhG emissions by almost half by 2030 (hey, that’s twice what the Clean Power Plan would have required!). The Garden State will require 50% of NJ electric needs to be met from renewable sources.
  • And on to May – ExxonMobil announced plans to reduce oil and gas methane emissions by 15% and flared gas volume by 25% — worldwide – by 2020.

Yes – a remarkable year, kicked off on June 1st 2017 by a vindictive head of state set on reversing the significant progress made under his predecessors.

But many individuals, companies, investors, civic organizations, NGOs proclaimed: We are still in.  The movement represents city halls, board room, college campuses, investors, and more…interests representing US$6.2 trillion (one-sixth of the entire American economy) have signed on to the We Are Still In declaration — https://www.wearestillin.com/we-are-still-declaration

Have you?

Notes:

The New York Times story by Michael Shear, June 1 2017 is at: https://www.nytimes.com/2017/06/01/climate/trump-paris-climate-agreement.html

The American Institute of Physics info on NASA, embrace of climate change consensus: https://www.aip.org/fyi/2018/bridenstine-embraces-nasa-science-climate-change-consensus

We Are Still In information at: https://www.wearestillin.com/

Accountability Demonstrated by This Bank Board? Wells Fargo Directors Clawback $75 Million from 2 Former Execs

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April 10, 2017

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

We often hear about bank industry un-accountability; is this the beginning of a turn toward greater accountability?  Time and actions taken will tell us…over time.

The Board of Directors of Wells Fargo has clawed back $75 million in compensation from two former executives — the CEO and the head of retail banking.  That’s a drop in the bucket to some governance experts and consumer protection advocates, but it’s a good sign that corporate accountability is being demonstrated by at least one bank board.

Former Chair/CEO John Stumpf gave up $41 million in comp when he resigned last October; he now is ordered to pay back an additional $28 million.

Former head of retailing Carrie Tolstedt gave up $19 million in comp, and now will lose $47 million in stock options.

This after a 6-month investigation ordered by a handful of independent board members and conducted by the Shearman & Sterling law firm. The bank has paid $185 million to date in regulatory fines.

Some 2 million (!) fraudulent accounts were opened in customer names to inflate sales claims (the retail banking operations were overseen by Tolstedt).  More than 5,000 employees have been fired, accused of participation in the scheme, which went on for more than a decade.

Wells Fargo is one of the “Big Four” commercial banks of the USA.  The familiar red stage coach hustling across the western prairies is the symbol of the venerable institution, founded in May 1852. But today’s bank is the result of the merger of the old Wells Fargo & Company with Norwest Bank back in 1998.

Strumpf joined Northwestern National Bank (banking arm of Norwest Corporation) in 1982 and had risen in Norwest operations / then the combined company over the years, becoming CEO in June 2007 and adding the board chair title in January 2010.

So — he was not a “newbie” perhaps not always familiar with the culture of the merged bank operations. His action seriously tarnished the reputation and brand value of the “stagecoach bank” founded so long ago by Messrs Wells and Fargo.

With this action, the Wells Fargo board of directors takes an important step in addressing the cultural woes of the merged bank.

As The Washington Post writer observed, this is an attempt to demonstrate that banks can hold themselves accountable (and so avoid regulatory action for mis-behaviors).

The new CEO?  That’s Timothy Sloan, who was the former COO and therefore the supervisor of retail bank head Tolsteadt!  The board members have all been re-nominated for re-election this year.  Let’s see how “accountable” shareholders think the board has been when they vote their proxies.

Culture — it’s all about culture!  Culture — good or bad – is the ultimate determinant of outcomes!

 

Global Warming – As the Phenomenon Ends, The Ice Begins? In Year 2060

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

Keep your eye on 2060, when the Ice Age begins and Global Warming ends, say the folks at Samsung Chemical Coating (“SCC”) in The New York Times advertisement…

Did the headline grab your attention? It sure caught mine.

The headline and some of the content from a full-page advertisement appearing today in The New York Times, is signed by Samsung Chemical Coating Co. Ltd. (for the record, they’ve also said this is material “copyrighted” and not for re-distribution). This is Fair Use reporting for you.

The ad is a full page display in the well-read Science Times Section of the Times; titled: “When Global Warming Ends, about the year 2060, The Ice Age will Begin”).

There are five main messages for you from Samsung:

(1) (Perspectives About) the Beginning of Global Warming

(2) There is No Relationship Between the Amount of Carbon Dioxide Emissions and the Global Warming

(3) (About the) Ice Age Environment

(4) Large Extinction of Living Things (like all of us humans)

(5) (Message to) The US Government and Scott Pruitt, US EPA

Highlights:

Global Warming, says Samsung (SCC) management, is one of the natural phenomena that occurs at the end of inter-glacial periods. There is more explanation for you (according to the ad) in The Washington Post on February 28th of a “study” by Samsung. *

There is no relationship between CO2 emissions and global warming. It’s about Earth wobbling (“precession*), certain star tracks, and seas warming and rising.

The Earth’s glaciers (today’s Big Ice) will be reduced by Year 2060 at, the end of the inter-glacial period we’re in, and then the Earth will begin to form new glaciers; earthquakes and tsunami’s will occur; radiation from the sun will pummel Earth; extreme temperatures will occur; really large hurricanes will occur.

And then – oh, boy! — the New Ice Age coming about 2060 will reach to New York City, growing ever-taller over 200 years, and everything living will become extinct!  The dead critturs will eventually drift down to decay and become coal and carbon/oil for future generations (if there any) to use. There may well be; Samsung’s paid message says creatures exposed to the sun’s radiation will mutate and new species will emerge.

Finally — Samsung, while saying that nothing can be done about the catastrophe coming, thanks to the Law of Nature (and Earth wobble, stars aligning, oceans warming, pole ice disappearing, glaciers melting and then re-forming, radiation increasing, giant storms, and more) — and so,  Scott Pruitt, US EPA Administrator, “…should review the results of ]Samsung’s] study and find ALTERNATIVE (my emphasis) MEASURES to minimize the damage of the catastrophe that will occur…”

Oh, and the future of Mankind depends on Administrator Pruitt and President Donald Trump.

A key line in the ad:  “We can say that the cause of global warming is not from carbon dioxide emissions.”

The company – it’s a a privately-owned South Korean firm, according to Bloomberg LP  — has run somewhat similar ads in the past.  * We could find no mention of “the study” in The Washington Post edition of February 28, 2017 as mentioned in today’s ad.

We got to thinking: Is this a joke? (It’s not April 1st yet.)  Someone who gave up tweeting to write more long-form messages in the wee hours of the morning?  Something unusual to get us thinking? About?

Is this a planned distraction from the more pressing issues in Washington DC — like the former President spying on the new President when he was a candidate? Something really jarring to justify the drastic cuts proposed by the new administration at the US EPA?  Is this fodder for global warming deniers?

The ad is real:  I have a printed copy right here on the desk as it appears in the NYT ScienceTimes Section!

What to you think?  Let us know….

FINALLY — there is an email in the ad if you wanted to communicate with someone:

  • Heemun Kang – scck22@hanmail.net
  • or Jimin Kang or Josung Kang

** Precession:  changes that occur as equinoxes change in successive sidereal year (Oxford: sidereal — “as determined by stars”).

Dangerous Antics – Fiddling with the Future of US EPA and the Health and Safety of the American People

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

The Trump Administration  — Making moves now on the US EPA to destroy its effectiveness through budget cuts and ideological attacks on its missions.

In his landmark work published in 1993 – “A Fierce Green Fire – The American Environment Movement” – former New York Times journalist Philip Shabecoff explained:  the U.S. Environmental Protection Agency was created by President Richard Nixon (a Republican) in December 1970 (two years into his first term) as part of an overall re-organization of the Federal government. The EPA was created without any benefit of statute by the U.S. Congress.

Parts of programs, departments and regulations were pulled from 15 different areas of the government and cobbled together a single environmental protection agency intended to be the watchdog, police officer and chief weapon against all forms of pollution, author Schabecoff explained to us.

The EPA quickly became the lightning rod for the nation’s hopes for cleaning up pollution and fears about intrusive Federal regulation.

As the first EPA Administrator, William Ruckelshaus (appointed by Richard Nixon) explained to the author in 1989: “The normal condition of the EPA was to be ground between two irresistible forces: the environmental movement, pushing very hard to get [pollution] emissions no matter where they were (air, water)…and another group on the side of industry pushing just as hard and trying to stop all of that stuff…” Both, Ruckelshaus pointed out, regardless of the seriousness of the problem.

We are a half-century and more beyond all of this back and forth, and the arguments about EPA’s role and importance rage on.

Today we in the sustainability movement are alarmed at the recklessness of the Trump White House and the key Administration officials now charged with responsibility to protect the environment and public health in two key cabinet departments: The EPA and the Department of Energy.

The ripple effects of the attacks on climate change science are in reality much larger: The Department of Defense (which has declared climate change to be a major threat long-term); the Department of Interior, overseeing the nation’s precious legacy of national parks and more; the Department of Agriculture (and oversight of tens of millions of acres of farmland); the Department of Commerce; the Department of Justice..and on and on.

The destruction could start early: The Washington Post (with its ear to the ground) is closely watching the administration and reported on February 17th that President Donald Trump planned to target the EPA with new Executive Orders (between two and five are coming) that would restrict the Agency’s oversight role and reverse some of the key actions that comprise the Obama Administration legacy on climate change and related issues.

Such as: rolling back the Clean Energy Plan (designed to limit power plant GhG emissions), which required states to develop their own plan as well. And, withdrawing from the critical agreement reached in Paris at COP 21 to limit the heating up of Planet Earth (which most of the other nations of the world have also adopted, notably China and India).

The destroyers now at the helm of the EPA also don’t like the Agency’s role in protecting wetlands, rivers etc. (The Post was expanding on coverage originally developed by investigative reporters at Mother Jones.)

Mother Jones quoted an official of the Trump transition team: “What I would like to see are executive orders implementing all of President Trump’s main campaign promises on environment and energy, including withdrawal from the Paris climate treaty.”

And, in the Washington Post/Mother Jones reportage: “The holy grail for conservatives would be reversing the Agency’s ‘so-called endangerment finding,’ which states that GhG emissions harm public health and must therefore be regulated [by EPA] under the Clean Air Act.”

Think about this statement by H. Sterling Burnett of the right-wing Heartland Institute: “I read the Constitution of the United States and the word ‘environmental protection’ does not appear there.” He cheered the early actions by the Trump-ians to give the green light to the Keystone Pipeline and Dakota Access Project.

On March 1st The Washington Post told us that the White House will cut the EPA staff by one-fifth — and eliminate dozens of programs.

A document obtained by the Post revealed that the cuts would help to offset the planned increase in military spending. Cutting the EPA budget from US$ 8.2 billion to $6.1 billion could have a significant [negative] impact on the Agency.

We should remember that in his hectic, frenetic campaigning, Donald Trump-the-candidate vowed to get rid of EPA in almost every present form – and his appointee, now EPA Administrator (Scott Pruitt) sued EPA over and over again when he was Attorney General of Oklahoma, challenging its authority to regulate mercury pollution, smog (fog/smoke), an power plant carbon emissions (the heart of the Obama Clean Energy Plan).

In practical terms, the Post explained, the massive Chesapeake Bay clean up project, now funded at $73 million, would be getting $5 million in the coming Fiscal Year (October 1st on). Three dozen programs would be eliminated (radon; grants to states; climate change initiatives; aid to Alaskan native villages); and the “U.S. Global Change Research Program” created by President George H.W. Bush back in 1989 would be gone.

Important elements of the American Society have tackled conservation, environmental, sustainability and related issues to reduce harm to human health and our physical home – Mother Earth – over the past five decades: Federal and state and local governments; NGOs; industry; investors; ordinary citizens; academia.

Today, the progress in protecting our nation’s resources and human health made since rivers caught fire and the atmosphere of our cities and towns could be seen and smelled, is under attack.

The good news is that for the most part, absent some elements of society, the alarms bells are going off and people are mobilizing to progress, not retreat, on environmental protection issues.

American Industry – Legacy of Three Decade Commitment to Environmental Protection – The Commitment Must Continue

The good news to look back on and then to project down to the 21st Century and Year 2017 includes  the comments by leaders of the largest chemical industry player of the day as the EPA was launched and key initial legislation passed (Clean Air Act, Clean Water Act, and many more)  – that is the DuPont deNemours Company.

Think about the importance of these critical arguments – which could be considered as foundational aspirations for today’s corporate sustainability movement:

Former DuPont CEO Irving Shapiro told author Philip Shabecoff: “You’ve have to be dumb and deaf not to recognize the public gives a damn about the environment and a business man who ignores it writes his out death warrant.”

The fact is, said CEO Shapiro (who was a lawyer), “DuPont has not been disadvantaged by the environmental laws. It is a stronger company today (in the early 1990s) than it was 25 years ago. Where the environment is on the public agenda depends on the public. If the public loses interest, corporate involvement will diminish…”

His predecessor as CEO, E. S. Woolard, had observed in 1989: “Environmentalism is now a mode of operation for every sector of society, industry included. We in industry have to develop a stronger awareness of ourselves as environmentalists…”

And:  remember, warned Dupont CEO Shapiro: “…if the public loses interest corporate involvement will diminish…”

Today let’s also consider the shared wisdom of a past administrator as she contemplated the news of the Trump Administration actions and intentions:

Former EPA Administrator Gina McCarthy (2013-2017) said to the Post: “The [proposed] budget is a fantasy if the Trump Administration believes it will preserve EPA’s mission to protect public health. It ignores the need to invest in science and to implement the law. It ignores the history that led to the EPA’s creation 46 years ago. It ignores the American People calling for its continued support.”

Consider the DuPont’ CEO’s comments above … if the American public loses interest.  At this time in our nation’s history, we must be diligent and in the streets (literally and metaphorically) protesting the moves of this administration and the connivance of the U.S. Congress if our representatives go along with EPA budget cuts as outlined to date.

# # #

About “A Fierce Green Fire: The American Environmental Movement,” by Philip Shabecoff; published 1993 by Harper Collins. I recommend a reading to gain a more complete understanding of the foundations of the environmental movement.

A decade ago I wrote a commentary on the 100-year evolvement of the conservation movement into the environmental movement and then on to today’s sustainability movement in my Corporate Finance Review column.  It’s still an interesting read:  http://www.hankboerner.com/library/Corporate%20Finance%20Review/Popular%20Movements%20-%20A%20Challenge%20for%20Institutions%20and%20Managers%2003&04-2005.pdf

 

 

News From the Sustainability Front as The Trump White House Makes Controversial Moves on ESG Issues — Actions and Reactions

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

February 23, 2017
Forward Momentum! – Sustainability 2017

Are you like many of us having sleepless nights and anxiety spells as you watch the antics of the Trump White House and the creeping (and similarly moving-backwards) effects into the offices of important Federal agencies that the Administration is taking over?

Consider then “other news” — and not fake news, mind you, or alt-news — but encouraging real news that is coming from OTHER THAN the Federal government.

We are on track to continue to move ahead in building a more sustainable nation and world — despite the roadblocks being discussed or erected that are designed to slow the corporate sustainability movement or the steady uptake of sustainable investing in the capital markets.

Consider the Power and Influence of the Shareowner and Asset Managers:

The CEO of the largest asset manager in the world — BlackRock’s Larry Fink — in his annual letters to the CEOs of the S&P 500 (R) companies in January said this: “Environmental, social and governance (ESG) factors relevant to a company’s business can provide essential insights into management effectiveness and thus a company’s long-term prospects. We look to see that a company is attuned to the key factors that contribute to long-term growth:
(1) sustainability of the business model and its operations; (2) attention to external and environmental factors that could impact the company; (3) recognition of the company’s role as a member of the communities in which it operates.

A global company, CEO Fink wrote to the CEOs, needs to be “local” in every single one of its markets. And as BlackRock constructively engages with the S&P 500 corporate CEOs, it will be looking to see how the company’s strategic framework reflects the impact of last year’s changes in the global environment…in the ‘new world’ in which the company is operating.

BlackRock manages US$5.1 trillion in Assets Under Management. The S&P 500 companies represent about 85% of the total market cap of corporate equities.  Heavyweights, we would say, in shaping U.S. sustainability.

* * * * * * * *

As S&R investment pioneer Steve Viederman often wisely notes, “where you sit determines where you stand…” (on the issues of the day).  More and more commercial space users (tenants and owners) want to “sit” in green spaces — which demonstrates where they “stand” on sustainability issues.

Consider:  In the corporate sector, Retail and other tenants are demanding that landlords provide “green buildings,” according to Chris Noon (Builtech Services LLC CEO). The majority of his company’s construction projects today can easily achieve LEED status, he says (depending on whether the tenant wanted to pursue the certification, which has some cost involved). The company is Chicago-based.

This is thanks to advances in materials, local building codes, a range of technology, and rising customer-demand.

End users want to “sit” in “green buildings” — more than 40% of American tenants recently surveyed across property types expect now to have a “sustainable home.” The most common approaches include energy-saving HVAC systems, windows and plumbing. More stringent (local and state) building codes are also an important factor.

Municipalities — not the Federal government — are re-writing building codes, to reflect environmental and safety advances and concerns. Next week (Feb 28) real estatyer industry reps will gather in Chicago for the Bisnow’s 7th Annual Retail Event at the University Club of Chicago to learn more about these trends.

* * * * * * * *

Institutional investors managing US$17 trillion in assets have created a new Corporate Governance framework — this is the Investor Stewardship Group.

The organizers include such investment powerhouses as BlackRock, Fidelity and RBC Global Asset Management (a dozen in all are involved at the start). There are six (6) Principles advanced to companies by the group that including addressing (1) investment stewardship for institutional investors and (2) for public corporation C-suite and board room. These Principles would be effective on January 1 (2018), giving companies and investors time to adjust.

One of the Principles is for majority voting for director elections (no majority, the candidate does not go on board). Another is the right for investors to nominate directors with information posted on the candidate in the proxy materials.

Both of these moves when adopted by public companies would greatly enhance the activism of sustainable & responsible investors, such as those in key coalitions active in the proxy season, and year-round in engagements with companies (such as ICCR, INCR).

No waiting for SEC action here, if the Commission moves away from investor-friendly policies and practices as signaled so far. And perhaps – this activism will send strong messages to the SEC Commissioners on both sides of the aisle.

Remember:  $17 trillion in AUM at the start of the initiative — stay tuned to the new Investor Stewardship Group.  These are more “Universal Owners” with clout.

* * * * * * * *

Not really unexpected but disappointing nevertheless:  The Trump Administration made its moves on the Dakota Access Pipeline (DAPL), part of the Bakken Field project work, carrying out a campaign promise that caters to the project’s primary owners (Energy Transfer Partners**) and other industry interests, S&R investors are acting rapidly in response.

The company needed a key easement to complete construction across a comparatively small distance. Except that…

  • The Standing Rock Sioux Tribe says the route would cross their drinking water source, impact their sacred sites, and threaten environmentally-sensitive areas;
  • would violate treaty territory without meeting international standards for their consent; (this is the 1868 Fort Laramie Treaty, which according to the U.S. Constitution, should be the supreme law of the land);
  • and ignore alleged shortcomings in the required environmental review (under the National Environmental Policy Act – NEPA).

These are “abuses”, and banks and financial services firms involved may be complicit in these violations by the nature of their financing, S&R investors note. Their involvement in the project financing could impact their brands and reputations and relationships with society. And so S&R shareholders are taking action.

Boston Common Asset Management, Storebrand Asset Management (in Norway) and First Peoples Worldwide developed an Investor Statement to Banks Financing the DAPL. The statement — being signed on to by other investors — is intended to encourage banks and lenders to support the Rock Sioux Tribe’s request for re-routing the pipeline to not violate — “invade” — their treaty-protected territory. The violations pose a clear risk, SRI shareholders are saying.

The banks involved include American, Dutch, German, Chinese, Japanese, and Canadian institutions.  They in turn are owned by shareholders, public sector agencies, and various fiduciaries — “Universal Owners,” we would say.

The banks include: Bayerische Landesbank (Germany); BBVA (Argentina); Credit Agricole (France); TD Securities (Canada); Wells Fargo; ABN AMRO (The Netherlands); Bank of Tokyo-Mitsubishi UFJ; and Industrial and Commercial Bank of China, and others.

The shareholders utilizing the Investor Statement say they recognize that banks have a contractual obligation with the respect to their transactions — but — they could use their influence to support the Tribe’s request for a re-route…and reach a “peaceful solution” acceptable to all parties.

As The Washington Post reported on January 24th, soon after the Trump Administration settled in, President Trump signed Executive Orders to revive the DAPL and the Keystone XL pipelines. “Another step in his effort to dismantle former President Barack Obama’s environmental legacy,” as the Post put it.

One Executive Order directed the U.S. Army Corps of Engineers to “review and approve in an expedited manner” the DAPL. Days later the Corps made their controversial decision, on February 7th reversing course granting Energy Transfer Partners their easement. This week the remaining protestors were removed from the site (some being arrested).

The sustainable & responsible & impact investment community is not sitting by to watch these egregious events, as we see in the Investor Statements to the banks involved. The banks are on notice — there are risks here for you.

* * * * * * * *

May be what is happening in the asset management and project lending activities related to the project is the IBG / YBG worldview of some in the financial services world:  I’ll Be Gone / You’ll Be Gone when all of this hits the fan one day.  (Like the massive Ogalala Aquifer being contaminated by a pipeline break. The route of the extension is on the ground above and on the reservation’s lake bed.  Not to mention the threats to the above ground Missouri River, providing water downstream to U.S. states and cities.)

* * * * * * * *

Energy Transfer Partners, L.P:  (NYSE:ETP)  This is a Master Limited Partnership based in Texas.  Founded in 1995, the company has 71,000 miles of pipelines carrying various products. The company plans to build other major pipelines — the Rover Project — to carry product from the shale regions (Marcellus and Utica) across the Northern U.S. state east of the Mississippi.  ETP LP acquired Sunoco (remember them?).

Mutual Funds – Bond Holders – other key fiduciaries with brands of their own to protect — are funding the operations of ETP LP.

Brand names of equity holders include Oppenheimer; Goldman Sachs Asset Management; CalPERS; JPMorgan Chase.  Bond holders include Lord Abbett, PIMCO, Vanguard.  There are 567 institutional owners — fiduciaries — with some 45% of ownership, according to Morningstar. Partners include Marathon Petroleum Company (NYSE:MPC) and Enbridge (NYSE:ENB). (Bloomberg News – August 2, 2016 – both firms put $2 billion in the project and related work.)

The Partnership used to have an “Ownership” explanation on its web site — now it’s disappeared. But you can review some of it in Google’s archived web site pages here: http://webcache.googleusercontent.com/search?q=cache:http://www.energytransfer.com/ownership_overview.aspx&num=1&strip=1&vwsrc=0

* * * * * * * *

We are seeing in developments every day (like these above with non-governmental strategies and actions) that hold out promise for corporate and societal sustainability advocates and sustainable investment professionals that with — or without — public sector support, the Forward Momentum continue to build.

We’ll share news and opinion with you — let us know your thoughts, and the actions that you / your organization is taking, to continue the momentum toward building a better future…a more sustainable nation and world.

Out the Seventh Generation, as the Native American tribes are doing out in the American West in protecting their Treaty lands.  In that regard we could say, a promise is a promise — the Federal and state governments should uphold promises made in treaties.  Which are covered as a “guarantee” by the U.S. Constitution that some folk in politics like to wave around for effect.

FYI — this is Article VI:  “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land, and the Judges in every State shall be bound thereby…”