More details
about that investor summit this week. Here is the original posting. Links are live. KwC
Investors worth $3.22 Trillion urge action at
Climate Risk Summit http://www.ens-newswire.com/ens/may2005/2005-05-10-04.asp
Mouths Where Their Money Is
By Emily Gertz, WorldChanging.com,
Wednesday, 11 May 2005
NEW YORK, N.Y. -
Yesterday, nearly 400 people met at the United Nations headquarters to
talk about changing the world. They were upbeat and enthusiastic about their
power to get corporate America's attention, and to demand that it take climate
change seriously. And not just take it seriously, but do something about it.
Who were these people? Global activists? International diplomats? No. They were
American state treasurers, city and state comptrollers, and managers of pension
and mutual funds, joined by a smattering of their European colleagues. They
gathered for the second Institutional Investor
Summit on Climate Risk, cosponsored by the United Nations Foundation -- established by billionaire Ted Turner in 1998 to support U.N. causes -- and Ceres, a Boston-based investor-environmentalist
coalition.
These financial managers collectively control trillions of dollars in
investments in U.S. public corporations, and are responsible for seeing to it
that millions of retired steelworkers, teachers, state employees, and others do
not wake up one day and find themselves not just elderly, but poor. As far as
these professionals are concerned, climate change is creating huge investment
risks -- but it also holds the potential for enormous financial rewards. It is
their professional responsibility to see to it that U.S. corporations deal with
both.
And the world, to some extent, seems to be counting on them. "You are
essential to our ability to slow climate change and mitigate its worst
effects," U.N. Secretary-General Kofi Annan told the summit via a taped greeting in the morning.
"You are accustomed to thinking big, and thinking long term," he
said, perhaps implying that these were qualities not shared by U.S. policy
makers.
"Climate change will impact our investments," said Denise Nappier, treasurer of Connecticut, who cochaired
the summit with Tim Wirth, the green-leaning former Colorado senator who is now
president of the U.N. Foundation. Eventually, said Nappier, climate risk will join the many traditional measures
financial managers like her consider when looking at an investment, but right
now, it's a risk factor that most American corporations are ignoring, making it hard to evaluate how much they
may be affected.
Although concern about the environment seemed to unite many of the summiteers,
"this is not an environmental conference," Nappier declared.
"Today is not about our planet's well-being. It's about our
economic health. We're learning that they're intertwined, but today, it's all
about the money."
She added that "climate change is already presenting intriguing and
attractive opportunities for those of us in the investment business."
This is language that fund managers and the corporations they invest in are
professionally required to give serious attention to, whatever their green
sympathies: the language of financial risk and return.
Green Suits Take the Baton
from Tree-Huggers In the morning's first
session, Harvard scientist John Holdren outlined basic
climate-change anxieties with brevity and lucidity: glacier melt, sea-level
rise, extreme weather, baking cities, disappearing species, etc. Subsequent
speakers translated these phenomena into the language of ethical and profitable
business, touching on topics like price-earnings ratios for companies exposed
to risk from the changing climate and returns on investment in clean technology
and carbon credits.
The
message, in short: market forces are stepping forward to break the policy-making
impasse on global climate in the United States. The message underneath: sober
financial professionals in very well-tailored suits are taking on actions and
initiatives that make them more akin to -- and perhaps ultimately more
effective than -- the last couple generations of tree-huggers in setting the
U.S. on a course toward sane climate policy. The excitement and energy at
yesterday's meeting -- the sure knowledge that change was happening and those
present were part of it -- was unlike anything one might experience these days
at a gathering of eco-activists.
Paul
O'Neill, secretary of the treasury during President Bush's first two years in
office, followed Holdren by drawing lessons from his years as an industrialist
to illustrate
how climate risk could become investment opportunity. O'Neill was chair
and CEO of Alcoa, the world's biggest producer of aluminum, from 1987 to 1999,
and led the company in major reductions in its greenhouse-gas emissions while
boosting efficiency and productivity, reduc ing worker injuries to near-zero,
and instituting fully transparent reporting to investors and the public on
these and a host of other factors. His words set a tone of enlightened
corporate leadership that the summit attendees seemed hungry for: "I think
responsible leaders in this country will respond to the idea of a
sustainability template ... there are billions of people today who are born
into a life of no hope, and have no hope. Our generation should be the one that
makes sure that changes."
During follow-up comments, David Hawkins, a climate specialist
at the Natural Resources Defense Council, expressed his frustration at the lack
of leadership from the U.S. Securities and Exchange Commission in getting
corporations to report on and respond to climate risk. "I am a corporate
governance enthusiast," he said, "but when I listen to John Holdren
speak, I'm filled with frustration, because what he says has the ring of truth,
and I cannot get [his] speech put in to the prospectus of the publicly traded
American company. I cannot bring it to the attention of the shareholder."
Hawkins wondered how much progress could be made without the managers of those
corporations in the room agreeing to report fully on climate risks.
However,
the investors felt they could bring both corporations and the SEC into line
without waiting for action from above. Richard Moore, the treasurer of
North Carolina, disagreed directly with Hawkins. "The management of
those companies are not here, but the owners are," he said,
generating applause. "I think if there's anything we've learned over the
last few years, it's that if we're asking for disclosure, if we as owners, if
we as customers demand a level of service from the people that we do business
with, we will get attention. One of the things we've learned over the last few
years is we don't have to depend on the SEC. We don't have to wait on the SEC.
If we are selective in the targets that we pick, if we are reasonable in the
information that we are asking for, I dare people to tell us no."
Is he right? Very recent history seems to say: yes.
Nearly every presenter yesterday intoned the words "GE announcement,"
referring to General Electric's "ecomagination"
initiative, unveiled just a day earlier. GE's
public, voluntary commitment to effect a 1 percent reduction in greenhouse-gas
emissions (as opposed to a 40 percent increase under business as usual) and a
30 percent improvement in energy efficiency by 2012, to double its investments
and returns in clean-energy technologies by 2010, and to report publicly on its
progress toward these goals seemed to uphold the idea that, ratification of
Kyoto or no, U.S. corporations are going to have to deal with climate risk if
they want to stay in business.
GE's step certainly buoyed Ceres' own report on its progress in pricking up the
ears of corporate boards. Walking its own talk on transparency, the group
distributed a 22-page report on "Investor Progress on Climate Risk." In the 18
months since the first Investor Summit in 2003, this group of institutional
investors has:
- Increased the number of participants in
its U.S.-based Investor Network on Climate Risk from 10 to 43, with total
assets growing from $600 billion to $2.7 trillion.
- Made $450 million in new, direct
investments in clean technologies.
- Filed 30 global-warming shareholder
resolutions with North American companies in 2004 (25 with U.S. companies
and five with Canadian). By comparison, in 2001 there were about six such
resolutions filed with U.S. companies. Called upon major
greenhouse-gas-emitting companies and boards to disclose more information
about the financial risks of climate change, and their plans to mitigate
those risks.
Call Me, Anytime ...The day's centerpiece was the announcement of a joint
U.S.-European investor call to action on "managing climate risk and
capturing the opportunities." Over two dozen institutional investors representing four
continents, 15 countries, and a collective $3 trillion-plus in assets have signed on to a 10-point action plan
that calls for U.S. companies and Wall Street firms to make assessment of
climate-change risk an integral part of their asset assessment and reporting,
and to work with investors on reducing those risks.
For their part, the institutional investors intend to put $1 billion of their
collective assets into solid clean-technology investments, pursue shareholder
resolutions with U.S. corporations on better reporting and management of
climate risk, develop reporting standards, and continue to build their
international network. Their mantra is engagement with corporate America, not
divestment from it.
The plan doesn't ignore government completely. One point calls on the SEC to
require that companies disclose their climate-change risks as part of their
filings with the commission. Asked about this, Ceres President Mindy Lubber (who during the morning session had
described how the company insuring her Cape Cod cottage had unilaterally
cancelled the policy, saying that it would no longer handle any properties at
sea level), noted that the SEC says it already requires disclosure of material
risk. In a meeting with Ceres, the SEC stated that if investors informed it
that companies were not doing this, the commission would look at the situation.
Not exactly a resounding commitment, but the fact that the meeting happened at
all seems encouraging.
When Al Gore presented the afternoon keynote, the
crowd's good mood bubbled over into a standing ovation. The former U.S. vice
president is now chair of Generation Investment Management, an investment firm formed late in 2004.
Generation has set out to merge traditional financial analysis with social,
environmental, and geopolitical factors, to establish the competitive advantages
of sustainability.
"We're all here because there is an
enormous policy vacuum," said Gore. "The business community, the insurance companies, the
pension funds, the institutional investors are stepping forward with leadership
from you all, because those who should be stepping forward have not."
Citing "short-termism" -- the intense pressure to
generate quick results -- as the biggest problem facing investors, Gore called
the institutional investor summit "audacious" for taking on this
entrenched system. "This really needs to be done," he said. "And
if nobody else is going to do it, then those who find themselves as stewards of
assets that have to be invested over the long term, in order to safeguard the
responsibility that comes from long-term liability, you have to step up to the
plate and say, 'I'll do this.'"
"It's hard, because the instruments and the tools that you naturally have
at your disposal are not necessarily the ideal instruments and tools for
solving this problem," he said. "But don't underestimate how powerful
your instruments and tools and your abilities can be in actually solving this
problem."
"John Holdren's presentation talked about some tipping points in the
environment," Gore continued. "I know there are tipping points in the
political system also, globally and nationally." When a company like GE
reorganizes itself around "ecomagination," Gore suggested, we're
nearly at that point. "It is time to take the businesslike, common-sense, difficult
but necessary steps to shift the perspective and integrate the data, and start
acting in ways that are fully in step with your fiduciary responsibilities," he said. "And don't let anybody
suggest that it cannot be done."
Emily Gertz is a
regular contributor to WorldChanging.com, and an internet content and strategy
consultant for nonprofits. She has written on environmental policy for BushGreenwatch, and on the intersections of
environment, culture, art, and activism for The Bear Deluxe and other independent alternative
publications.
Article found at
Grist http://www.grist.org/comments/dispatches/2005/05/11/gertz/index.html
Related links
Generation
Investment Management http://www.generationim.com/strategy/
Corporate
Social Responsibility Newswire Service http://www.csrwire.com/article.cgi/3250.html
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