What Does Perfection Look Like? Carbon Disclosure Project’s 2012 Results

On Wednesday, September 12, the Carbon Disclosure Project (CDP) released the results from its 2012 survey. Based on the results, not only have overall scores improved from its Global and S&P 500 survey respondents, but the average disclosure score required to gain entry on the Carbon Disclosure Leadership Index (CDLI) increased by 4 points (11%) to 92. For the first time since the CDP survey began, two companies, Bayer and Nestle, scored full marks – a perfect score of 100! The criteria to gain entry and remain in these Indices are more stringent than ever.

Nestle demonstrates its commitment to reducing emissions from energy efficiency, switching to cleaner fuels and investing in and consuming renewable energy sources. Bayer has staked part of its business strategy on product innovation and investing in healthcare solutions with long-term societal benefits. Both companies also strive to maintain transparency and reporting practices considered best in-class across all industries.

CDP states that leaders have in common an explicit long-term approach to managing the opportunities and risks presented by climate change. Maturity in climate change management and clarity in decision-making with regard to the associated opportunities and risks help differentiate the companies recognized as leaders. The leaders realize consistent operational performance gains including lower energy costs, low-carbon energy use, increased productivity and the successful commercialization of highly resource efficient and low-carbon energy products and services. 

Another key take away from the 2012 CDP results is that investors expect higher levels of transparency and environmental, social and governance (ESG) information. The body of data continues to show a strong correlation between greater transparency and robust non-financial reporting and market outperformance compared to companies with poor records of transparency or weak ESG disclosures.   From the public’s and the investors’ perspective, full CDP and ESG disclosures lead to better long-term value creation.

 And what could be better than a perfect 100?

 –Christopher Thomas

About Friday Carbon Facts – a new series of brief articles and blogs about greenhouse gas emissions and carbon management. One article each month will focus on carbon management trends or GHG mitigation efforts based in a developing economy.

Nasdaq, four other stock exchanges join forces in push for environmental disclosure

Financial Times reported today that Nasdaq OMX has joined Brazil’s BM&FBovespa, and the stock exchanges in Egypt, Istanbul and Johannesburg to encourage companies listing with them to disclose more environmental and social impacts. Together they list more than 4,600 companies worldwide. The group announced at a conference in Rio de Janeiro that they wanted to promote wanted to promote “long-term sustainable investment and improved environmental, social and corporate governance disclosure and performance among companies listed on their exchange”.

Nasdaq recognized they couldn’t make this move alone, and therefore sought support from other stock exchanges. The four other exchanges have been eager to work with regulators and its trade group, the World Federation of Exchanges, to develop global standards that all exchanges could use to promote sustainable and socially responsible investing. Nasdaq is the first stock exchange in the U.S. and Europe to make such a commitment. In related news, the London Stock Exchange just announced that all its listed companies will have to report their GHG emissions at the start of the next financial year.

We believe this is a great first step in promoting more ESG disclosure and greater transparency amongst corporations worldwide, with the hope of creating a global standard that all exchanges could employ to encourage responsible investing. What do you think? Tell us your thoughts!

Last day for early bird registration to 2012 US SIF conference!

Don’t delay: today is the last day to register at the early registration discounted rate for US SIF’s Sustainable Investing in Action, taking place May 3-4 at the Hyatt Regency Capitol Hill in Washington, DC.   

Jonathan Greenblatt, Director of the White House Office of Social Innovation and Civic Participation and Special Assistant to the President will speak at the US SIF member day on May 2, and Barbara Bennett, Chief Financial Officer of the US Environmental Protection Agency, will open US SIF’s annual conference.

Also recently confirmed as conference speakers are:

• Alan Ayres, Product Manager – Emerging Market Equities, Schroders,

• Brian Rice, Investment Officer, California State Teachers Retirement System,

• Eric Roston, Sustainability Editor of Bloomberg Businessweek, and

• Anne Simpson, Senior Portfolio Manager, California Public Employees Retirement System

Jesse Eisinger, Senior Reporter, ProPublica

By registering now, you’ll ensure that you won’t miss out on a rich and varied agenda featuring thought-provoking keynote addresses and plenary roundtables on:

• Building Integrated, Green Communities

• The Evolution and Future of Sustainable Investing

• The Global Outlook for Sustainable Growth

• Corporate Governance after Citizens United

• Sustainable Economies, Planetary Limits

• Extending Producer Responsibility in the Bottled Water Industry—and Beyond

You’ll hear from Geeta Aiyer, President of Boston Common Asset Management; Frances Beinecke, President of the Natural Resources Defense Council; Michael Burns, Executive Vice President of Pimco Europe; Michelle Edkins, Global Head of Corporate Governance and Responsible Investment at BlackRock; Tom Hamburger, political reporter at The Washington Post; Larry Hatheway, Chief Economist at UBS Investment Bank; Kim Jeffery, President and CEO of Nestle Waters North America; Adam Kanzer, General Counsel of Domini Social Investments; Charles Kolb, President of the Committee for Economic Development; Barbara Krumsiek, CEO of Calvert Investments; corporate governance expert Nell Minow; and Jonathan Rose, founder of Jonathan Rose Companies, a leading green urban solutions provider in real estate.

Additional concurrent sessions will feature lively discussion on:

• the environmental, social and governance (ESG) challenges in the health insurance, oil & gas and information technology industries,

• the opportunities for foundations and other investors in alternative investments and community development,

• influencing companies—in the United States and around the world—through active ownership,

• ESG integration tools and techniques,

• the latest trends in corporate sustainability reporting, and

• the regulatory landscape three years after the financial crisis.  

Rooms at the conference hotel are also going fast, so be sure to secure your hotel reservation when you register. While the reserved block of rooms last, the group rate is $259/night plus tax. To secure your place at the conference, visit the online conference registration site.

Barb Brown, Principal and Co-owner of BrownFlynn, will be moderating the panel session on Sustainability Reporting Trends. We hope to see you next month!

Mercer study shows increased international interest in responsible investing

Yesterday the Financial Times published an article stating that U.S. investors are ramping up their efforts around environmental, social and governance (ESG) factors, particularly in regard to climate change, according to a new Mercer study.

Historically U.S.-based investment institutions have lagged behind their European counterparts in implementing ESG strategies. Of the more than 915 institutions that signed the UNPRI, only 63% went on to follow the allocation guidelines.

The Mercer study entitled: “Climate Change Scenarios – Implications for Strategic Asset Allocation“, looks at 12 institutional investors with more than $3 trillion under management combined and tracked their investment behavior over the past year with regard to ESG. The study found that 80% of the institutions have increased, or will soon increase, their ESG-related engagement with either asset managers or directly with companies. This is to better understand the inherent climate risk in various strategies.

The increased demand for ESG strategies is likely due to recent market volatility, which has institutional investors searching for sustainable investment products.  “Turbulence in the financial markets, issues like BP and Fukushima, and climate change are behind it, no doubt,” says Neil Johnson, U.S. managing director of Sustainable Asset Management, a $13 billion Robeco subsidiary that specializes in responsible investing.

“Collecting the material non-financial information [on climate risk] that helps you make a better informed stock selection decision in order to build a portfolio that will add value is gaining interest. Institutional investors are catching up with the thought that there’s alpha to be had, and risk mitigation and just a good sustainable, long-term way to invest,” Johnson says.

Are you surprised by the results of this study, or does it align with trends we’ve been seeing recently? Do you think we will see an even bigger increase in investor interest in 2012? Discuss!

Goldman Sachs Asset Management makes responsible investing commitment

Responsible-investor.com reported today that Goldman Sachs Asset Management (GSAM), the fund management division of Goldman Sachs, has signed the UN PRI and is outlining plans to make responsible investment a key component of its business.

GSAM is one of the world’s top 10 asset managers with $714.6billion in assets under its management. They recognize that environmental, social and governance (ESG) factors could affect investment performance, bring forth potential investment risks, and provide an indication of a company’s management and leadership. GSAM is working to formally integrate ESG analysis into its investment processes where “consistent with its fiduciary duty”.

“We are committed to responsible and sustainable investing and are working to further integrate ESG (environmental, social and governance) principles into investment strategies and client solutions globally. We believe responsible and sustainable investing extends beyond the evaluation of quantitative factors and traditional fundamental analysis. Where material, it should include the analysis of an entity’s impact on its stakeholders, the environment and society,” the firm said in a statement.

GSAM is already a signatory to the Carbon Disclosure Project (CDP) and the UK Stewardship Code. They are joined by BlackRock, Alliance Bernstein and PIMCO in signing the UN PRI, adding to the list of prestigious firms who lend their support.

Goldman Sachs is probably the most well-known firm to join this list. Do you think their signing on will prompt other big name firms to do the same? Do you think the new year will bring more movement like this? Discuss!

Mexico stock exchange launches sustainability index, in partnership with EIRIS

Yesterday, Bolsa Mexicana de Valores (BMV) launched its own sustainability index, in partnership with EIRIS. The index is based on the 70 most liquid shares on the Mexican Stock Exchange.  Companies who wish to be included are assessed according to their performance, impact and response to emerging environmental, social and governance (ESG) issues such as climate change and human rights.

BMV, with EIRIS and local research partner Ecovalores, developed the methodology and assessment framework for the index. These organizations also research and assess the companies that wish to be included on the index. BMV is the second largest exchange in Latin America at $450billion in stocks, behind Brazil.

To be eligible for inclusion on the index, each company’s sustainability practices are evaluated in comparison with its industry globally and have to score in the top 50% to be included on the index.

Peter Webster, Executive Director at EIRIS said: “Stock exchanges around the world – particularly those in emerging markets – are embracing the view that they have a key role to play in promoting sustainability and greater disclosure by their listed companies. We are delighted to be working with BMV as part our wider work with stock exchanges around the world”.

To read the full news release please click here.

Do you think Mexico’s development of a sustainability index will start a trend in other countries around the world? If so, why? Discuss!


World’s Largest Insurers to meet next week, finalize Principles for Sustainable Insurance

Responsible-Investor.com reported yesterday that some of the world’s largest insurance and reinsurance companies will meet in Ruschlikon, Switzerland, to finalize the Principles for Sustainable Insurance (PSI), the UNPRI equivalent for ESG integration into the insurance sector.

The four principles, similar to the six UNPRI principles, include signing up to look at integrating ESG issues into insurance business lines and promoting ESG across the insurance industry. Members of this working group include Munich Re, Swiss Re and Tokio Marine. The principles will be formally launched after this meeting and were developed under the United Nations Environment Programme Finance Initiatives (UNEP FI) Insurance Commission. The Commission comprises leading insurers and reinsurers committed to considering ESG issues in their business strategies.

The four Principles are:

  1. We will systematically consider ESG issues in our business principles, strategies and operations.
  2. We will engage with insurance industry participants to raise awareness on ESG issues, reduce risk and develop solutions.
  3. We will work together with society to enhance our effectiveness in implementing the Principles.
  4. We will be transparent by reporting on our progress and activities in implementing the Principles.

To read the full article please click here. Do you think these principles are a good idea? Do you think insurance companies should adhere to them? Discuss!