Do Investors Really Care About Sustainability?

The answer: Yes!  An increasing number of investors recognize the link between companies’ environmental and financial performance.  Traditional investors who typically weeded out “sin” businesses in their portfolios have shifted their focus to sustainable investing—positively screening for companies committed to sustainable development.  They’re seeking to invest in companies actively addressing the world’s environmental, developmental and resource challenges, thereby positioning them to deliver long-term, favorable returns.

CSRwire Talkback’s contributors Libby Bernick of Trucost (NA) and Liesel van Ast highlight other examples of mainstream investors’ increased focus on sustainability as a means of unlocking value.  For example, in 2012, investors favored carbon-efficient companies.  And, institutional investors are increasingly disclosing the environmental performance of their portfolios not only to increase awareness about risks, but also to respond to increased pressure for greater transparency.  To learn more about why investors really do care about sustainability, read more of CSRwire’s Talkback here.

–Margie Flynn

Newsweek Green Rankings Published

It’s that time of year again! The fourth annual Newsweek Green Rankings list has arrived, rating the largest publicly traded companies in the United States and across the globe on their environmental performance. Newsweek collaborated with Trucost and Sustainalytics to compile companies’ overall Green Score from three component scores: Environmental Impact, Environmental Management and Environmental Disclosure, weighted at 45%, 45% and 10% respectively.

The top 5 U.S. Companies are:

1. IBM
2. Hewlett-Packard
3. Sprint Nextel
4. Dell
5. CA Technologies

To read more about the top 15 U.S. companies and see their scores, please click here.

The top 5 global companies are:

1. Santander Brasil
2. Wipro
3. Bradesco
4. IBM
5. National Australia Bank

To read more about the top 15 global companies and see their scores, please click here.

Companies are also ranked according to industry, including Consumer Goods, Healthcare, Energy, Professional Services and Utilities (20 total). There are even lists such as Least Green Companies (BlackRock), Most Transparent Companies (UPS) and Reputation and Reality Winners list (IBM).

Scores were calculated using the same methodology as 2011 for comparability, in order to create a baseline for these companies and provide an environmental benchmarking tool to them and other stakeholders. To see the full lists please click here.

What do you think? Any surprises from the 2011 rankings? Do you agree or disagree with the top ranked companies? Least green companies? Let us know!

2011 Newsweek Green Rankings out today

Since the first Newsweek Green Rankings came out two years ago, a ‘green economy’ was high on everyone’s to do list. Since then, momentum has slowed way down and major government decisions have been non-decisions. However, many of the world’s largest companies have swum against this tide. Even in our weakened economy, big players have attacked green initiatives head on – implying that corporate responsibility is here to stay.

Many top executives understand that corporate responsibility is not only good for the environment but even better for business. Reducing waste reduces costs, something companies are looking to achieve every day. They also know resources are limited – water, land and minerals are finite. Companies that are dependent on these resources for their business are trying to figure out ways to use less, recycle more and consume alternative sources of fuel to sustain themselves.

This year’s Green Rankings are composed of two lists: 500 U.S. companies and 500 global companies that highlight leaders and laggards in sustainability. The data was analyzed by Trucost and Sustainalytics, leading environmental research firms, and assesses companies’ environmental footprint, management and disclosure. Collectively, the companies surveyed are responsible for more than 6 billion tons of greenhouse gas emissions each year – nearly equivalent to all emissions produced annually by the U.S.

Overall, the Rankings suggest that the U.S. is lagging behind the rest of the world. This is especially true regarding transparency, as Europe’s regulatory environment requires companies to disclose non-financial data.

To read the full article please click here. To see the full methodology please click here. To see the full list of U.S. companies please click here. To see the full list of global companies please click here.

What do you think? Do you think the companies at the top are deserving? Are there any companies from the bottom you think should be higher, or companies that are left off altogether? Discuss!

Trucost & RLP Capital: ESG funds outperform traditional funds

The environmental research firm, Trucost, and RLP Capital, a forward-thinking independent wealth management firm, collaborated to study the effects of ESG analysis in actively managed U.S. equity mutual funds, according to a press release from Trucost. The study found that funds incorporating ESG analysis outperformed traditional funds over 1- and 3-year periods. Further, these funds had smaller carbon footprints, indicating lower exposure to carbon costs.

The study compared the carbon footprints, performance and risk characteristics of the 8 largest traditional mutual funds with the 8 largest responsible funds in several key asset categories. 7 of the 8 responsible funds outperformed the traditional funds, and all 8 had significantly higher risk-adjusted performance over the 3-year period.

While traditional funds use an investment approach that relies solely on traditional financial analysis, responsible funds incorporate both traditional financial analysis and ESG analysis to identify firms with solid financial prospects that demonstrate positive track records with regard to ESG issues, according to Trucost. As part of the study RLP examined over 30 ESG criteria to determine what factors, if any, are incorporated into each mutual fund’s investment process.

To read the full press release please click here.

This is great news for socially responsible investors – do you think this trend will continue and evolve from just a trend to the norm? Discuss!

UNPRI foresees trillions in climate asset losses for long-term investors

Responsible-Investor reported yesterday that long-term investors are facing an environmental bill that could take trillions from their climate assets over time if they don’t start forcing their organizations/regulators/asset managers to reduce their climate change impact, according to a study backed by UNPRI and UNEP and conducted by Trucost.

Trucost found that the world’s top 3,000 companies by market cap were responsible for $2.15 trillion worth of environmental damage in 2008 (water and air pollution, GHG emissions, general waste and resource depletion). This number is in comparison to the total global environmental damage in 2008 at $6.6 trillion (11% of the global GDP, and 20% more than the $5.4 trillion decline in the value of pension funds in developed countries caused by the global financial crisis in 2007/08).

This figure could reach $28.6 trillion by 2050 with the utilities, oil/gas producers and industrial metals/mining industries the biggest offenders. According the the UNPRI and UNEP, workers and retirees could see lower pension payments from funds invested in companies with significant environmental damage costs when the government starts imposing a stricter “polluter pays” principle.

Large investment portfolios will also be affected through higher insurance premiums on companies, taxes, inflated input prices and the costs of clean-up. UNPRI and UNEP said that large institutional investors need to see themselves as univeral owners invested in the broad economy, and acting in the best interests of the global economy for long-term growth.

To read the full article, please click here.

These stats are pretty staggering – do you think institutional investors will push the climate issue with companies to be more environmentally responsible in the long-term? Discuss!