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June 08, 2011
Investors Call on Russell 1000 Companies to Address Sustainability
    by Robert Kropp

Led by Ceres, a coalition of investors representing more than $1 trillion in assets under management writes to the CEOs of Russell 1000 companies, urging them to increase corporate attention to sustainability issues.

More than 30 investors, representing over $1 trillion in assets under management, are signatories to a letter sent to the CEOs of companies listed on the Russell 1000 index, urging them "to encourage your management team and Board of Directors to address sustainability issues across your organization, which can enhance long-term company and shareholder value." The Russell 1000 consists of the largest US-based securities, based on market capitalization.

Citing the increased attention of investors to sustainability issues following such events as the financial crisis and the BP oil spill, the coalition of investors, led by Ceres, asked for " enhanced disclosure of all material business risks having the potential to directly affect both short- and long-term financial performance, including risks posed by climate change, water scarcity, human rights, employee health and safety, and other sustainability issues."

"We encourage you not only to design and implement a robust sustainability strategy," the letter stated, "But also to demonstrate to shareowners and other stakeholders how effectively you are managing sustainability risks and opportunities."

The investors recommended that companies communicate their strategies for addressing sustainability risks and opportunities through such channels as analyst calls, road shows, and annual meetings.

While many of the largest US companies have increased disclosure and board oversight of sustainability issues, the number decreases considerably when smaller companies are considered. For example, a report issued last year by the Carbon Disclosure Project (CDP) found that disclosure of greenhouse gas (GHG) emissions by S&P 500 companies increased to 59% in 2010, and 54% of companies now include emissions data in their annual corporate reports.

However, a second report, published by Pax World Management, reveals that when the universe of companies is expanded to include the 364 companies representing the top 50% of market capitalization among the Russell 2000 index, only 39 addressed climate change in their reporting, and a mere four reported their greenhouse gas (GHG) emissions. Pax World is a signatory to the Russell 1000 letter.

The investors also recommended that companies consider using the Ceres Roadmap for Sustainability as a tool for implementing a sustainability strategy. "The Roadmap," the letter stated, "Details strategies and results from companies taking on these challenges, and provides a robust platform for accelerating best practices and performance for companies at all stages of the journey toward sustainability."

"We've seen enough hidden financial risks with globally-damaging economic results in recent years," stated Ceres President Mindy Lubber. "It's time that companies operate with a clear view of all their risks and costs but also the tremendous opportunities open to those businesses across all sectors who compete by developing solutions to environmental and social issues."


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