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May 29, 2014
No Surprise: Climate Change the Biggest Issue for Sustainable Investors
    by Robert Kropp

A survey of eleven sustainable investors by Monitor Global Outlook reveals that while more environmental and social shareowner resolutions have been filed in 2014 than ever before, the number of withdrawals has set a record too.


The number of sustainable investment professionals surveyed recently by Monitor Global Outlook, a service of the Christian Science Monitor, may be small, but the influence of the eleven whose insights make up the report has been considerable.

The professionals surveyed include Andrew Behar, CEO of As You Sow; Laura Berry, Executive Director of the Interfaith Center on Corporate Responsibility (ICCR), as well as Rev. Seamus Finn, a member of the organization; Julie Gorte of Pax World Management; and Lloyd Kurtz, co-faculty chair for the annual Moskowit z Prize for Socially Responsible Investing and Chief Investment Officer at Nelson Capital Management.

Institutional Shareholder Services, the influential proxy advisory firm, also participated in the survey, and told MGO that 428 environmental and social shareowner resolutions were filed for the 2014 proxy season, the highest number ever. The 166 withdrawals thus far have also set a record, leading a number of those surveyed to observe that companies have become more responsive to investor concerns on sustainability issues.

“The way that companies are coming to the table and actually talking – it looks like more than ever,” Behar observed.

Not surprisingly, participants rated climate change as the most pressing issue for sustainable investors. “Activists argue companies aren’t doing enough to hold themselves to measurable goals and timetables,” the report states, referring to a recent publication by Ceres that found that only 35% “have time-bound targets in place for reducing greenhouse gas (GHG) emissions.”

The record number of climate-related resolutions, Finn said, “shows a frustration with the political process and a sense of urgency.”

A new front in engaging with corporations on climate change has been the number of resolutions addressing stranded assets, or the fossil fuel reserves that will have to remain unburned if the worst effects of climate change are to be avoided. As You Sow withdrew a resolution on the issue after ExxonMobil agreed to report to shareowners on the associated financial risks. The report itself was disappointing, however, as the oil and gas giant contends that the global demand for fossil fuels will result in all of its reserves being burned.

Berry described Exxon's response as saying, “OK, we’ll tell you everything we’re going to do, and by the way, none of it has anything to do with making things better.”

Geopolitical risks are hampering sustainable investment in many parts of the world, the survey respondents stated, with the Middle East being the most worrisome region. Conditions in Central and South America have improved, however; on the other hand, Finn observed in relation to the rights of indigenous peoples, “Just when I think Brazil is doing better, I get a lot of push-back from colleagues saying, ‘Not quite so.’ ”

Another positive development, the investors say, has been the response of apparel companies to the tragedy in Rana Plaza, Bangladesh, last year, when more than 1,000 died as the result of a building collapse. Nearly 200 companies have “joined compacts holding them and their supply chains to higher standards,” the report states.

 

 
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