Major U.S. Companies Embrace Progressive Climate Action
From the Wonk Room.
On Wednesday, five major U.S. corporations launched a new business coalition with the investors’ activist group Ceres to call for immediate, muscular, and progressive action to fight global warming. The founding members of Business for Innovative Climate and Energy Policy (BICEP) are Levi Strauss & Co., Nike, Starbucks, Sun Microsystems and The Timberland Company. As right-wing business organizations like the Chamber of Commerce pretend that limits on pollution will destroy the economy, the members of BICEP recognize that the true threat is failing to halt catastrophic climate change.
The eight principles embraced by BICEP for national action on global warming reflect recommendations from the Center for American Progress, Green For All, 1Sky, and other progressive organizations, including a moratorium on new coal plants, no subsidies for pollution permits, aggressive efficiency standards, and green-job creation in low-income communities.
In addition, BICEP calls for greenhouse gas emissions to be at least 25 percent below 1990 levels by 2020, in line with scientific recommendations—and more than double the target set by President-elect Barack Obama.
As Mindy Lubber, president of Ceres said in a press call, tackling global warming is integral to future economic strength:Rather than ignore risk, address the risk and turn it into an opportunity. We need to send the right and honest market signal. Carbon pollution has a cost.
The full list of recommendations:
- Set greenhouse gas reduction targets to at least 25 percent below 1990 levels by 2020 and 80 percent below 1990 levels by 2050.
- Establish an economy-wide GHG cap-and-trade system that auctions 100 percent of carbon pollution allowances, promotes energy efficiency and accelerates clean energy technologies.
- Establish aggressive energy efficiency policies to achieve at least a doubling of our historic rate of energy efficiency improvement.
- Encourage transportation for a clean energy economy by promoting fuel-efficient vehicles, plug-in electric hybrids, low-carbon fuels, and transit-oriented development.
- Increase investment in energy efficiency, renewables and carbon capture and storage technologies while eliminating subsidies for fossil-fuel industries.
- Stimulate job growth through investment in climate-based solutions, especially “green-collar” jobs in low-income communities and others vulnerable to climate change’s economic impact.
- Adopt a national renewable portfolio standard requiring 20 percent of electricity to be generated from renewable energy sources by 2020, and 30 percent by 2030.
- Limit construction of new coal-fired power plants to those that capture and store carbon emissions, create incentives for carbon capture technology on new and existing plants, and phase out existing coal-based power plants that do not capture and store carbon by 2030.
Investor Summit on Climate Risk
The 2008 Investor Summit on Climate Risk will bring together more than 450 institutional investors, Wall Street leaders and CEOs from around the world to consider the scale and urgency of climate change risks, as well as the economic opportunities of a global transition to a clean energy future.
Purpose
The purpose of the Summit is to provide a high-level forum for state treasurers, leading institutional investors, and financial services firms from around the world to consider the scale and urgency of climate change risks, as well as the economic opportunities of a global transition to a clean energy future.
Objectives
Based on a vision of hope and opportunity, the Summit will focus on how investors can advance solutions to climate change, with a particular emphasis on the benefits of energy efficiency. The Summit aims to help investors:- Examine recent scientific findings on climate risk and technological solutions
- Assess potential capital flows into energy efficiency and clean technologies
- Learn how treasurers, institutional investors and financial services firms worldwide are factoring climate risk into their policies and strategies
- Consider prudent steps investors can take to address climate risk and opportunities
Background
The 2008 Summit builds on the groundbreaking success of the first two UN Investor Summits on November 21, 2003, and May 10, 2005. Hundreds of institutional investors and asset managers from around the world, representing trillions of dollars in assets, attended the previous Summits. The information they shared raised profound concerns about investor exposure to climate risk, the future security of investment assets, and the fiduciary duty to take prudent steps to address climate risk on behalf of shareholders and beneficiaries. Information on previous Summits can be found at the Investor Network on Climate Risk website.
Climate Risk – and Opportunity
Climate change poses regulatory, legal, physical and competitive risks for companies. In the two years since the 2005 Summit there has been a growing recognition that climate change presents serious risks, not only for businesses and investments, but also for the global economy. Left unattended, risks from climate change will worsen over time, harming company assets and global investment portfolios. Leading economists, investors, and business leaders have stated recently that the costs of action to reduce greenhouse gas emissions are both affordable and significantly lower than the costs of inaction. Where there are risks, there are also opportunities, and the business opportunities posed by addressing climate change are significant. With the proper government policies and market conditions, low-carbon technologies that are available today could be more broadly deployed, and significant reductions in emissions could be achieved over the next few decades—all while creating vast new economic opportunities and new jobs.
Agenda
7:30 am – Registration and Coffee (enter at UN Visitors Entrance, 1st Avenue @ 46th Street)
9:00 am – Welcoming Remarks (Trusteeship Council Chamber, 2nd Floor)- Amir A. Dossal, Executive Director, United Nations Fund for International Partnerships
- Ban Ki-moon, Secretary-General, United Nations
- Timothy E. Wirth, President, United Nations Foundation
- John P. Holdren, Professor, Harvard University & Director, Woods Hole Research Center – presentation and discussion
- Diana Farrell, Director, McKinsey Global Institute – presentation 10:20 am – Discussion
- Mindy S. Lubber, President, Ceres & Director, Investor Network on Climate Risk (moderator)
- Timothy E. Wirth, President, United Nations Foundation (moderator)
- Nobuo Tanaka, Executive Director, International Energy Agency
- Peter A. Darbee, Chairman, CEO, & President, PG&E Corporation
- Vinod Khosla, Founding CEO, Sun Microsystems & Founder, Khosla Ventures
- John Chiang, Controller, State of California (moderator)
- Donald MacDonald, Trustee Director, BT Pension Scheme
- Denise L. Nappier, Treasurer, State of Connecticut
- Russell Read, Chief Investment Officer, California Public Employees’ Retirement System (CalPERS)
- Alex Sink, Chief Financial Officer, State of Florida
1:00 pm – Luncheon (Delegates Dining Room, 4th Floor; closed to press)
- Luncheon Welcome: Richard H. Murray, Managing Director & Chief Claims Strategist, Swiss Re
- UN Welcome: Dr. Srgjan Kerim, President, 62nd session of the United Nations General Assembly
- Introduction: Jeff Skoll, Founder & Chairman, Skoll Foundation & Participant Productions
- Featured Speaker: Al Gore, 2007 Nobel Peace Prize winner; Former Vice President of the United States; Chairman, Generation Investment Management
Climate disclosure, focusing on measuring financial risks and opportunities
- Dr. Gary Yohe, Professor of Economics, Wesleyan University
- Mr. Jeffery Smith, Partner in Charge of Environmental Practice, Cravath, Swaine, and Moore
- Ms. Mindy Lubber, President, Ceres
- Mr. Russell Read, Chief Investment Officer, California Public Employees’ Retirement System
Senate Banking Committee takes up corporate disclosure of financial risk from climate change By Nicholas Rummell October 31, 2007Several leading Democrats on the Senate Banking Committee say they want to push for greater disclosure from companies about the financial risk they face from climate change.
The move by Democrats is largely the by-product of a petition sent to the Securities and Exchange Commission last month. That petition requested that the SEC require companies to spell out material losses from climate change, such as the impact of new fuel regulations on automakers.
According to the petitioners, who include regulators in 11 states as well as institutional investors and advocacy groups, companies are currently required to delineate such risks under accounting rules, but they often fail to meet those requirements because of poor regulatory guidance. Business groups often argue that such information is confidential.
A Banking Committee hearing on the topic late last month was sparsely attended, by only Democratic members, but it shows congressional interest in the financial risks argument. Sen. Robert Casey (D-Pa.) said he thinks the federal government should act to “chart a new course” for stopping climate change and improving financial returns for companies, which he called “two ends of a problem.”
A bill being marked up in another Senate committee reportedly would require new SEC regulations to require public companies to inform shareholders about financial disclosure of and economic impact of global warming on the company. The bill, sponsored by Sens. Joseph Lieberman (I-Conn.) and John Warner (R-Va.), places caps on carbon emissions.
Current climate change disclosures are inconsistent, which makes it difficult for investors to compare one company’s disclosure with others, said Russell Read, chief investment officer at the $259 billion California Public Employees’ Retirement System. Mr. Read said the SEC currently can require greater disclosure, but that it probably needs “prodding” by Congress to do so.
Some feel additional disclosure would lead to more inconsistent filings. Gary Yohe, an economics professor at Wesleyan University, said that, depending on whether a company evaluates risk to customers or the entire social cost of carbon use, “you get a wide range of numbers.”
Such guidance should focus only on companies that would be significantly impacted by climate change. “It would be a mistake for everyone to say something,” said Jeffrey Smith, lead partner in the environmental practice at law firm Cravath Swaine & Moore. Flooding the market with insignificant disclosure would hurt investors, he said, noting that companies should be “poised” to address useful information in filings. “Fake numbers are bad.”
Mindy Lubber, president of environmental advocacy group Ceres, testified that insurers face quantifiable financial risks from prolonged droughts and wildfires, energy companies face climate-change litigation and other companies face risk from greenhouse gas regulations. She cited recent investment bank research reports as evidence that Wall Street is starting to pay attention to the costs attributed to climate change.
Ms. Lubber said the petitioners don’t want “an onerous new disclosure regime,” but rather to tighten up current accounting standards on physical risks that can be evaluated, such as litigation or losses due to hurricanes. Petitioners in recent years have repeatedly asked the SEC to issue guidance, but the SEC has ignored such requests, she said.
The clamor for financial disclosure related to climate change has also made for strange bedfellows. Steven Milloy and Thomas Borelli, climate change skeptics and mutual fund managing partners, filed a petition for rule-making with the SEC earlier this month. They want companies to have to disclose the business risks of laws and regulations that address global warming.
The two activists, critical of the global warming movement and attempts at regulation, found that of 21 corporate members of the U.S. Climate Action Partnership, only five disclosed that global warming regulation is a business risk. USCAP is a group of 33 companies and environmental groups that calls for significant reductions in greenhouse gases. “USCAP members,” Messrs. Milloy and Borelli wrote in their petition, “are keeping shareholders in the dark.”
Case in point, the two say, is the impact on General Electric’s labor force of the proposed shift to compact fluorescent light bulbs from incandescent bulbs. GE manufactures the environmentally friendly compact bulbs in China, which has caused friction with the company’s U.S. employees. The petition also targets PepsiCo, Du Pont and Caterpillar—also members of USCAP—for not disclosing financial risks adequately, as well as Wal-Mart, which is not a member.
“Global warming regulation represents a serious risk to publicly owned corporations, yet this threat to corporate earnings and shareholder value is not being disclosed to shareholders,” the petition stated.
According to Ms. Lubber and supporters, companies actually could reap benefits by addressing climate change. One analysis cited by Ms. Lubber found that U.S. electric power companies that have not prepared for the future cost of carbon regulations could see losses in earnings of up to 17%. Conversely, the same analysis found that companies with less polluting fuel mixes could see earnings increase by as much as 15%, she said.
The SEC has not issued a response on either petition and is not required to do so, though staffers may review them.
Environmental proxy proposals seeking more data on financial risk from global warming have come into vogue (see “Green Proxies to Be Red Hot This Season,” FW, Oct. 29). Last year, environmental activist shareholders filed a record-breaking number of green proposals; even more are planned for the 2008 season.