December 2008 – What’s New in Environmental Governance?

A Note from Mike Wallace:
This month, we observed – that despite the economic downturn – companies were maintaining sustainability spending. Year-end data reflected the exponential growth in sustainability disclosure over the past two years. However, while sustainability reporting continued to rise, data showed that reporting is often not in alignment with core business objectives and fails to demonstrate leadership on climate change. Happy holidays and best wishes for a wonderful 2009.

Access to Capital
Corporate Investment in Sustainability Remains Steady Amid Economic Downturn
Eighty percent of corporate sustainability executives surveyed from across North America plan to maintain or increase levels of sustainability-related spending in 2009, despite the current economic conditions, according to Panel Intelligence’s Quarterly Sustainability Tracking Study.

Companies are maintaining programs to use sustainability to attract customers, investors and employees amid economic downturn.

Projected Earnings Losses up to 30% for Firms That Don’t Implement Sustainability

According to a recent analysis, companies in consumer goods sectors that do not implement strategies to mitigate the risks posed by environmental pressures could face a potential loss of 13 percent to 31 percent in earnings by 2013.

Reporting Trends
U.S. Voluntary Climate Change Disclosure Increases Exponentially in 2008
The Financial Post reported that U. S. companies mentioned climate change 7,634 times in their securities filings in the first quarter of 2008 compared with 536 in the comparable period in 2006.

Ratings & Rankings
New 2008 Sustainability Index Rankings
In a recent analysis of sustainability reporting in the financial sector, new 2008 Sustainability Index rankings for 2008 were released. According to the report, ninety percent of the 30 largest banks analyzed in this report are voluntarily reporting on sustainability issues and more than half produce a fairly extensive formal sustainability report.

EPA Recognizes Water Efficiency Leaders

The U.S. EPA recently announced its 2008 Water Efficiency Leaders. A special category honored corporate and industry leaders.

Companies Cited For Failure to Align Sustainability to Performance and Take Leadership on Climate Change.

A recent CERES Report found that the boards of only 11 of the 63 companies analyzed in hear climate-specific updates, and just seven CEOs have assumed leadership roles on climate change initiatives. None of the consumer and technology companies examined tie related performance to the compensation of their top officers.

Industry leaders included technology and pharmaceutical firms. Industry laggards included restaurants, real estate, and travel and leisure.

Mindy Lubber, president of CERES, said:

"With or without a recession, climate change is a core business issue that all consumer and tech companies should be focused on."

Sustainability Coalitions

Investor Coalition Requests that Companies Join CEO Water Mandate

A group of sixteen investors, representing over 1.5 trillion dollars in assets, have asked the chief executives of 100 of the world’s biggest companies to join the CEO Water Mandate, part of the UN Global Compact. In a letter, the investors emphasized the importance of adopting a comprehensive approach to water management and reminded companies of the value of doing so in order to protect and foster their long-term investments.

Sustainability Regulations

President-Elect Obama Names Green Team

President-elect Obama recently named his “Green Team”, which includes:

• Energy Secretary Steven Chu (a Nobel-winning physicist)
• Climate Czar Carol Browner (a former EPA chief)
• EPA Leader Lisa Jackson (a former New Jersey environmental regulator)

Insurance Regulators Push for Reporting on Climate Change

The National Association of Insurance Commissioners (NAIC) is pushing for reporting on climate change. The NAIC asserts that insurers should be asked about climate risk in their internal risk-assessment process, particularly how insurers inform and provide incentives for policyholders to deal with climate risk. The NAIC is working with industry groups to define disclosure practices, which may include a survey with results made publicly available.