"What’s New in Sustainability?"
March 2009 Newsletter

A note from Mike Wallace:
The past month saw several key sustainability developments.

1. EPA requirements on greenhouse gas reporting seem highly likely in the wake of President Obama’s request that Congress enact a cap-and-trade system.
   
2. Private equity firms announced a collective agreement to incorporate ESG principles into lending and investing. Now, mainstream private equity behemoths like Blackstone and KKR are actively focused on sustainability.
   
3. New research concluded – during the financial crisis – companies with advanced sustainability programs have outperformed peers by 15%.
   

We also recently returned from New York where we co-sponsored the Financial Times conference on Sustainable Investing, met with shareholder groups focused on climate change, and attended the release of the Carbon Disclosure Project’s Supply Chain Report. The investment community continues to mobilize and focus on sustainability in preparation for cap-and-trade.

Access to Capital

Sustainable Companies Outperform Peers During Financial Crisis
A new report showed that companies focused on sustainability outperformed their peers by 15% during the financial crisis. Companies with advanced sustainability efforts averaged $650 million above industry averages for protected market capitalization per company. The study focused on performance between May and November 2008.

Nearly 75% of CDP’s 55 Trillion Dollars Factor Climate Change into Capital Allocation
New research by the Carbon Disclosure Project (CDP) reveals that nearly 75% of CDP’s signatory investors factor climate change information into their investment decisions and asset allocations. The CDP’s signatories represent approximately $55 trillion dollars. Of these, more than 80% consider climate change to be important relative to other issues impacting their portfolio. Interestingly, some of the institutions surveyed revealed a willingness to go beyond requesting disclosure on climate change, such as asking companies to reduce their greenhouse gas emissions.

The Economic Stimulus Package: Billions to Be Invested in “Green”
The Senate and House of Representatives are finalizing the details of the $789 billion federal economic stimulus bill. The specifics of the package include:

• $50 billion for energy programs, focused chiefly on efficiency and renewable energy, including $5 billion to weatherize modest-income homes
• $13.9 billion to subsidize loans for renewable energy projects
• $11 billion towards an updated electricity grid
• $6.4 billion to clean up nuclear-weapon production sites
• $6.3 billion in state energy efficiency and clean energy grants; and
• $4.5 billion to make federal buildings more energy efficient.

The Department of Energy intends to begin providing “green” loan incentives to private firms by mid-year.

Global recession gives boost to corporate energy efficiency drives
The global recession is adding increased emphasis on cost saving energy efficiency projects, according to a new research report from the Economist Intelligence Unit. Almost three-quarters (73%) of firms polled will make energy efficiency a high or moderate priority over the next two years in a bid to cut costs.

Reporting Trends

Global Accounting Association Issues New Sustainability Reporting Guidance
The Association of Chartered Certified Accountants (ACCA) issued sustainability reporting guidance to help firms prepare for the U.K.’s Climate Change bill, which requires emissions reductions of 80% from 1990 levels by 2050. (The guidance is the second in a series of ACCA briefings on sustainability reporting.)

Investor Coalitions

Private Equity Firms Sign on to Principles for Responsible Investment
The Private Equity Council (PEC) has announced that its members have adopted a set of environmental, social and governance (ESG) guidelines in accordance with the United Nations' Principles for Responsible Investment (PRI). Members of PEC include many of the world’s best-known private equity firms, including The Blackstone Group, The Carlyle Group, and Kohlberg Kravis Roberts & Co.

U.S. Companies Face Record Global Warming Resolutions
CERES and the Interfaith Center on Corporate Responsibility, who collectively represent nearly one trillion dollars of capital, named nine companies to a Climate Watch List, citing concerns that the firms are lagging behind their industry peers and are potentially undermining their long-term competitiveness in responding to the business challenges from global climate change. Investors have filed shareholder resolutions with eight of the nine companies—and 49 other businesses—aimed at improving their focus and attention to the financial risks and opportunities from climate change.

Ratings, Rankings, & Indices

Uptime Institute Announces Global Green 100 List
The Uptime Institute announced the corporations selected for its Global Green 100 list. The list highlights the significant energy efficiency achievements of global corporations operating major data centers. The list included exemplary Fortune 500 and InformationWeek 500 organizations with a demonstrated board-level policy and governance commitment to increasing energy efficiency and reducing the carbon footprint of their enterprise IT and data center operations.

Sustainability Regulations

"I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America."
- President Barack Obama (to Congress, February 25, 2009)

EPA Expected to Regulate Carbon Dioxide
The New York Times reported that the U.S. Environmental Protection Agency (EPA) is expected to act for the first time to regulate carbon dioxide and other greenhouse gases that scientists blame for the warming of the planet, according to top Obama administration officials.  EPA regulation is projected to include mandatory reporting of emissions into a database, which aligned to Obama’s public call for a cap-and-trade system and other energy and climate change legislation pending in Congress.

Lawsuit Forces U.S. Financing Agencies to Account for Climate
Environmental groups and cities won a settlement in a precedent-setting lawsuit will force two U.S. government agencies to address the global warming effects of their overseas financing activities.  After more than six years of litigation, the first case of its kind established important legal precedents related to global warming. Under the settlement, the Export-Import Bank, the official export-credit agency of the United States, will begin taking carbon dioxide emissions into account in evaluating fossil fuel projects and create an organization-wide carbon policy. Additionally, the Overseas Private Investment Corporation will establish a goal of reducing greenhouse gas emissions associated with projects by 20 percent over the next 10 years.

Company News and Upcoming Events

1. National Investor Relations Institute (NIRI) Silicon Valley Chapter: 2009 Annual Spring Conference - March 27, 2009 - Redwood City, CA – Mike Wallace will provide an overview of how the financial markets are measuring corporate social responsibility and integrating this performance into their investment decisions.
   
   
2. 6^th Annual National Environmental Leadership Summit - May 4 – 7 - San Francisco, CA – Mike Wallace will be presenting with major financial institutions (CalPERS and ICCR) to discuss how corporate environmental performance is being measured and used by the financial markets.
   
   Wallace Partners contacts are entitled to a $50 discount on registration Promotion Code:  wallace
   
   
3. ESG: Sustainable Business, Responsible Investing - May 14 – San Diego, CA – Mike Wallace will be discussing the role Investor Relations plays in the success of an integrated sustainability program.
   
   
4. 6^th Annual CleanMed Conference - May 18 – 20 – Chicago, IL – Mike Wallace will be presenting with the Cleveland Clinic, Dartmouth-Hitchcock and Spectrum Health on the development of the healthcare industry’s Eco-Health Footprint.
   

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