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A note from Mike Wallace:
The month of September has seen the release of several of the world’s most influential reports on corporate sustainability. The Dow Jones Sustainability Index and the FTSE4Good are the two most respected sustainability ratings in the marketplace. In addition, the world’s most focused shareholder initiative - the Carbon Disclosure Project - released its 6th annual report and has created new partnerships with Bloomberg and PwC. In essence, this market evolution continues to increase disclosure on sustainability and raises the bar on all companies (public and private) to measure, manage and disclose sustainability information.
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Environmental Governance - Leveraging existing corporate governance systems to respond to the growing market demand for sustainability information.
Whether you have an existing sustainability program or are just beginning to contemplate one, Wallace Partners can help you focus your efforts in a manner that meets your business needs while addressing your most influential stakeholders' interests.
Here are some questions we can help you answer:
- What are the most important sustainability criteria for your industry and your company?
- Is your sustainability performance being accurately communicated by your company, within the market and among your stakeholders?
- Are your departments (EH&S, IR, HR, PR, etc.) aligned and working together to address the growing demand for sustainability information?
- How do you compare with your competitors on sustainability?
- What do your stakeholders really want to know about your sustainability performance?
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Ratings Update
The world’s most influential sustainability ratings reviewed their listings in September.
- The Dow Jones Sustainability Index conducted their annual review. 33 companies were added and 25 companies were deleted from the index – increasing the number of companies from 312 last year to 320 this year. The Index, started in 1999, is weighted based on market capitalization, and changes are made every September based on the newest sustainability scores. The annual review is based on an analysis of corporate economic, environmental and social performance, and assesses corporate governance, risk management, branding, climate change mitigation, supply chain standards and labor practices.
- FTSE announced its 2008 Semi-Annual review of its FTSE4Good Index. Globally, 36 companies were added and 12 companies were removed from the index series. Additions and deletions to the index are based on transparent environmental and social criteria that represent global standards of good Corporate Responsibility (CR) practices, which continue to evolve over time, demanding continued improvement in corporate responsibility practices in order to gain or maintain inclusion in the index.
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Carbon Disclosure Project
The Carbon Disclosure Project (CDP) is the most influential shareholder initiative ever witnessed by the global markets. It has organized 385 Signatory Investors representing over $57 trillion in assets under management. In 2008, CDP sent the request on their behalf to over 3,000 companies worldwide, requesting information on greenhouse gas emissions and the implications of climate change in terms of business risks and opportunities. The responses have been collected and were reported publicly in September.
- Over 1500 of the world’s major companies reported their greenhouse gas emissions and climate change related strategies in the updated Carbon Disclosure Project (CDP).
- Global corporations view climate change as a driver of risk and opportunity and have cited clear regulation as key to managing the impacts, in this year’s findings from the CDP report.
- Despite the uncertainty with regard to regulation the majority of global companies are acting to reduce their emissions. 74% of Global 500 companies reporting to CDP are now reporting emissions reduction targets, showing companies are increasingly taking climate change mitigation seriously.
- As an indication of the mainstreaming of the CDP’s information, September saw the announcement of partnerships with Bloomberg to market the CDP information to investors and with PriceWaterhouseCoopers (PwC) to write and audit the reports.
Emilia Fazzalari of Bloomberg, said:
"CDP data on Bloomberg allows users to access information about carbon emissions of companies, helps investors to assess the potential regulatory impact on their investments, and creates greater transparency and more tools for Bloomberg customers to participate in the emissions trading markets."
Richard Gledhill, global climate change leader at PwC, says:
“Companies need to measure and report their carbon emissions and be clear about how they are managing them. Unless they do so, they risk losing sight of the impact of climate change on the long-term financial health and future prospects of their business.”
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Financial Value and Sustainability
The Investor Relations Perspective
A report by Verizon and IR Magazine found that investor relations professionals are increasingly asked about their corporate environmental performance:
- Eighty-seven percent (87%) of investor relations professionals believe companies can improve long-term shareholder value through better carbon management.
- Forty-five percent (45%) say that shareholders are increasingly engaged in overall CSR policy.
- Forty-three percent (43%) already include carbon-reduction measures as a key part of overall CSR policies.
Market Opportunities & Challenges
A Carbon Trust report, based on analysis by McKinsey & Co, found that the emissions reductions will create significant business opportunities and risks. Companies’ futures will be highly dependent on how well prepared they are for the move, which will create large upsides and downsides for business. Well positioned and proactive, forward thinking businesses could increase company value by up to 80%. Conversely, poorly positioned and laggard companies run the greatest risk of destroying value. The groundbreaking research found that as much as 65% of company value was at risk in some sectors.
Measurement Before Management
The first mandatory cap-and-trade auction in the United States was initiated on September 25th, under the Regional Greenhouse Gas Initiative, adopted by 10 Northeastern and mid-Atlantic states. By the end of the month the auction had raised nearly $40 million. This is only the beginning of the carbon market, which has the potential to become the largest commodity market in the world.
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How we can help
Wallace Partners offers a unique approach to assessing current conditions and integrating sustainability into organizations. We apply a methodology that builds on existing management systems, identifies unforeseen assets, and enhances operational efficiency. Our strategic approach will help you identify the operational, financial and reputational benefits of measuring and strategically disclosing sustainability performance data to priority stakeholders and the broader market. By identifying internal and external opportunities, we will help you lay the foundation for efficiently measuring and managing environmental, social, and economic performance, and disclosing sustainability information in a manner that:
- Increases business resiliency
- Reduces reputational risk
- Clarifies external perceptions
- Enhances access to investment capital, and
- Aligns with broader branding initiatives
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Publications & Events
Mike Wallace is actively speaking and publishing on Environmental Governance topics. Articles and other resources are available on the site.
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