April saw a number of developments in the area of Environmental Governance, where environmental performance meets traditional corporate governance. Large public pension plans and institutional investors are increasing their environmental due diligence on the companies in which they invest.

Market Influences – top down market pressure increases:
The nations largest public pension plan, California Public Employees' Retirement System (CalPERS) has expanded its corporate governance guidelines to measure companies' commitment to environmental issues...

"Our board will be the first fund to engage companies and investment managers on these particular steps, and we will lead the way for other institutional investors to follow.  These two steps will significantly impact the way analysts, managers and companies evaluate climate risks, will improve the transparency of climate risks, and will encourage more consistency in how companies disclose their responses to climate risks."  State Controller John Chiang

Florida State Division of the Treasury has also taken recent steps:

Bruce Gillander, director in Florida's Division of Treasury said Florida officials have looked at purchasing a private rating system that ranks individual companies on how they are preparing for risks associated with climate change or how they are taking advantage of business opportunities in the wake of climate change.

These are only two of the major global shareholder initiatives that are continuing to push corporate environmental disclosure.

Market Due Diligence
As an increasing number of companies make "green" claims,an increasing number of Influential Stakeholders are using a variety of resources to conduct their own environmental due diligence on these companies and their claims. Here are two examples of public lists that rank and rate companies on environmental performance.

The Global 100 Most Sustainable Corporations in the World is a project initiated by Corporate Knights Inc. with Innovest Strategic Value Advisors Inc., a leading research firm specializing in analyzing extra-financial drivers of risk and shareholder value, including companies’ performance on social, environmental and strategic governance issues.

http://www.global100.org/2008/index.asp

The Toxic 100: The Top Corporate Air Polluters in the U.S. – The index relies on the U.S. Environmental Protection Agency's Risk Screening Environmental Indicators (RSEI) project. The starting point for the RSEI is the EPA's Toxics Release Inventory (TRI), which reports on releases of toxic chemicals at facilities across the United States.

http://www.peri.umass.edu/Toxic-100-Table.265.0.html

Now that thousands of companies are actively reporting quantified environmental performance data, it becomes increasingly important to understand where your company falls within the dozens of rankings, ratings and sustainability listings.  It is also critical that your sustainability message is consistent with the information that’s already in the market.  Not reporting quantified data about your carbon footprint while claiming that you are, or will be "carbon neutral", sends a mixed signal to the markets.

Market Trickle Down Effect
As large, publicly traded companies begin to understand their own environmental footprints they realize a large portion of their impact comes from their suppliers.  This is resulting in an increasing push to assess and improve suppliers’ environmental performance.  Public and private companies are being equally affected by the increasing interest in environmental performance.

Wal-Mart continues to expand its efforts to measure, manage and reduce the impacts of its supply chain, consisting of over 60,000 suppliers.  They partnered with the Carbon Disclosure Project (CDP) to initiate a supply chain study that has affected companies ranging from the F100 to small independent businesses.

The Carbon Disclosure’s Supply Chain Leadership Collaboration includes Cadbury Schweppes, Dell, HP, Imperial Tobacco, L'Oréal, Nestlé, PepsiCo UK & Ireland, Procter & Gamble, Reckitt Benckiser, Tesco and Unilever and seeks to measure carbon risks and liabilities in the supply chain.  You can read about the latest results of this effort at:

http://www.mhwmagazine.co.uk/index.asp?show=newsArticle&id=4951&country=

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 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