Ceres, ICCR draft a blueprint for sustainable investing

Ceres, ICCR draft a blueprint for sustainable investing

Charging bull image by Stuart Monk via Shutterstock.

President Barack Obama recently made a major speech on climate change, and the issue finally has moved squarely to the center of public attention. In addition to the reductions in the nation's emissions that the regulatory actions outlined promise, the speech may well help the sustainable investment agenda gain even more widespread adoption.

If mainstream investors are casting about for a place to start, they could do far worse than look to two sustainable investment organizations that have done as much as any to make the case for sustainability. Both Ceres and the Interfaith Center on Corporate Responsibility (ICCR) recently have published texts to help investors incorporate sustainability into their decision-making.

The four pages of insights published by ICCR provide some background on the issue of climate change, and state plainly, "The primary responsibility for controlling greenhouse gas emissions clearly lies with global policymakers."

Which is not to say that investors in their roles as activist investors do not have leverage.

"As early as 1992 ICCR members began to use their leverage as shareholders to forcefully engage the fossil fuel industry and other GHG-heavy sectors in an effort to curb emissions and forge new paths towards a green economy," the paper states.

ICCR points out that despite decades of shareowner action, companies in the fossil fuel industries fail to account for climate change in their business plans and oppose government action that introduces a carbon tax or mandates reductions in GHG emissions. Such intransigence in the face of scientific consensus has helped the fossil fuel divestment campaign begun by 350.org last year to capture the attention of so many.

But according to ICCR, shareowner engagement is the most effective way to influence corporate behavior.

"To divest is to relinquish those shares to another owner who may not be practicing active ownership," the paper states. "This approach, in effect, serves to strengthen management control. ICCR members advocate for amplifying our collective voice by bringing more shareholder advocates to the table -- that is, we support engagement."

"However," ICCR acknowledges, "divestment may be appropriate when a company with egregious practices has failed to respond to a long-term engagement or when an organization has exhausted its available resources to continue to engage a company effectively.

"If investors determine to divest as a last resort, we urge them to raise the public visibility of their decision and the reasons for it."

The paper documents the various engagement strategies and significant accomplishments of ICCR members and other sustainable investors, as well as developing strategies addressing such issues as stranded assets and the human rights impacts of climate change.

"The majority of the energy sector remains mired in its old model and demonstrates through its actions that it is in apparent denial of the terrible price future generations will pay for its resistance to reform and/or to conform to measures that can produce change," ICCR concludes. "In the absence of a more stringent GHG policy to enforce reductions, it is our responsibility as concerned investors to use our leverage to intervene wherever and whenever we can. There is no doubt that bolder, more creative strategies are required."

For many faith-based members of ICCR, "where there is disagreement, we must be in discussion to hope for resolution. For that reason, as shareholders, we remain engaged with the companies we hope to change."

The Ceres blueprint for sustainable investment will be examined in the second part of this series.

This article originally appeared at Social Funds.

Charging bull image by Stuart Monk via Shutterstock.