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Can Climate Change Activists Enlist Mainstream Investors?

[fa icon="calendar'] Nov 19, 2012 2:24:01 PM / by Carol Pierson Holding

By Carol Pierson Holding

On November 7 in Seattle, 350.org launched its “Do the Math” campaign to target college and university investment funds to divest of fossil fuel stocks. While this strategy is bound to raise awareness among college kids, I initially questioned if there was enough money at stake to actually influence behemoths like Exxon.

The audience at the kick-off was not a radical crowd. Like the Keystone Pipeline protests, attendees were about half college students and half veterans of previous divestment efforts. I walked in with two such veterans, now oceanographers in their 60s.

Ticket demand in Seattle was so intense that the event had to be moved to Benaroya Hall, where 2,000 seats sold out within days. Seattle was just the first city in a 21-city tour, all of which have had similar responses. The numbers and passion should be enough to spark college divestiture. But that still begs the question: will divestiture by colleges have any meaningful impact?

College and university endowments are about $400 billion, and given the high returns in fossil fuel, most no doubt hold these stocks.

On the other side of the equation is $27 trillion, or the value of 2,795 gigatons of fossil fuel reserves identified by financial analysts at the The Carbon Tracker Initiative.

In other words, even if all university endowments held only fossil fuel stocks and every stock was divested, it’s still only 1.5% of the value of underground carbon holdings.

So the question is, where else can this movement go?

350.org is using apartheid as its forebear, but in many ways, the comparison is inapt. South African manufactured goods and natural resources, even diamonds, could be sourced from other nations. Unlike the energy industry, substitutes were already available. Even more important, apartheid is a political issue and disruption would be limited to South Africa.

With fossil fuels, life itself would be disrupted. To name just one example: oil is the heart of global transportation systems, driving the auto industry, refineries, retail gas stations, encompassing hundreds of millions of jobs around the world. As the American Petroleum Institute says in its current ads, fossil fuels = jobs, energy, growth and security.

Even these seemingly unassailable arguments have holes. As Naomi Klein said this week to Bill Moyer, right now, fossil fuel companies don’t pay for the real harm in carbon waste. Hurricane Sandy’s direct economic loss is estimated at $50 billion so far. Swiss Re put total losses from Katrina, including loss of productivity, at $250 billion. Both extreme- climate events affected jobs, energy, growth and most certainly security.

What starts with college campuses could well move on to larger sustainable investment pools. Bloomberg News reported last week that—

“Institutional investors are now employing sustainable investing strategies in more than $3.7 trillion of investments -- a 22 percent increase in two years. Hospitals, retirees, pensions, banks and religious institutions used sustainable and responsible investing (SRI) strategies for $1 out of every $9 invested in the U.S. at the end of 2011.”

And the divestiture movement could spread even beyond SRI. Colleges and SRI funds use their shareholder clout to influence the actions of companies. But Lisa Woll, CEO of SIF, the SRI industry association that reported the results, credits another less selfless reason: clients are protecting themselves against risk.

Risk plays a much more important role in today’s post-great recession investment environment. Now, indices like the Dow Jones Sustainability Index are integrated into financial and management performance analysis. Blue-chip financial media from the Financial Times to the Wall Street Journal hold annual SRI conferences. Bloomberg added sustainability metrics to its analysis. Data providers such as CSRHub provide sustainability metrics to corporate supply managers and consumers when they are making purchase decisions.

The risk of what might happen in terms of fossil fuel liability for climate disasters could start to dissuade investors, especially with students and grumpy green grandparents taking to the streets. The SIF report on SRI investments found that climate change is already an issue for 23 percent of institutional asset owners using sustainability criteria. Institutional investor assets guided by environmental concerns increased 43 percent from 2010, to $636 billion.

Still chump change next to $27 trillion in carbon assets, but we’re starting to approach some numbers that could cause hurt. And hurt forces change, not just with carbon producers but with regulators. We used moral condemnation to drive divestment of tobacco companies, even after some funds lost value due to apartheid divestiture, and regulators stepped in where they’d been reluctant in the past. Are fossil fuel companies next?

Photo courtesy of Georgie R via Flickr CC.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 6,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.


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[fa icon="comment"] 2 Comments posted in American Petroleum Institute, climate change, divest, Do the Math, fossil fuel, Katrina, university endowments, Uncategorized, 350.org, Carol Pierson Holding, hurricane sandy, SRI, The Carbon Tracker Initiative

Political Feedback Loop on Climate Change Has Just Begun

[fa icon="calendar'] Nov 5, 2012 9:49:53 AM / by Carol Pierson Holding

By Carol Pierson Holding

Scientific American ran an article in its November issue titled “Is Global Warming

Hurricane Sandy caused by global warming?

Happening Faster Than Expected?” in which the authors credit feedback loops with accelerating global warming at a rate much faster than scientists anticipated. The classic example is that global warming melts ice, reducing reflective surfaces and increasing the amount of sunlight that is absorbed by land and water, further heating the earth and melting even more ice.

Now thanks to Sandy, it looks like the U.S. could be experiencing a policy and communication feedback loop on climate change.

The environmental policy feedback loop has been negative for all of Obama’s presidency. It’s obvious that many climate deniers are aware of the hazards, but it’s also true that to change the system is a horrifically disruptive proposition, especially given the massive investments in fossil fuel industries, our chief creators of carbon emissions. The rich invest in oil and coal for their outstanding financial returns. The poor suffer through droughts and flooding.

And at first, it seemed like reactions to Sandy were going to be business as usual. Below 34th Street, the neighborhoods felt like Armageddon, with dark streets screaming with sirens and fear evident in every face on the street.

The next morning, word comes through that the power will be off for at least five more days. Without light or power, there is nothing to do. Without electricity to charge computers and cell phones, communication dries up. The feeling of fear and isolation grows.

New York Mayor Michael Bloomberg lives on higher ground, on the Upper East Side. In his world, the lights are on. Elevators work. Cafes are open. So it wasn’t that strange that in a press conference on Tuesday, Bloomberg, champion of big-city climate change policy, at first was not moved viscerally. He waffled, then bungled pronunciation when he attributed the storm to “secular or cyclical” causes. Despite his gold star record on climate mitigation, he could not use up political capital to respond to the issue directly.

Bloomberg no doubt felt compassion for those who had lost their lives or homes, but he did not feel the fear that would motivate him to address this provocative issue.

The media, having backed off climate reporting as politicians did, now insisted on linking Sandy to climate change. They started their own feedback loop, asking the questions hourly and featuring climatologists like Ben Strauss on news broadcasts, inciting each other to do more.

The politicians, who before Sandy avoided conversations about climate change like the third rail, then jumped on the issue. We watched Chris Christie, governor of New Jersey, and politicians from New York, Governor Andrew Cuomo, Senator Charles Schumer and Representative Jerrold Nadler address climate change with a new urgency.

Then, three days after Sandy, Bloomberg issued the strongest endorsement of climate change action: in an opinion piece for Bloomberg News, he credited his decision to support Obama as being, “A Vote for a President to Lead on Climate Change.” To his credit, Bloomberg “compelled all” to take action without admitting that climate change caused Sandy:

“Our climate is changing. And while the increase in extreme weather we have experienced in New York City and around the world may or may not be the result of it, the risk that it might be -- given this week’s devastation -- should compel all elected leaders to take immediate action.”

The media had a new story and the feedback loop accelerated. As Business Week’s headline of November 1 cleverly put it, “It’s Global Warming, Stupid,” replaying Bill Clinton’s 1992 campaign strategy “It’s the Economy, Stupid.” Climate change could well be the deciding issue for this Presidential election.

Activists geared up to start the feedback loop on November 7, the day after the election. Now they will feed it. 350.org will kick off a nationwide roadshow to spur a movement for divestment from the fossil fuel companies a la Apartheid. Up to now, that idea was unthinkable. But that was before Sandy.

After years of silence, the conversation that Sandy unleashed is looping back on itself, feeding a suppressed desire to do everything we can, not just to mitigate the effects of climate change but to try to slow it down. As nature has shown us, feedback loops generate energy to feed themselves and grow much faster than we imagine. Let’s hope this one will grow as fast as global warming.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 5,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on over 6,000 companies from 135 industries in 70 countries. By aggregating and normalizing the information from over 170 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.


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[fa icon="comment"] 0 Comments posted in Bloomberg, climate change, environmental policy, President Obama, Scientific American, Uncategorized, Carol Pierson Holding, hurricane sandy

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