CSRHub Blog Research on ESG metrics and comments on sustainability best practice

By Bahar Gidwani

Overview

The Green Bond concept was developed in 2007/2008 by the World Bank and Skandinaviska Enskilda Banken (SEB).  They created this fixed income product to respond to demand from investors who wanted to support projects that address climate change.  By 2010, almost $4 billion of green bonds were being issued by a variety of institutions such as the World Bank and the European Investment Bank.  Corporate borrowers began issuing Green Bonds in 2011, followed by municipalities and local governments.

https://www.climatebonds.net/market/history

The initial market for Green Bonds was with socially responsible investors (SRI), who seek to both earn a return and to generate a positive social impact.  The market’s growth has encouraged mainstream investors to participate—and has encouraged a wide array of corporate and governmental entities to initiate Green Bond-fundable projects.  With more than $36 billion of green bonds issued in 2014, they have become a distinct “asset class.”

Green Bond buyers may expect the entities who originate Green Bonds to have better social and sustainability behavior than entities who do not.  This study tests this assumption by examining the perceived social performance of a set of Thomson Reuters-tracked Green Bond issuers, using CSRHub data on perceived social responsibility performance.  We found data on the social performance for 83% of issuers on Thomson Reuters list.  Together they accounted for 99% of the $951 billion cumulative face value of the Green Bonds issued by the 90 distinct entities we reviewed for this study.

To see the full research report, download a complimentary copy here or below.

About the Author

Bahar Gidwani is CEO and Co-founder of CSRHub.  He has built and run large technology-based businesses for many years. Bahar holds a CFA, worked on Wall Street with Kidder, Peabody, and with McKinsey & Co. Bahar has consulted to a number of major companies and currently serves on the board of several software and Web companies. He has an MBA from Harvard Business School and an undergraduate degree in physics and astronomy. Bahar was recently interviewed on Brian Lehrer TV. He plays bridge, races sailboats, and is based in New York City.

About CSRHub

CSRHub provides access to the world’s largest corporate social responsibility and sustainability ratings and information.  It covers over 15,000 companies from 135 industries in 132 countries. By aggregating and normalizing the information from 400 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 improve corporate sustainability performance.

By: Carol Pierson Holding

The International Monetary Fund declared that the GDP of China has, as expected but ahead of forecasts, surpassed the GDP of the United States. MarketWatch called it a “major economic earthquake” that will “change almost everything in the longer term.”

This news has been predicted since last April, and yet it will take a while for reality to sink in. NPR travel commentator Rick Steves wrote an opinion piece in Sunday’s Seattle Times in which he stated an assumption most of us have held our entire lives and take great pride in: “There’s no question that, economically, we are firmly established on top of the world.”

But so what if we’re not number one? Nobel Prize winning economist Joseph E. Stiglitz writes in January’s Vanity Fair that economically we might end up better off. And that China probably will not crow about its achievement — “China (does) not want to stick its head above the parapet.” Wanting to be #1 is a distinctly American attitude.

Stiglitz says that the real danger is in losing our influence. In his words, “The bedrock strength of the U.S. has always rested less on hard military power than on ‘soft power’; most notably its economic influence.” The U.S. has used this soft power to lead international bodies such as the World Bank and the G20 “to pursue the economic interests of its multinationals, including its big banks.”

Those driving our economic interests have not addressed climate change with the urgency it deserves. Stiglitz calls out both American and Chinese roles in increasing carbon emissions and other forms of ecological degradation. Until the recent U.S./China climate deal, the U.S. has repeatedly denied the urgency of climate change, refused to sign treaties and retreated from funding global efforts at remediation.

Now that China can claim economic leadership, will it use its influence to lead environmental policy as well?

Harvard Business School (HBS) professor William Kirby believes China will step up. In an article for Working Knowledge, HBS staffer Christian Camerota cites Kirby’s staggering statistics for pollution in China: “Between 70 and 90 percent of the country's flora was endangered by 2008, and by 2013, around 80 percent of its major rivers were so debased that they no longer supported aquatic life. The strain (imposed by economic growth) is manifesting as sinking cities, shrinking reefs, wilting crops, and diminishing water supplies.”

As Kirby told Camerota, “Pollution is tolerable when it's accompanied by economic growth, and that's why the (Chinese) government has been so successful at doing much of what it wants with the landscape of China to date. But I think between man-made pollution and the degradation of the natural environment, we've reached a tipping point, where the government has an obligation to reverse course."

All indications are that Chinese society will not only support the leadership’s environmental efforts but push them to go farther. Across China, in hundreds of protests just in 2014, local residents, including peasants, academics and middle class families have marched against existing polluters and companies that proposed to put human health at risk.

Kirby goes on to explain another reason why Chinese society supports environmental remediation: “Nowhere in the world is the concept of family stronger than in China, and I think they will take that heavy responsibility very seriously. … A bettered natural environment would ensure healthier citizens and longer-term prosperity."

China’s new economic leadership may usher in a new era of climate and environmental effort. In fact, China might end up becoming the global leader we’ve been hoping for. China might even use its economic power to force the US to match its environmental progress. And wouldn’t that be ironic!

Photo courtesy of Leo Fung 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 10,000+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 10,000+ companies from 135 industries in 104 countries. By aggregating and normalizing the information from 365 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.

By Carol Pierson Holding

One of the more solid tenets of Big Oil dogma has always been that carbon pricing, whether a simple tax or a market-based cap-and-trade system, is terrible and conservatives must stand in unison against it. Daily Caller reporter Michael Bastach, a former Koch Institute Intern, confirmed this recently: “This vote against a carbon tax in the (American Legislative Exchange Council) ALEC meeting in Chicago … comes after Republicans in both the House and the Senate voted unanimously against a carbon tax earlier this year.”

So it was a surprise to read the December 5 New York Times headline “Large Companies Prepared to Pay Price on Carbon.” Seemed a leap from what the real news was: according to the article, Carbon Disclosure Project, now CDP, released research findings that big companies have been figuring a carbon tax into their financial models for some time.

Well, of course they have, and we knew that.

CDP itself said as much. Its 2012 report predicts that companies will act ahead of regulation: “80% of the Carbon Disclosure Leadership Index (CDLI) include climate change information in their annual reports (non-CDLI: 49%).”

Shell’s New Lens Scenarios predicted that in 2020, “emissions are heavily taxed.”

And California is implementing Cap and Trade.

The non-news “news” made the top right hand column of the New York Times front page, placement reserved for the day’s most important story. The same story seemed to appear everywhere at once, from Huffington Post’s Politics Section to Reuters and a week later, Forbes.

But still, why is this major news? And why now?

Certainly, the media has recommitted to environmental coverage. New York Times Public Editor Margaret Sullivan ended her impassioned commitment to environmental reporting with a quote from Al Gore, “The survival of human civilization is at risk. The news media should be making this existential crisis the No. 1 topic they cover.” The heat is on.

But my bet is that the news included, for the first time, the specific price per ton for carbon that each company is using. Exxon’s bet is $60; BP and Shell use $40; the lowest number is $6. CDP’s mission is to give investors data they can use to motivate companies to disclose their environmental impacts and take action to reduce them. It’s difficult for investors to make risk projections based on generalized corporate statements of intent. Much easier when the company publishes actual cost projections, as the respondents to CDP did. More than just another admission of responsibility, this is vital news for investors and confirms that CDP respondents are serious about carbon pricing.

Or maybe CDP respondents finally took a hard look at what’s actually at stake.

According to CDP, if oil and gas companies don’t come out for carbon pricing, the risk is delayed projects, further divestment pressure and, at the worst, threats to their license to operate.

Even when carbon pricing is enacted, profits will be safe. Consumers will end up paying for carbon taxes in any guise through higher energy bills, as they have in the past.

Stock prices won’t be hurt – in fact, investors like the certainty of carbon pricing. MarketWatch said of the announcement, “Big Oil is straying from conservative orthodoxy and making long-term financial plans under the assumption the government will force them to pay a price for carbon pollution as a way to control global warming — and Exxon Mobil Corp is better prepared than others to face the new expense” because of its investments in natural gas, which has lower measurable emissions.

[csrhubwidget company="Exxon-Mobil-Corporation" size="650x100" hash="c9c0f7"]

The potential opportunity from Big Oil embracing carbon pricing and accepting its responsibilities, as Exxon did in openly acknowledging to the New York Times that carbon pollution from fossil fuels contributes to climate change? A reputational turn-around that could result in higher stock prices.

The most cynical explanation for the timing of the “news” is that that Big Oil is looking at carbon prices as a distraction from the real threat that fossil fuel production will be regulated out of business. They stimulated salacious delight in exposing their actual numbers and changed front page chatter from what had been dominant, that major public funding sources from the Ex-Im Bank to the World Bank would no longer lend to coal projects. When the administration nearly doubled its internal carbon price earlier this year, energy companies immediately jumped in – to demand the calculations be open to public comment. Carbon pricing wrangling could divert the media from more important stories.

Photo courtesy of Carbon Visuals via Flickr CC.