Wall Street’s top regulator will vote on March 6 on whether to adopt rules requiring U.S.-listed companies to report climate-related risks, the agency said in a notice on Wednesday, in a potentially major overhaul of U.S. disclosure rules.
The Securities and Exchange Commission rules aim to standardize climate-related company disclosures about greenhouse gas emissions, risks and how much money they are spending on the transition to a low-carbon economy. The agency says that such information is important for investors.
The imperatives of climate change demand enhanced risk management in the commercial real estate (CRE) loan market: Investors and lenders must refine their strategies and conduct meticulous property-level risk assessments as part of their credit analysis. Community and regional banks are particularly susceptible to climate-related financial risk due to their CRE loan balance sheet exposure and must navigate unpriced climate risks to ensure balanced and resilient loan portfolios. To maintain portfolio health and overall stability, these institutions must exercise ongoing vigilance in their risk monitoring.
Exxon MobilXOM -0.16%decrease; red down pointing triangle is suing two sustainable investment firms in a bid to block them from putting forward a shareholder proposal that would commit the oil company to further curb its greenhouse-gas emissions and target its customers’ emissions.
In a federal lawsuit filed in Texas on Sunday, the Houston-based oil giant said investment firms Arjuna Capital and Follow This became Exxon shareholders only to put forward proposals that would “diminish the company’s existing business.”
U.S. sustainable funds had their worst calendar year in 2023, according to Morningstar, which has been tracking them for more than a decade.
Investors pulled $13 billion from U.S. sustainable funds in 2023, including $5 billion in the fourth quarter alone, due to a combination of lagging performance, politics and one iShares fund’s bad year.
Marquette was delighted to host executives and corporate leaders from companies and investment firms from across the country on October 24 at its annual Sustainability 2.0 Conference.
The event garnered its largest attendance ever.
Experts from around the world came together to discuss the challenges and opportunities facing organizations for a sustainable economy, now and in the future.
The Marquette University Sustainability Lab is a cross-disciplinary project that aims to research and disseminate knowledge, foster and develop managers around effective sustainability and stewardship practices increasingly demanded across industries globally. Our lab aligns with the university’s commitment to the Laudato Si’ papal encyclical and furthers our Catholic, Jesuit mission to care for our common home. Through instructional opportunities that span business, the STEM fields, the humanities and more, the Sustainability Lab provides students with the knowledge they need to Be the Difference.
Housed in finance and the college of business, the S-Lab is interdisciplinary across the university including the Office of Economic Partnerships, supply chain management, communications, engineering, the natural sciences, the Women’s Leadership Institute, the law school and the Center for Peacemaking.
Its purpose: to research, educate and bring together this generation of sustainability leaders.
Marquette has long been recognized as a leader in sustainability. The university hosts the “Sustainability 2.0” Conference every fall, bringing together business leaders and executives from investment firms, public and private companies and NGOs for the largest regional conference on the issue. Our ESG (environmental, social and governance) courses are, likewise, unique among Midwest universities, designed with the future of corporate behavior in mind. Finally, the university itself is a recipient of the Princeton Review’s “Green College” designation and is recognized as one of the country’s most sustainable campuses.
Co-director, Dr. Christopher K. Merker, had this to say on the Lab and the critical importance of sustainability on present and future business performance: “Our goal is to help people understand and adapt to the world that’s changed around them. Those who undertake this successfully will be prepared to handle the strategic issues around sustainability, whether as an investor or as a business manager.”
Answer: “Yes, it is critical that we address climate change. Climate change is a global crisis that poses significant threats to our planet and our way of life. It is caused by human activities such as burning fossil fuels and deforestation, and it leads to a wide range of harmful impacts, including rising temperatures, sea level rise, extreme weather events, and loss of biodiversity. If we do not act to address climate change, the consequences will be severe and long-lasting, affecting not only our generation but also future generations. Therefore, it is essential that we take action to reduce greenhouse gas emissions and transition to a low-carbon economy through policies, innovations, and individual actions. By working together, we can mitigate the effects of climate change and ensure a sustainable future for ourselves and future generations”
Followup question: “Can sustainable finance help solve climate change and if so how?”
Answer: “Yes, sustainable finance can play a significant role in addressing climate change. Sustainable finance refers to financial activities that support sustainable development and the transition to a low-carbon economy. By directing capital towards sustainable investments, sustainable finance can help to reduce greenhouse gas emissions and mitigate the effects of climate change. There are several ways in which sustainable finance can contribute to addressing climate change: Encouraging investments in renewable energy: Sustainable finance can help to direct more capital towards renewable energy such as solar and wind power, which can replace fossil fuel and reduce greenhouse gas emissions. Supporting energy efficiency: Sustainable finance can also help to fund energy efficiency projects, such as building retrofits and energy-efficient appliances, which can reduce energy consumption and greenhouse gas emissions. Promoting sustainable agriculture and forestry: Sustainable finance can support investments in sustainable agriculture/forestry, which can help to reduce deforestation, conserve biodiversity, and promote sustainable land use practices. Encouraging companies to reduce emissions: Sustainable finance can encourage companies to reduce their greenhouse gas emissions by linking financing to environmental, social, and governance (ESG) criteria. Facilitating the transition to a low-carbon economy: Sustainable finance can help to finance the transition to a low-carbon economy by supporting research and development of new technologies, such as carbon capture and storage and electric vehicles. Overall, sustainable finance can play a crucial role in addressing climate change by directing capital towards sustainable investments and promoting the transition to a low-carbon economy”
Maybe ask it questions you have for yourself and your family
2022 is wrapping up on many levels as the most challenging year financially since the Global Financial Crisis, geo-politically since 9/11, and politically since the McCarthy years, when the country was divided over fears of a fifth-column, communist invasion.
One casualty in this bubbling cauldron of uncertainty has been what has become known in the past few years as ESG investing. 2022 marked the first year of negative outflows in over a decade with investors pulling $13.2 billion out of ESG funds through November 2022, according to Lipper. Even when considering the broader universe of fund outflows this year, ESG outperformed and not in a good way.
The secular headwinds are obvious at this stage: in Europe the Ukraine War and the implosion of its energy market. In the U.S., rampant inflation. In the emerging markets, the insidious and growing activism of authoritarian regimes on the world stage, namely China, Russia, Iran and North Korea.
Certain factions in the United States have seized on this backdrop of uncertainty and placed a portion of the blame on the ESG movement, characterizing it as woke, damaging to the middle class and harmful to the economy.
Exhibit A: Blackrock has seen over $2 trillion in assets flow out, particularly from a wave of public pensions that have fallen under state legislation banning ESG investments.
Exhibit B: Vanguard announced recently its intention to back away from the NetZero Alliance to address “confusion” over its ESG positions as a leading indexer.
While a political backlash in the U.S. seems to be the norm these days on just about any issue, this has marked a sea-change in the ESG movement, just as the SEC pursues stronger mandates to enforce greenwashing claims.
This has no doubt made for a tougher business environment for ESG investing.
All that being said, beneath the subterfuge is real underlying progress developing, and it is happening in the places that matter most: companies. A confluence of rationalization happening at the ESG standards level, in the form of the International Sustainability Standards Board, combined with pending rules on SEC climate-related financial disclosure has lit a fire, and companies are not backing away.
Data science is leading the way, and companies that are measuring are finding that they can also manage. Capital markets will remain part of the equation, providing some additional carrots and sticks, but the real traction will only happen with companies that find ways to innovate ourselves into a new carbon pathway, as one example.
This is also I think bringing some new life to the whole rationale where I think ESG as an investing experience has found itself marooned. For too long investment managers have fallen back on this idea that ESG is a risk management exercise. This may be true, and certainly can be argued, but it only carries us so far. People wanting to do the right thing and have a passion for doing the right thing, is where the whole idea of good corporate citizenship started. ESG investing has failed with investors who thought this concept could be simply rationalized and outsourced. As we are finding out, doing sustainability is a roll up the sleeves activity that is best placed when as an integral part of doing business.
