Companies, Trade Groups, and Climate Change: Why We Need an SEC Rule on Corporate Political Disclosure
This blog post is cross posted from the Union of Concerned Scientists.
Today marks the 4th anniversary of the Supreme Court’s landmark decision in Citizens United v. Federal Election Commission. But the decision–which opened the floodgates to unlimited corporate political spending–isn’t just of interest to political and legal scholars. If you care about science-based policy, you also have a dog in this fight.
If you’ve been following climate action (and inaction), you’ll know the familiar actors known to spread misinformation about climate science and block progress on policy initiatives to address climate change.The Exxon Mobils and the Koch Brothers of the world are now household names. But in recent years, another set of players have come onto the field in a bigger way. Not corporations and billionaires butdark money groups, including trade and business associations and think tanks. Dark money groups are so called because their funding sources are unknown. Such groups have tax-exempt nonprofit status and thus, are not legally required to disclose their donors. This allows companies and individuals to fund climate-policy-blocking groups without the actions being affiliated with their name.Read more
When we started research on our new report, little did we know that Sandy would wreak havoc on its release day. But the sad fact is that storms like Sandy will become even more frequent and even more disruptive if we don't act fast to stem climate chaos.
Yesterday, Rainforest Action Network and BankTrack released our new report, Bankrolling Climate Disruption: The Impacts of the Banking Sector’s Financed Emissions, which spells out the swift action that the banking sector must take to account for and reduce its biggest impact on the climate: the emissions it finances. You can also read our blog post on the report here.
Many people in the asset management industry are convinced that climate change is caused by human actions, but few are actually managing money in line with that belief.
A new initiative from Australia, the Asset Owners Disclosure Project, has so far failed to gather support for its suggestion that asset owners such as pension funds and endowments should be transparent on what they are doing about climate change.
Read the whole article on the FT website.
This Sunday is the final day to register for PowerShift 2011, a conference sponsored by the Energy Action Coalition (a partner group of REC), dedicated to furthering the youth climate movement. The conference has taken place every other year since 2007. At the inaugural PowerShift, political leaders like Nancy Pelosi and Van Jones addressed the crowd of over 6,000 promoting economic and environmental justice with the creation of millions of “green jobs.” Students left the conference and began organizing politically around green-collar jobs and clean energy, looking toward the 2008 elections. However, the momentum did not stop there. In 2009, a group of 12,000 members of the movement got together in Washington, DC to discuss, learn, and create campaigns to bring back to their communities. Here, thousands of students engaged in the Capitol Climate Action, successfully shutting down Washington DC’s coal-fired power plant.
This year students, organizers, entrepreneurs, workers, youth from all walks of life reconvene once again. This time the goal is to create a comprehensive strategy that will be able to be implemented by attendees across the country. The focus will be much more centered on movement building than ever before, working on three main campaigns: “Catalyzing the Clean Energy Economy,” “Campus Climate Challenge 2.0,” and “Beyond Dirty Energy.” Attendees will attend workshops to gain the skills necessary for launching these campaigns on their campuses and in their communities.
The Responsible Endowments Coalition is just one of 50 partner organizations involved with the Energy Action Coalition (EAC), promoting social, economic, and environmental justice. However, most of these organizations are more traditional environmental groups, organizing campaigns around clean energy on campus or creation of green jobs, REC has a slightly different and complimentary approach. While the work of the EAC on the ground is vastly important to the success of the youth climate movement, REC likes to hit people where it hurts: their wallets. REC campaigns on university campuses have the potential to shift large millions of dollars away from destructive environmental practices and towards alternative energy. Institutional investors have successfully filed resolutions to work towards a cleaner future with banks and companies including JP Morgan Chase, XTO Energy, ExxonMobil, and ConocoPhillips. Universities are institutional investors and can have the same power when filing a resolution to promote alternative energy. Most notably, in 2010 Loyola University of Chicago filed a resolution with JP Morgan Chase concerning financing of mountain top removal, an extremely environmentally hazardous form of coal mining in Appalachia.
Climate change is a real problem that can only be stopped by us. We need people on the ground demanding for green jobs, reduced carbon emissions, and clean air and water for all. But we also need people on campuses pressuring their universities to take a stand with their money, using their considerable wealth to say to the corporations practicing mountain top removal and offshore drilling, pumping our air full of dangerous carbon emissions that they need to give us something better. So join REC and the EAC at PowerShift 2011, This could very well be the 11th hour.
For more information and to register for PowerShift 2011 visit http://www.powershift2011.org.
REC just released a companion guide to the Sustainability Tracking Assessment and Rating System (STARS) sustainable investment section. REC is a partner on the rating system and wants to ensure that all universities understand how to answer the questions and learn from the process. This guide is available in the “Additional Resources” Section of the STARS Reporting Tool website as well as in the Handbooks section of the REC website. In addition to the guide there is a Worksheet tool that helps schools arrive at the answers needed for the survey. The list of STARS institutions is available here.
According to the STARS Technical Manual the point of the investment section is to:
This subcategory seeks to recognize institutions that make investment decisions that promote sustainability. Most institutions invest some of their assets in order to generate income. Together, colleges and universities invest hundreds of billions of dollars. Schools with transparent and democratic investment processes promote accountability and engagement by the campus and community. Furthermore, institutions can support sustainability by investing in companies and funds that, in addition to providing a strong rate of return, are committed to social and environmental responsibility. Investing in these companies also supports the development of sustainable products and services. Finally, campuses can engage with the businesses in which they are invested in order to promote sustainable practices. (STARS Technical Manual, Investment section)
The introduction to the guide states:
As a member of the STARS Technical Advisor Work Group on investments and the executive director of a group that works with colleges and universities on responsible investment, I’ve seen a variety of concerns expressed by people at different institutions about how to best answer the questions in the Investment section of STARS, both being honest and scoring the points that they deserve. This section has confused people for different reasons, from difficulty evaluating investments to lack of understanding of a Committee on Socially Responsible Investment or as we call it, a Committee on Investor Responsibility (CIR).
In this document I hope to answer many of the questions that people have and clarify the scoring system.
Check it out!
In May 2010, Middlebury College announced that it has designated a portion of the endowment to be actively invested in environmentally responsible companies. “The Sustainable Investments Initiative” was created with $4 million from Middlebury and an additional $35-70 million from The Rockefeller Brothers Fund.
For Middlebury, the Initiative reflects an effort to have the college’s investment strategies be consistent with its institutional values. The college’s mission statement refers to a commitment to integrate “environmental stewardship” in both curriculum and practices. Though the school’s on-campus efforts—carbon neutrality by 2016, biomass plant, recycling center, organic garden—have gained it a national reputation for environmental responsibility, as of the start of 2010, the endowment had not yet incorporated these values.
The Sustainable Investments Initiative represents a significant shift in college’s investment strategy. For the first time in the college’s history, rather than judging the success of an investment exclusively by its financial performance, this fund will be monitored for environmental impact as well. This shift is inspired by a hope that investing in environmentally sustainable initiatives will eventually become a standard investment practice. Some predict that investing this way in the future will actually yield higher returns as environmental issues continue to become more salient across the globe.
In the official press release for the fund, Middlebury College’s President Ron Liebowitz is quoted, “We are pleased to be involved in this new initiative. We’re excited at the prospect of an initiative whose performance can further our educational mission while providing social and environmental value.”
While the creation of the fund is certainly a significant first step, there are still many questions left unanswered. What kind of criteria should be used to evaluate companies in the fund, what the returns from the fund will be spent on, and how the fund will be monitored are just a few of these.
The students at Middlebury College hope that this Initiative will serve as a model for the rest of the endowment, providing an opportunity to test this investment strategy. It is also their hope that this fund will serve as inspiration to other education institutions to evaluate how their own values are reflected in their endowment investments.
For the Responsible Endowments Coalition, this fund hopefully represents the beginning of a trend—school communities coming together to determine the values they hold in common and then applying those a their endowment, a vehicle for change with incredible amounts of untapped potential.
I feel lucky that something really interesting on campus fell into my lap, so my first blog post will be somewhat more interesting than “people came to the meeting.” The upcoming event will be a great opportunity for spreading awareness about endowment issues at WashU. We were planning to do an education and networking activity at about this time in the semester, so we are excited about this turn of events.
But I suppose, I should tell you what’s going on, rather than continue to babble. WashU’s local environmental group, Green Action, is putting on the Climate Solutions Forum, and they have invited Students for Endowment Transparency to participate. The impetus came when, last semester, two new board members were chosen. And they are (get ready for this) the CEOs of Peabody Coal and Arch Coal! A less than savory duo to say the least. Peabody is the nation’s largest coal company, and Arch is not for behind. Both make extensive use of the destructive Mountaintop Removal process in Appalachia, and then ship it into Missouri on a daily basis (despite the fact that the northern Plains of Missouri are a great place to put Wind Turbines that are closer to home). At the same time, WashU decided to create the Clean Coal Consortium. This made it clear that WashU administrators did not hold Green Energy in high esteem, and would cling to Fossil Fuels. It was also dressed up in the marketing term “Clean Coal”, to protect their image. This creation, in conjunction with the new Coal Execs on the Board, spurred Green Action toward protest. Our campaign has been allied with that movement from the get go.
So the Climate Solutions Forum is the latest development in Green Action’s campaign for WashU to abandon Fossil Fuels, and become a leader in renewable energy. It was planned to match with the coming of the Coal Execs to campus and the latest development of the Clean Coal Consortium (October 2nd-4th). They’re trying to push Carbon Sequestration as “the way of the future”.
The Forum, however, will show where the future really lies. First, we are going to show up at their main event, a big fancy dinner in which an Obama administration official will be addressing personnel from WashU, Peabody, Arch, Ameren UE (our local electrical provider) and several other St. Louis corporations. We will wearing T-shirts and carrying signs that say “Stop Ignoring Our Climate Future” and other statements along those line. Mind you, we plan to be quiet and undisruptive (even CEO’s have free speech rights), but we will be noticed.
Part Two will come on the heels of this attendance. Green Actions is planning a series of workshops at WashU, at which students, faculty, and even the administration and CEO’s may attend, where they will hear all about the many simple paths we have available toward making a Green Energy future. It is to lay out for all to see, it isn’t that the corporations can’t do it. It’s that the won’t do it. Hence the theme, “Stop Ignoring”.
Anyway, Students for Endowment Transparency is going to giving a workshop/teach-in (whatever you would call it) on the Endowment Process and Socially Responsible Investment. We look forward to showing the environmental benefits of establishing a Committee on Investor Responsibility. The teach-in will show that Green Action could use the Endowment to further WashU’s environmental commitments, by voting proxies on corporate sustainability, screening for solar panel companies and away from oil, and the like, giving them another prong upon which to lead their efforts. All of the progressives at WashU, myself included, are looking forward to the Climate Solutions Forum. And I must say, all in all, WashU is clearly becoming a much more exciting place than when I started.
Around the world, people are debating how to regulate emissions to stop climate change. On Capitol Hill, Democrats and Republicans are engaged in an on going battle. I believe, strongly, that no widely accepted proposal that has been offered to date goes nearly far enough to create the transition to a carbon-neutral economy. Much of the ongoing debate, on both sides, talks instead about balancing the economic costs of regulating greenhouse gas emissions.
Both sides in the political debate talk about ensuring that we don’t hurt our economy while implementing policies to prevent climate change. Companies, on the other hand, are spending millions of dollars lobbying to prevent a real, comprehensive climate-change and energy bill, often claiming that climate change doesn’t exist or is man-made.
In our work with shareholder advocates like CERES, the Responsible Endowments Coalition often encounters companies saying that they are trying to reduce their greenhouse gas emissions but that any major change should be left up to the government, while at the same time lobbying against regulation. Many companies also say that they are prepared for the risks that are posed by climate change.
The first statement may be true. The latter is patently false. Almost no company is prepared for the risks of climate change. Similar to the country itself, they may be prepared for climate change regulation, but not the dramatic outcomes of climate change itself.
The risk of climate change, like that of nuclear weapons, is existential in nature. We may spend decades talking about addressing climate change without actually taking action. There is a chance that we will be fine, but there is a good chance that we will not.
A False Choice
One thing is crystal clear, as with company risks, the choice between our economy and preventing climate change is a false one. While some can say that regulation may hurt the economy, the truth is that no regulation at all will kill it, and, there is a slim chance, also kill every one of us.
Almost everyone that cares about these issues hopes that the science proves wrong. But most evidence points in the opposite direction. While the effects are currently unknown, climate change is a risk we cannot ignore. Like we do in many things from government spending to waste, we risk mortgaging our future generations.
The only real choice is to move to a clean energy economy, based primarily on incredible reductions in greenhouse gas emissions. Whether we regulate or not, we face major changes to our economy. We must not make a bet on ten years of positive economic growth in exchange for the future of the planet. We also must not count on our ability to overcome the effects of climate change and leave many with less resource than us, in the Global South and elsewhere, to suffer.
At risk of being cliché, following the words of one of the founders of Earth Day, Senator Gaylord Nelson, who called for a “nationwide grassroots demonstration on behalf of the environment.” Remember the original spirit of Earth Day. Don’t just go outside. Rise up and take a stand against the corporations fighting to continue polluting and fight for meaningful legislative action now.
Join the Responsible Endowments Coalition, the Energy Action Coalition, and all of its member groups as we work to make changes that will protect our people and our planet for years to come.