Wall Street’s Climate War Intensifies With New Weapons

Global-warming activists are giving investors new tools to pressure companies or even divest outright.

A man stands next to the bronze bull symbolizing financial markets near Wall Street in lower Manhattan November 2, 2010 in New York City. The Dow Jones industrial average rose as investors awaited the results nationwide elections, putting the average near its highest point this year. (Photo by Chris Hondros/Getty Images)
National Journal
Ben Geman
June 30, 2014, 5 a.m.

An act­iv­ist group on Monday un­veiled a new tool for keep­ing tabs on what com­pan­ies are — and aren’t — dis­clos­ing about risks they face from glob­al warm­ing.

The in­vestor ad­vocacy group Ceres has launched a search­able data­base of what 3,000 large cor­por­a­tions say about cli­mate change in an­nu­al re­ports to the Se­cur­it­ies and Ex­change Com­mis­sion.

The Ceres tool is fresh evid­ence that share­hold­er act­iv­ism is play­ing a grow­ing role in battles over cli­mate change. The new data­base looks at fil­ings from com­pan­ies in the Rus­sell 3,000 in­dex of the largest U.S. cor­por­a­tions, but users can also look more nar­rowly at the S&P 500.

Act­iv­ists say that in­vestors should have more in­form­a­tion about how pub­licly held com­pan­ies may be af­fected by fed­er­al and state cli­mate and en­ergy policies, as well as the phys­ic­al risks that cli­mate change cre­ates for busi­nesses from threats such as rising sea levels and severe weath­er.

“For mar­kets to prop­erly ac­count for rising cli­mate-re­lated risks, in­vestors need in­form­a­tion on how com­pan­ies re­cog­nize and man­age those risks. This tool helps to make that en­ter­prise far easi­er for in­vestors in­ter­ested in un­der­stand­ing and man­aging cli­mate risk,” said Ju­lie Gorte, seni­or vice pres­id­ent for sus­tain­able in­vest­ing at Pax World, a com­pany that spe­cial­izes in green in­vest­ing.

In 2010, the SEC re­leased guidelines for how com­pan­ies should be ac­count­ing for cli­mate-re­lated risks in their fil­ings with the reg­u­lat­ors. But ac­cord­ing to Ceres, the re­port­ing has been spotty and of­ten curs­ory, and the group says the SEC hasn’t done enough to put teeth in­to the dis­clos­ure re­quire­ment.

Ac­cord­ing to Ceres, only half of the Rus­sell 3,000 filers ad­dressed cli­mate change in their an­nu­al re­ports.

“Ro­bust cli­mate-re­lated data from com­pan­ies is a crit­ic­al need, but it’s still lack­ing,” Ceres Pres­id­ent Mindy Lub­ber said in a state­ment. “This tool is an im­port­ant step in mak­ing it easi­er for in­vestors to ana­lyze cor­por­ate data that’s avail­able and what’s still miss­ing.”

While Ceres or­gan­izes in­vestors to push com­pan­ies on cli­mate and sus­tain­ab­il­ity, a sep­ar­ate group of act­iv­ists is wa­ging a cam­paign that presses uni­versit­ies, cit­ies, and oth­ers to di­vest their hold­ings from fossil-fuel cor­por­a­tions.

And that brings up an­oth­er new de­vel­op­ment: Thursday af­ter­noon brought the launch of the Fossil Free In­dexes US, which meas­ures the per­form­ance of a ver­sion of the S&P 500 that ex­cludes large oil, gas, and coal com­pan­ies.

“We’re primed to give in­vestors a unique op­por­tun­ity to in­vest in the broad mar­ket while avoid­ing the in­creas­ing risk of long-term in­vest­ment in fossil fuels,” said Stu­art Bra­man, CEO of Fossil Free In­dexes, which has worked with 350.org, one of the act­iv­ist groups be­hind the di­vest­ment move­ment.

Fossil Free In­dexes has tracked the per­form­ance of its in­dex against the S&P 500 — which is made up largely of U.S. com­pan­ies — go­ing back a dec­ade.

“Over the 10 years end­ing 5/30/14, the cor­rel­a­tion between re­turns on FFI­US and the S&P 500 has been very high, sug­gest­ing that in­dex in­vestors need not sac­ri­fice re­turns when choos­ing not to in­vest in the biggest car­bon re­source com­pan­ies,” the com­pany said in an­noun­cing the new in­dex.

It’s the second such in­dex to launch in re­cent months.

In late April the U.K.-based in­dex pro­vider FTSE Group, the wealth-man­age­ment com­pany Black­Rock, and the Nat­ur­al Re­sources De­fense Coun­cil un­veiled the ex-Fossil Fuels In­dex Series, which is a glob­al set of in­dexes.

Bra­man, the founder of the new­er in­dex launched last week, said it’s a way to provide to provide op­tions for “in­sti­tu­tions and in­di­vidu­als to help pro­tect the plan­et along with their in­vest­ments.”

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