Is ESG Hot Air Contributing to Climate Change?
It was only a matter of time. As more and more financial institutions claim to be green or responsible or sustainable, eventually someone was going to ask them to prove it.
Recently, eight U.S. senators did just that.
The senators sent letters to the heads of eleven investment firms, asking how they managed the environmental, social, and governance (ESG) risks related to tropical deforestation.
Green Century applauds these senators for asking appropriate questions about firms’ deforestation-linked investments.
It’s equally important that individual investors start asking tough questions, too.
If we’re going to halt deforestation and address climate change before it’s too late, we need corporations to help. And investors can play an instrumental role in convincing companies to become more sustainable.
Since Green Century began pressing companies about deforestation in Southeast Asia, the number of palm oil refineries in the region covered by zero deforestation agreements mushroomed from about 5% in 2012, to nearly 75% in 2017.
We’ve also helped secure zero-deforestation commitments from key palm oil purchasers, including Conagra,* Target,* and Kellogg,* which now sources 99% sustainability certified palm oil.
Having secured these key victories in Southeast Asia, we’ve now expanded our focus to South America and the soy and cattle industries in Brazil.
Unfortunately, all of this work makes us rather unique. While a lot of other investment firms have started talking about ESG investing in recent years, far too few are actually taking action.
For example, BlackRock CEO Larry Fink has garnered a lot of attention for his public letters, where he acknowledges investors’ “responsibility to help drive this change,” but BlackRock remains the world’s largest investor in coal plant developers. What’s sustainable about that?
Rest assured, while BlackRock and those other investment firms are busy, trying to cobble together answers to the senators’ questions, Green Century’s work to halt deforestation and address climate change will continue unabated.
*As of December 31, 2018, Target Corporation and Kellogg Company comprised 0.74%, 0.00%, and 0.00% and 0.00%, 0.15%, and 0.00% of the Green Century Balanced Fund, the Green Century Equity Fund, and the Green Century MSCI International Index Fund, respectively. Other securities mentioned were not held in the portfolios as of December 31, 2018. References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or the distributor.
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Stocks will fluctuate in response to factors that may affect a single company, industry, sector, country, region or the market as a whole and may perform worse than the market. Foreign securities are subject to additional risks such as currency fluctuations, regional economic or political conditions, differences in accounting methods, and other unique risks compared to investing in securities of U.S. issuers. Bonds are subject to risks including interest rate, credit, and inflation. A sustainable investment strategy which incorporates environmental, social and governance criteria may result in lower or higher returns than an investment strategy that does not include such criteria.
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