“Mutual fund companies have a fiduciary duty to vote in the best interest of their clients, but in the case of climate change, many are not doing so,” said Mindy Lubber, president of the sustainability advocacy group Ceres, which commissioned the analysis. “The dearth of support by industry giants – American Funds, Fidelity and Vanguard – is especially disturbing.”

“Most large companies face significant climate-related risks, including physical and regulatory impacts, but many are ignoring them,” Lubber added. “Shareholder resolutions are a key mechanism for shareholders to strongly encourage companies to disclose these risks and actions for managing them.”

A growing number of institutional investors – many of them part of the Investor Network on Climate Risk comprised of 100 institutional investors collectively managing about $10 trillion in assets – have publicly signaled that they view information about climate change risks as material to their investment decisions.

Many of these same investors filed dozens of shareholder resolutions in 2011 and 2012 requesting that companies disclose climate risks and strategies for managing those risks. Among those are the New York State and New York City Pension Funds and the California State Teachers’ Retirement System (CalSTRS), which together filed or co-filed 17 climate-related resolutions in 2011. All told, the Ceres study tracked 111 resolutions filed with 81 U.S. and Canadian companies during the 2011 proxy season on climate change and related sustainability issues.

In 2010, the U.S. Securities and Exchange Commission issued formal guidance requiring publicly traded companies to disclose material climate risks in their financial filings.

Although American Funds’ proxy voting guidelines call for a case-by-case voting strategy on issues such as climate change, the firm voted against every single climate-related resolution filed in 2011 with companies held in its mutual fund portfolios, according to the new analysis done by Jackie Cook of Fund Votes.

Fidelity abstained on 89 percent of the resolutions and voted against 11 percent even though its proxy voting guidelines state that abstentions are used mainly when information on economic impact is lacking. Yet there is a great deal of financial and analytical information available on the impacts of climate change and climate risk management strategies from highly respected institutions such as Deutche Bank, Generation Investment Management, and many others.

Vanguard’s 88 percent abstention rate (12 percent against) reflects a policy of deferral to corporate management on such issues even though Vanguard’s proxy voting guidelines call for action where an issue can have “a significant, tangible impact on the value of a fund’s investment and management is not responsive to the matter.”

“The movement over the last few years by Fidelity and Vanguard from voting against all shareholder resolutions related to climate change to abstaining on most is a very small step in the right direction,” Lubber said. “But it also a very passive strategy that simply defers responsibility to management. These mutual funds should be leveraging their influence to ensure the companies they invest in are taking their climate-related risks and opportunities seriously, and disclosing material climate-related information to their shareholders. As fiduciaries for their customers they have an obligation to do better.”

In some cases, according to the Fund Votes analysis, mutual fund voting is misaligned with the firms’ publicly stated positions on issues related to climate change. For instance, signatories to the Principles for Responsible Investment (PRI), BlackRock and AllianceBernstein supported less than five percent of climate-related resolutions on which they voted in the 2011 proxy season. PRI signatories publicly endorse six PRI principles, including Principle 2, which states:  “We will be active owners and incorporate environmental, social and governance (ESG) issues in our ownership policies and practice,” including proxy voting.  The preamble to the principles states “…we believe that ESG issues can affect the performance of investment portfolios…”

Another example of misalignment is between Fidelity’s voting record and its recent on-line advertisements featuring water scarcity and ‘peak water’ as a key investment theme. Despite these ads Fidelity failed to vote for a single water-risk-related resolution that was part of the study.

Though the proxy voting record of the Big Three is lacking, many large fund companies do have proxy-voting records that show strong concern for the financial impacts of climate change. Some have voted in favor of more than 50 percent of shareholder climate-related resolutions at large US corporations (See Appendix 1 below for specific voting records). Firms with the best voting records in 2011, all supporting more than half of the climate resolutions, were: TIAA-CREF, Wells Fargo, Fifth Third, Credit Suisse, Oppenheimer, GMO and Delaware.

Appendix:

Percent of votes cast ‘for’ and abstained by 44 Large Mutual Fund Families on 2011 climate-related resolutions

About Ceres

Ceres is an advocate for sustainability leadership. Ceres mobilizes a powerful coalition of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Ceres also directs the Investor Network on Climate Risk (INCR), a network of 100 institutional investors with collective assets totaling more than $10 trillion.

For more information, visit http://www.ceres.org and http://www.incr.com.

This report originates from a convening of water providers, finance experts and NGOs in August 2011, as part of The Johnson Foundation’s Charting New Waters. With support from the Russell Family Foundation, Ceres and American Rivers were able to continue that dialogue in a series of interviews. This document is an attempt to distill those ideas into a set of high‐priority, high‐impact strategies that can be jointly pursued by the many stakeholders who have a stake in shaping a more prosperous water future.

Though Congress failed to renew the tax credit, clouding the future of America's wind power industry, businesses are again working to revive the PTC before it expires in December.

A new business voice is emerging in Washington to reshape America's energy future along a cleaner path. With more aggressive lobbying, nitty-gritty involvement in drafting legislation and bucking the business status quo represented by the US Chamber of Commerce, these companies are engaged in Herculean effort to turn the nation away from fossil fuels embedded in the economy and politics.

The strong business case for expanded renewable energy production is only part of what motivates Starbucks, Levi Strauss and others. All see a larger picture: we cannot build the healthy, sustainable global economy that powers their businesses long-term without addressing major economic threats such as climate change and natural resource scarcity. Success will require comprehensive state and national policies that encourage clean energy and drastically cut greenhouse gas emissions. In the US, these policies are sorely lacking.

Most of the signatories to the PTC letter are members of Business for Innovative Climate & Energy Policy (BICEP), an initiative formed to give business a voice on 'green' issues in Washington. Its members range from well-known food and apparel companies such as Clif Bar and Nike to the Portland Trail Blazers professional basketball team, eBay and many others.

Corporate involvement in the policy arena is nothing new, of course. Businesses have always been quite adept at pursuing their self-interests through the political process, as the oil and gas industries - current beneficiaries of billions in tax breaks - clearly show.

What is new is that so many companies now believe sustainability goals such as environmental protection, reduced reliance on fossil fuels and development of renewable energy are good for the planet and for business. Polar opposites, in other words, from the US Chamber of Commerce and others who see virtually all regulations that impact corporate behaviour as bad for business.

"We reject the notion that climate and energy legislation is going to be costly," said Stonyfield Farm founder Gary Hirschberg, one of BICEP's earliest supporters who joined 500 business executives in Washington to support climate legislation in 2010. "Climate action offers economic opportunity rather than economic penalty."

More than ever, the voices of businesses like these are being heard.

Last year, a senior executive at apparel company Timberland testified before Congress on efforts by House Republicans to limit the US Environmental Protection Agency's (EPA) authority to curb greenhouse gases and other air pollutants. "Preventing EPA from exercising its authority, or rolling back any of its actions, would cost the economy in human health, in terms of illness that often results in lost work days, and more," she told the House Energy and Commerce Committee. The rollback effort subsequently failed.

Corporate sustainability activism is also reaching beyond Washington to the state level. BICEP companies played a leading role in fending off a repeal of California's landmark climate law. They also led in advocating for stronger national automobile fuel economy standards - now set to go into effect this fall.

In other regions, corporations are working hand-in-hand with lawmakers to encourage clean energy development. When BICEP member company eBay wanted to use clean solar energy to power an expanded data centre facility in the state of Utah, it required a change in state law. Together with Rocky Mountain Power, the state's largest electric utility, other high-tech companies such as Google and Oracle, and a Republican state senator, they crafted legislation this spring to make renewable energy available to large energy users and create a real alternative to coal-fired generation. That legislation is now law.

"I'm looking for choice in a state, and if I want clean power I want to be able to get it. That's what this law does," said eBay's global data centre strategy director Dean Nelson, who is already planning to build a second data centre and add nearly 2,200 new jobs in the state. The law will also help eBay diversify its energy portfolio, providing a hedge against volatile fossil fuel prices.

Other businesses are flexing their muscles in different ways. Aspen Ski Company, a major ski area operator facing shorter ski seasons as global temperatures rise, is taking on the US Chamber for its resistance to climate change policies. Last month, it led a successful effort to have the Aspen Chamber of Commerce disassociate itself from the national organisation.

Although many companies are disheartened by the current dysfunction in Washington, one former US Department of Energy official recently appealed for businesses interested in clean energy policies not to disengage.

"Please do not abandon Washington," former US Department of Energy official Cathy Zoi recently told an audience convened by Fortune magazine. "This is important…because you guys are thinking about reliable, affordable electricity, and Washington needs to know that you care about it."

Even today, with a presidential race slowing national policy-making to a crawl, companies like Levi Strauss see opportunities for positive action.

"In an election year…companies should use this time to create a foundation of support for when the policy environment is more ripe for action," Anna Walker, senior manager of government affairs and public policy at Levi Strauss, told an audience in Boston last week.

"Like the Chinese proverb of a thousand cups of tea, this is an opportunity to build relationships with policymakers, to tell your story, and strengthen alliances with like-minded companies and organisations," Walker added. "In a time when big action won't happen, those smaller actions - those cups of tea - can help secure change for the future."

Risk comes in different forms, and there are times when business as usual becomes a risk in itself. America’s electric utilities are approaching just such a moment.

Across the country, a generation of power plants and transmission systems is aging and needs to be replaced. At the same time, rules on pollution and greenhouse gas emissions are tightening. Clean energy technologies are getting cheaper and gaining market share. These shifts coincide with record spending: Utilities are expected to make $2 trillion in capital investments over the next 20 years – about double their recent spending rate.

How to move forward in this complex, risky environment? That’s the subject of a new report from Ceres, Practicing Risk-Aware Electricity Regulation: What Every State Regulator Needs to Know.

The industry experts who wrote the report analyzed a range of investment decisions utilities could make over the next two decades – decisions that will determine which utilities prosper and how their shareholders, ratepayers, and the wider society will be affected. The economic as well as environmental stakes are high.

Just ask Progress Energy. In 2009, the utility began collecting money from its Florida customers to build a new nuclear power plant for 2016 at an expected cost of $4-6 billion. The company’s latest estimates: $24 billion to build the plant for 2024. That’s a huge bill to saddle customers with, especially given cheaper and less risky alternatives.

Avoiding such outcomes is exactly the subject of this report. Building big nuclear or fossil-fueled power plants is getting riskier and more expensive, and it’s no longer the default. For regulators, playing by yesterday’s rules won’t work. That’s why the report calls for regulators to take a “risk-aware” approach to deciding what utility investments most benefit society while earning a fair return for utility shareholders.

Using comprehensive analysis, the report authors rank power sources by cost and risk. Nuclear power, for example, ranks roughly in the middle of the pack on cost (or at least it did before last year’s disaster in Fukushima, Japan). But it is far and away the most exposed to risk, which is why new nuclear plants (such as the one Progress Energy is planning in Florida) can cost five times initial estimates. Beyond cost overruns and delays, the nuclear industry’s ongoing waste disposal problem and the effect of accidents like Fukushima cannot be ignored.

The report also finds coal-fired power plants to be among the riskiest options, with natural gas-fired plants not far behind. And significant questions remain about carbon capture and storage (CCS) technology, which coal and gas-fired plants will require under a future carbon policy. The liability that attaches to long-term maintenance and storage of stored carbon could represent a serious material risk.

The good news is that there’s a far less risky, less expensive option than nuclear or fossil-fueled power plants: energy efficiency. With increased efficiency, risks like construction delays, fuel price hikes and pollution control costs aren’t an issue. The cheapest power plant is one a utility doesn’t have to build.

But investment in energy efficiency will require regulatory adjustments. As long as utilities make money solely from the power they sell — and not by helping ratepayers use less energy — efficiency will be relegated to the sidelines.

Other low-risk and low-cost options identified in the report include renewable resources like wind, geothermal and biomass. In general, renewables come out ahead.

The report amounts to a strong call for state utility regulators to be more engaged and forward-looking in approving utility investments. Just like diversifying an investment portfolio, diversifying energy sources to include efficiency and renewables, fossil and non-fossil generation, and a mix of supply and demand-side strategies is key for utilities and those that depend on them.

For an industry facing sweeping new forces and major transformative change, the real risk lies in building the next generation’s infrastructure using yesterday’s technologies and business models.

“Last Call at the Oasis” does far more than recount the alarming woes of our country’s most water-stressed regions; it’s a beautifully produced, detailed picture of an immense global crisis bearing down on us as we speak – and thankfully a roadmap of sorts to what we can do about it.

I hesitate these days to even string together words like “immense global crisis” – there’s much crisis fatigue, and so many people and issues screaming for our attention.

But water’s one of the really big issues – we literally can’t live without it, our economies depend on it and in many regions supplies are running short. Two billion people are already being affected by water shortages. Population growth and climate change add even more pressure to the situation.

In America, where clean water is taken for granted, it’s far too easy to forget this reality. But if we can view what’s portrayed in “Last Call” as a giant opportunity to change our world for the better, it just might infuse us with hope and energy instead of dread.

One of the experts interviewed in “Last Call” frames a key source of our problem with water. “We think of it as the air,” says Robert Glennon, a law professor at University of Arizona, “infinite and inexhaustible.”

But it’s neither – even in hydrologically-blessed countries like our own.

We are overdrawing, over-polluting and under-pricing this exhaustible resource here and globally, and like an overdrawn bank account approaching zero we will soon see the consequences. Think oil in the Middle East – the pressures on vital resources even in faraway places can deliver disruption to our own, more secure doorsteps.

So we’ve got to get water use and management right, and it’s going to take loads of work and some true paradigm shifts. Here’s where the good news starts: Scientists, some major businesses, and organizations like mine are fixated on this challenge and are eager to spread their knowledge.

At last week’s Ceres conference in Boston, Michael E. Sullivan, IBM’s top executive for water solutions under the company’s “Smarter Planet” effort, told an audience of 600 that better access to data and better ways to analyze it have created big opportunities for companies to cut water use and save money.

IBM’s own experience at its big semiconductor plant in Burlington, VT, is an example worth emulating. The plant once used half of Burlington’s municipal water supply, but new water-management techniques cut that usage by 30 percent. An unanticipated surprise was that Burlington’s water prices rose as IBM’s usage dropped – but Sullivan said significant savings from reduced energy and chemical use led to cumulative savings totaling about $3.6 million annually – and that doesn’t count the environmental benefit.

Other Ceres conference speakers had their own real-world examples of dramatically reduced water use. Places like water-poor Singapore, which has shored up its water supply through massive investments in efficiency, rainwater capture and recycled wastewater. And giant water users like Coca-Cola, which has improved its water efficiency by nearly 20 percent and has a worldwide water stewardship program in place to monitor its water performance globally.

But greater political will and public focus is essential, and businesses can play a big role as catalysts. Global problems demand large-scale solutions. Business, researchers, NGOs and governments must join hands on water scarcity – just as they often do for medical, defense and other forms of research.

One great current example are two complementary and free-of-charge water risk tools pioneered by the World Resources Institute (WRI) and Ceres. With much of the data provided by Coca-Cola, WRI’s new Aqueduct tool maps localized indicators of water risks globally, identifying company operations and supply chains facing potential water challenges. Then companies can use detailed steps outlined in Ceres’ new Aqua Gauge tool to catalyze effective water risk management.

Collaborations like these get the whole picture: This one accurately values water and lets stakeholders help shape resource protection strategies. It also gives investors a tool to evaluate growing water risks in their portfolio companies.

More collaboration is vital. Journalist Alex Prud’homme, whose book “The Ripple Effect: The Fate of Freshwater in the Twenty-First Century,” inspired “Last Call at the Oasis,” put it this way in an interview at the Ceres conference:

“I’d like to see the private sector play a greater role in working with the public sector. The private sector’s done a reasonably good job at developing new water efficiencies. I think they can do a lot more, and I think they can share some of those lessons with public bodies. So I’d like to encourage them to become part of this policy debate.”

Water scarcity is a global issue – one that we will need to solve together. The business world is a crucial part of the equation, and as “Last Call” shows us, there’s no room for sitting this one out.

CalPERS, the $235bn (€177bn) US pension fund giant, says institutional investors must extend their sustainability efforts towards improved financial regulation and derivatives reform if they are to avoid the danger of market meltdowns.

Speaking at the Ceres conference in Boston, Anne Simpson, Senior Portfolio Manager and Director for Corporate Governance at CalPERS, said investors needed to be adding the ‘F’ for finance reform to their ESG efforts: “The financial crisis showed very clearly that badly configured financial markets make for a world of complete danger. Sustainability for CalPERS means being able to continue to invest within healthy markets, but we are not being heard within regulators such as the SEC on these issues at the moment.” Simpson said another area where both investors and corporates needed to step up was in recognising the mutually reinforcing interests of long-term ownership: “There are three types of ‘investor’ – a term that hides a multitude of sins – and where we need to be able to differentiate between owners, raiders and traders.

Companies need to recognise the interest of their ‘owners’, and owners need to step up to re-assert their interests. Nano traders and hedge fund raiders don’t care about the sustainable health of the company; it’s an arbitrage.” The call came as CalPERS released its first sustainability report. Simpson said the CalPERS board had endorsed its plans for implementing ESG across the fund’s total assets as practically as possible. Importantly, she said ‘sustainability’ had become the guiding framework the fund was using for a return to what she called ‘old fashioned economics’.

The CalPERS sustainability report lays out its position on proposed financial market reforms under five principles: transparency, independence, corporate governance, investment opportunities and systemic risk. It says the aim is to help restore trust and confidence in capital markets through new accounting standards to help reform the derivatives market and to improve auditor independence. The fund said it was also working closely with a number of groups to improve financial reporting and ensure investors receive transparent and relevant information about the economic performance and condition of businesses. It is also promoting the campaign for international integrated reporting to bring together financial, environmental, social and governance information in one report.

The fund is also developing its ESG work under three tags: priorities, performance and procurement. The first step, it says, has been to identify ‘priorities’ after cataloguing more than 100 separate ESG initiatives across CalPERS. It said a peer exchange of information between 12 of the world’s biggest pension funds had shown that they are honing their focus on sustainability that is most relevant to investment objectives. Consequently, regarding ‘performance’, the fund said it will seek to identify how sustainability issues can affect risk and returns over time, noting that: “Despite a growing body of qualitative and quantitative evidence from the market and academia, there is still much discussion on metrics.” On ‘procurement’, CalPERS says it wants to ensure that all its managers and investment service providers understand its expectations on ESG.

Fuel Economy Impacts: 2020 from Ceres on Vimeo.

In the new video, top automotive experts explain:

• Why the automotive industry will likely earn an extra $4.76 billion in 2020 under the standards and see a four percent uptick in sales
• Why American automakers will likely enjoy the biggest percentage increase in profits (six percent), pulling in an extra $2.44 billion dollars in 2020 under the standards
• How the standards will impact consumers
• What technologies will be used to meet the standards

These findings are contained in a new report, “Fuel Economy Focus: Perspectives on 2020 Industry Implications” - produced by Citi Investment Research in partnership with Ceres.

The video, which is available for embedding on websites and blogs, features:

• Walter McManus, research professor in the School of Business Administration at Oakland University, co-author of the Citi Investment Research report, “Fuel Economy Focus: Perspectives on 2020 Industry Implications”
• Alan Baum, principal for Baum and Associates, co-author of the Citi Investment Research report
• Dan Meszler, principal researcher for Meszler Engineering Services, co-author of the Citi Investment Research report
• Carol Lee Rawn, Ceres Transportation Program director, co-author of the Citi Investment Research report

For technical assistance in embedding the video revealing the findings of Fuel Economy Focus: Perspectives on 2020 Industry Implications, please contact Brian Sant at sant@ceres.org.

Along with 21 other consumer brand giants, including Levis Strauss & Co., Starbucks, eBay and Nike, CA-based KB Home and Annie’s are calling for public action on climate change and energy policy that will compliment and enhance their individual corporate sustainability commitments.

KB Home has been a national leader in building energy efficient homes and was first homebuilder to provide MPG-like energy performance labels on its new homes starting in 2011.

“We believe that continued advancements in energy efficiency are fundamental to the future of homebuilding and we continue to look for ways to help minimize our homeowners’ environmental impact while lowering their energy costs,” said Jeff Mezger, CEO of KB Home. “We are honored to join the leading companies in BICEP and to advocate for sensible cost-effective climate and energy policies.”

“As a company committed to sustainable business practices, we know that climate change is a key issue that must be addressed at a national policy level and by the collective business community,” said Shauna Sadowski, sustainability director at Annie’s. “We applaud the efforts of BICEP to advocate for strong and effective climate and energy policies to protect our planet now and for future generations”.

“As BICEP grows so do our chances for creating systemic change to accelerate a clean-energy economy that is both prosperous and good for the environment,” said Anne Kelly, BICEP Director at Ceres. “We are thrilled to welcome both Annie’s and KB Home into BICEP where they will join other courageous corporate leaders who are making a difference.”

About KB Home
KB Home is one of the largest and most recognized homebuilding companies in the US. Since its founding in 1957, the Los Angeles-based company has built more than half a million quality homes. KB Home's signature Built to Order™ approach lets each buyer customize their new home from lot location to floor plan and design features. In addition to meeting strict ENERGY STAR® guidelines, all KB homes are highly energy efficient to help lower monthly utility costs for homeowners, which the company demonstrates with its proprietary KB Home Energy Performance Guide™ (EPG). A leader in utilizing state-of-the-art sustainable building practices, KB Home was named the #1 Green Homebuilder in a 2010 study by Calvert Investments and the #1 Homebuilder on FORTUNE magazine's 2011 World's Most Admired Companies list. For more information about KB Home's new home communities, visit www.kbhome.com.

About Annie's, Inc.
Annie's, Inc. is a natural and organic food company that makes great-tasting products in mainstream categories. Annie's products are made without the artificial flavors, synthetic colors and preservatives regularly used in many conventional packaged foods. Today, Annie's offers over 125 products, which are present in over 25,000 retail locations in the United States and Canada. Founded in 1989, Annie's is committed to operating in a socially responsible and environmentally sustainable manner.

About Business for Innovative Climate & Energy Policy (BICEP)
BICEP is an advocacy coalition of businesses committed to working with policy makers to pass meaningful energy and climate legislation enabling a rapid transition to a low-carbon, 21st century economy – an economy that will create new jobs and stimulate economic growth while stabilizing our planet’s fragile climate.   BICEP is a project of Ceres.

About Ceres
Ceres is an advocate for sustainability leadership. Ceres mobilizes a powerful coalition of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Ceres also directs the Investor Network on Climate Risk (INCR), a network of 100 institutional investors with collective assets totaling more than $10 trillion. For more information, visit www.ceres.org and www.incr.com.

Let me ‘fess up. The state of the environment sometimes gets me down. But to be fair, Earth’s vital signs would drive any respectable emergency room doctor into a state of utter panic. Globally, two thirds of ecosystem services, such as freshwater, pollination, natural hazard regulation, have been degraded in the past 50 years. Annual rates of growth in yields of many basic crops have declined over the past 20 years. The effects of global climate change are already being felt around the world.

But attending the Ceres annual conference this week gave me a refreshing dose of optimism. Ceres, a coalition of investors, environmental organizations, and other public interest groups, drew together hundreds of businesses, investors, and non-profits to share innovative approaches for corporate sustainability. Here are three rays of hope from the conference.

Roadmaps and races

The flagship report of the conference was The Road to 2020: Corporate Progress on the Ceres Roadmap for Sustainability. This report evaluates how 600 large publicly traded companies are progressing along the Ceres sustainability roadmap. If you’ve seen the report’s headlines, “businesses failing,” “businesses falling short,” and “disappointing results,” you might be wondering where my ray of hope is in all this.

Well, here is the deal. By tracking and publicly reporting companies’ progress along the roadmap, Ceres have created a powerful tool to drive corporate progress in the race to sustainability. Imagine if their more than 100 investors use it to inform how they invest $10 trillion dollars, or if the 130 civil society organizations in the Ceres coalition use it to focus their advocacy and campaign efforts? The roadmap also provides much needed guideposts to companies currently wandering in the dark as they seek a more sustainable path forward.

Tools for the journey

During the conference, participants discussed a number of practical tools to facilitate corporate sustainability efforts. Ceres and WRI teamed up to showcase how our respective tools, Aqua Gauge and Aqueduct, can provide an integrated approach to assessing and managing water risk. The WRI Aqueduct tool maps indicators of geographic water risks, complementing the Ceres Aqua Gauge framework for assessing companies’ response to water risk. Together they enable investors to compare water risks across geographic regions and companies.

Another promising tool, especially for those skeptics who believe people are only motivated by money, is linking executive pay to sustainability performance. While this is still a rarity, several companies are blazing a trail on this dimension of good governance, including: Intel, Excel Energy and Campbell Soup.

Of course tools are just means to ends. But they can both speed up the achievement of the ends and generate more effective results. The greenhouse gas accounting standards and tools developed by GHG Protocol over the past decade is a case in point. We have progressed from companies unaware of their emissions to companies reporting on their emissions, on to companies setting reduction targets and more recently companies expanding their reduction ambitions to their value chains and products. Which brings me to my next ray of hope…

Venturing outside the corporate fence line

Ten years ago, it was rare for companies to focus their sustainability efforts beyond their own direct operations. Today, it is increasingly accepted that corporate responsibility does not stop at the factory gate. One way WRI is helping companies look beyond their direct impacts is the release of two new GHG Protocol standards to measure value chain (scope 3) and product-level greenhouse gas emissions.

For many companies, it turns out that the majority of sustainability risks and opportunities reside in their value chains. Levi Strauss & Co., for example, released a white paper at the conference on its efforts to improve the health and well-being of workers in factories in its supply chain. And Levi’s is just one example; a session on building sustainable supply chains overflowed with corporate representatives sharing their experiences at the Ceres conference.

Ultimately we need all companies, not just the leaders, to make sustainability part of their corporate fabric. That will require changing the rules of the game. This is where governments must play a key role, ensuring that policies and incentives are aligned with driving more sustainable business action. Leadership companies should add their voices to those advocating for more progressive environmental and social policies. Such policies will also benefit them because they are better positioned to compete under new rules then the laggards.

Now if that happens, we really will have something to be hopeful about.

From the boardroom to the copy room and through the supply chain, Lubber called for more innovation and the ability to scale sustainability at a faster rate. In other words, instead of having pockets of leadership from companies, we need whole bags.

Of course, Ceres isn't all about corporations. The same conference also included plenty of mentions of “kids,” “family” and “community.” Occasionally, at the end of a session where future generations were invoked, there were one too many kumbayas for my taste.

But to focus on that would be to miss the important work being done by what Ceres vice president of corporate programs Andrea Moffat regards as “the social experiment called Ceres.”

Getting from here to there

The sobering analysis presented by Lubber and her colleagues in The Road to 2020 report finds that sustainability leadership is the exception and that below average performance with limited pockets of action is still the norm. The new report is an important reminder of the Ceres Roadmap for Sustainability, a practical framework for embedding environmental and social concerns into a business.

Sustainalytics CEO Michael Jantzi, who also worked on the report, suggests that companies consider the road map as something like a Rand McNally atlas: “It helps define what the destination looks like, but there are many ways to get there -- it’s not just turn right in fifty meters.”

The Ceres Roadmap is just one of the many useful tools the organization provides. From laying the early groundwork for the Global Reporting Initiative to the more recent publication of the Aqua Gauge tool for water risk management, Ceres has provided frameworks to help corporations and investors make progress toward a more sustainable future.

Investor’s voice: trader, raider or owner?

One of the unique aspects of Ceres is its ability to convene a disparate group of investors, corporations and nonprofits. The investor perspective is important and one of the questions that nags many a chief sustainability officer is “why aren’t investors asking about what I do on the quarterly financial analyst calls?”

Anne Simpson is a senior portfolio manager for the California Public Employees’ Retirement System (CalPERS), the nation's largest public pension fund with assets totaling $231.9 billion. During a plenary panel session entitled “Sustainability: The Business Imperative,” Anne explained that there are three types of investors who might be on that call: traders, raiders and owners.

Simpson noted that traders and raiders look to exploit market volatility, ranking environmental, social and governance (ESG) issues very low in terms of importance to their investment strategies. On the other hand owners like CalPERS view this data as critical to their investment decisions. Simpson explained that a company’s ESG data gives investors a chance to take a long-term forward view in terms of understanding whether a company is properly evaluating risks such as climate change and water scarcity.

CalPERS has been working with Ceres and other members of the Investor-Business Roundtable for a Sustainable Economy and will soon be launching an “ESG Expectations Document” for internal and external asset managers.

BICEP continues to flex policy muscle

One of the other valuable roles Ceres plays is coordinating an advocacy group of businesses committed to working with policy makers to pass meaningful energy and climate legislation. Business for Innovative Climate & Energy Policy (BICEP) is a coalition of leading consumer brand companies including Nike, Starbucks, Avon, eBay and many more.

During a BICEP overview session, Levi Strauss & Co.’s senior manager of government affairs and public policy, Anna Walker, stressed that now is the time for companies to keep up a drumbeat for long-term environmental policy. According to Walker, the administration and Congress want to hear the business case for sustainability. In an effort to illustrate by example, BICEP members are sharing their sustainability successes in Europe because of policies enacted there.

On the domestic front, one recent success was reported by eBay, which -- along with the Data Center Pulse Group and others -- worked with Utah’s Republican Senator Mark Madsen to develop new legislation that creates an option for companies to source the kind of energy they want without mandates, subsidies or cost increases for normal ratepayers.

What this means is that with passage of Senate Bill 12, signed into law on March 21, companies can now buy and transmit power directly from renewable energy developers. In a state with 94 percent coal generation, Utah can now lure other high-tech firms with a commitment to renewable energy without requiring deregulation, which was necessary under the old law.

That might not want to make you join hands and sing, but it’s a good reminder of the important role Ceres plays in helping to build an environmentally sound and sustainable economy.

The National Round Table on the Economy and Environment was created by former prime minister Brian Mulroney 25 years ago but, in last month’s budget, was given a year to wind down its operations.

Environment Minister Peter Kent justified the elimination of the round table – whose members were appointed by the government – by saying similar work is available from other think tanks and on the Internet.

In a report released Friday, the panel said climate change is real and its impacts are already being felt across Canada and the world.

“The capacity of and actions by businesses to adapt to the impacts of changing climate conditions – both average and extreme – will shape Canada’s future economic prosperity,” the report said.

And government will need to provide regulatory and financial incentives – as well as additional research – to encourage corporate leaders to prepare their businesses for the inevitable impacts of a changed climate, including flooding in some regions, droughts in others and extreme weather.

In effect, Canadians need to prepare for the effects of global warming even as they strive to reduce emissions in order to lessen the severity of the shifting climate patterns, round-table president David McLaughlin said.

“This is saying you are going to be exposed regardless – there is going to be climate change, there is going to be warming because of the emissions that are already up there, and it’s only going to increase,” Mr. McLaughlin said.

“Because of the uncertainty of it, because of the extreme volatile nature, you need to get ready and be prepared. It’s not an environmental issue in this context, it’s a bottom-line issue, it’s a core-business issue.”

The round table has previously warned the federal government that its adaptation effort was going to leave the country vulnerable to severe climate impact, and that its policies to date are insufficient to meet its own target of reducing emissions by 17 per cent from 2005 levels by 2020.

Mr. McLaughlin – a former chief of staff to Finance Minister Jim Flaherty – said businesses will be looking to government to provide leadership on the climate change issue.

“If government isn’t concerned, that does send a signals to a lot of businesses who may not have a lot of resources to deal with it, to say it is not a priority for now,” he said.

He wouldn’t comment on whether the elimination of the round table was evidence of a lack of leadership. But he said the group performs an important function not only in research, but in bringing together businesses and other experts to address issues of sustainable development.

The round table will produce two more reports before it closes its doors next March 31, including one that will assess the various provincial climate programs.

Download the report here.

The report was released at the Ceres Conference in Boston this week. Ceres is a coalition of investors and environmentalists working together to integrate sustainability into the capital markets. CalPERS helped found Ceres in 1989.

CalPERS has been a pioneer in sustainable investing and played a critical role in attracting institutional investors to the practice of including environment, social and financial considerations in investment decisions.

The report, Towards Sustainable Investment: Taking Responsibility, outlines CalPERS' journey to create a fiduciary framework that integrates sustainability across its investment portfolio and how it helps achieve long-term risk adjusted returns for its 1.6 million members and their families.

"We have been engaging directly with companies on environmental, social and governance issues for many years and are founding members of global networks such as the United Nations-backed Principles for Responsible Investment," says Anne Stausboll, CalPERS CEO.

Among its many shareholder actions influencing a wide range of corporations on environmental and social issues, climate change is one of the most important.

"Environmental issues, and climate change in particular, pose a set of enormous risks and opportunities for CalPERS. Climate change has an increasingly large influence on the energy and water strategies used by our portfolio companies, making it an important fiduciary consideration in our investment process," the report says.

CalPERS has invested $1.2 billion in capital in private equity funds - including its own CalPERS Clean Energy and Environmental Technology Funds - that support development of renewable energy companies.

They allocated $500 million to invest in 380 publicly traded companies around the world that derive a material portion of revenue in areas such as low-carbon energy production, energy efficiency management and carbon-trading.

They also invest 1% of their total in well managed forests, about $2.3 billion, in the US and the world.

They are also big investors in real estate and have reduced energy consumption across the portfolio 22.8% since 2004.

For every one degree Celsius that the air temperature increases, the atmosphere absorbs 7 percent more moisture from the ground. And that results in extreme weather patterns that threaten the livelihood -- and, ultimately, the existence -- of human beings, said Rifkin, president of The Foundation of Economic Trends in Bethesda, Md., who teaches business at Wharton School of the University of Pennsylvania.

But that's not the only reason businesses should start relying on alternative energy sources. Humans have already used up half of the crude oil, which was relatively easy to reach and produce, available on the planet, Rifkin said.

"We cannot afford the price of the other half," Rifkin told about 600 business leaders and policymakers gathered yesterday in Boston for the CERES Conference on sustainable economy.

The rising cost of energy caused the economy to tank in 2008, and history will only repeat itself without massive global efforts to reduce reliance on petroleum, he said. Rifkin said he doesn't believe the use of renewable energy will spare the world from another economic crisis if people continue to centralize electricity production.

The key is "distributed energy," meaning creating energy wherever sunlight, wind, earth, heat and tidal waves are, right on the spot, he said.

Rifkin said that if grid systems are designed to move excess power to where it's needed by detecting and sharing information through the Internet, the world would have enough energy to survive. The economy would also become more decentralized as energy production becomes decentralized, he added.

While the United States may lag behind its European counterparts in its efforts to shift into a new economic model, "no one moves more quickly (than Americans) once they get it," Rifkin said.

The CERES Conference brought together hundreds of institutional investors and corporate leaders, including those who work for Fortune 500 companies, in Boston this week as they tried to learn ways to hedge against climate change-related business risks.

CERES is a Boston-based nonprofit think tank that promotes sustainable business practice. From how to evaluate such risks as water shortage, which can affect food and apparel manufacturing industries, to how to share the information with shareholders, business leaders exchanged their methods and ideas for dealing with potential natural disasters as well as federal and local policies on natural resources.

Many of those attending the conference said institutional and individual investors are increasingly becoming conscious of business risks stemming from extreme weather events and limited natural resources. And companies are assessing the risks to stay competitive in the long run.

U.S. Environmental Protection Agency Administrator Lisa Jackson, a keynote speaker at the conference, noted that corporate America's interest in sustainability issues helps to advance the agency's agenda.

"There is nothing as powerful as having businesses out saying, 'Hear me, this is what's happening,'" Jackson said.

Rifkin, who gave his keynote speech before Jackson yesterday, said Germany is embracing the idea of distributed electricity and has already converted 1 million buildings into "micro-power plants" by installing solar panels, windmills and other devices appropriate for the individual locations.

As the world shifts into the "new energy regime," ordinary citizens become micro-power producers and the grid system acts as an "electricity Internet," allowing people to exchange information about where energy is and where it needs to be sent.

Some European countries have approached their goal for "green" electric power sources through government incentives for solar panels and other devices. They would have accomplished even more if they had thought about how to store excess energy produced by solar and wind-power generators, he said.

Rifkin said he understands why many Americans wonder where green jobs are after the federal government invested a large amount of stimulus money into the green economy.

"President Obama's got it wrong," Rifkin said, adding that stimulus funding was distributed among unconnected programs, minimizing the overall effect of the investment.

But America can still do enough to avert the "species crisis," and the time for action is now, he said.

"Now is the moment to leverage everything you have," Rifkin told the business leaders.

Sadly, most corporate managements are way behind the curve on this common sense, even survivalist, strategy.

Ceres, a sustainable investment advocacy organization, held its 2012 conference this week: "Igniting Innovation, Scaling Sustainability." In addition, and in conjunction with environmental, social, and governance (ESG) research firm Sustainalytics, Ceres released a report revealing 600 publicly traded companies' sustainability progress -- or lack thereof.

Moving forward in the new century
First things first: despite some heartening areas of corporate progress, there's still a long way to go in constructing what Ceres has called "the road to 2020" and the creation of the "21st Century Corporation." Ceres' threw down the gauntlet in 2010, outlining the importance of corporate strategies that allow for survival and success in a low-carbon, resource-constrained future economy.

Ceres and Sustainalytics point out the benefits of better sustainability processes and planning from both economic and social standpoints: "We see it as a world of opportunity for companies to improve competitiveness, realize large savings through energy efficiency, invest in their workers, strengthen their supply chains and, in many sectors, reap the benefits of the enormous investment opportunities in clean technology and clean energy."

These moves sound like perfect common sense. However, common sense is not so common, as the old saying goes, especially when so many corporate managements and boards are too often stuck on this quarter or next quarter alone.

Unfortunately, two years in, a measly 26% of the 600 corporations evaluated have integrated sustainability into their governance and management processes. Only a quarter are disclosing details about supply-chain monitoring and performance, and just a third are setting specific goals for slashing greenhouse gas emissions.

Hall of fame
Although it's clear many corporations are just starting out or remain clueless about the importance of long-term sustainability planning, some companies are ahead of the game in integrating these concerns into their business plans. The report called out Intel and Alcoa as two of the 157 companies that have proven themselves trendsetters for their overall governance strategies on sustainability.

Some highly specific areas are either relatively weak or relatively strong in terms of corporate action and attention.

Nearly half the evaluated companies have some kind of supplier code in place. On the other hand, only 10% of the 600 companies specifically reference International Labor Organization guidelines. Nike and Hewlett-Packard are among the 25% of the companies that publicly disclose supply-chain monitoring and performance information.

On the other end of the spectrum, a woefully small percentage of the companies ranked address human rights issues in a systemic way. Only 13% gained Ceres' highest "Tier 1" or "Tier 2" rankings on this metric, which evaluates policies covering discrimination, working conditions, and other human rights issues. 3M, General Electric, and Hess were among the very few lauded on the human rights measure.

Although only a third of the companies evaluated have specific goals for slashing greenhouse gas emissions, there is some good news. Nearly half -- 47% -- of the companies are at least making some progress in cutting electricity usage, using renewable energy resources, and increasing energy efficiency.

Looking for leaders
According to the data gathered by Ceres and Sustainalytics, very few corporations are leaders in sustainability measures. That's unfortunate, and doesn't bode well for a healthy economy or healthy investments in the far-flung future.

Given America's reputation for ingenuity, American corporations can do better than this, and hopefully this data will spark more movement by more companies in these areas.

As for those of us who are investors, let's keep a close eye on whether our stocks show signs that they're ready for the new century. If they're not, they may not make it to 2020 and beyond.

She said the administration plans to further exploit natural gas while also investing in renewable energy, has provided the necessary permits to facilitate offshore wind projects, and lauded Massachusetts for taking a leading role in trying to reduce the dangerous greenhouse gases that trap heat in the atmosphere.

“This administration hasn’t backed away from the need to address climate change, carbon pollution, and other forms of pollution, even as we’ve been growing our economy and trying to add jobs,” she said. “That means recognizing early on in this administration that there was real opportunity in making our cars and trucks more efficient, and it has now contributed to us being able to really lower our dependence on foreign oil supplies.”

She said the EPA expects to cut billions of tons of carbon pollution as the result of new fuel economy standards.

In an interview with a Globe reporter after addressing a sustainability conference organized by Boston-based Ceres Coalition at the Westin Boston Waterfront Hotel on Thursday, Jackson also said she is not concerned that a new Congress or a future president would seek to close her agency, as some Republicans have called for.