“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.

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."

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.

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 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.

Speaking at the CERES Conference in Boston, Jackson said the public discourse is focused on what is coming next.

“Much of the discussion is about the next sources” to be regulated for greenhouse gases, Jackson said, acknowledging that the Clean Air Act requires that once the agency begins regulating a pollutant, it must continue regulatory efforts for numerous emission sources.

“We’re certainly not running away from that,” she said. “But we are mindful … [that] we need to do it in a way that’s better for our economy. I joined the president in hoping for legislation — and that’s not happening.”

EPA officials have made a recent about-face on public plans to regulate greenhouse gas emissions at existing power plants after striking mentions of the assumed next step the new plant rulemaking last month.

“Rest!” Jackson said when asked what is on the EPA’s agenda for climate change for the rest of the year — quickly adding, “No, just kidding. There’s no rest … the urgency remains there.”

It is an “honor to be part of an administration that’s not hiding” from climate change, Jackson said.

Jackson touted the accomplishments of the agency on climate change: establishing a first-time finding that greenhouse gases endanger the health and welfare of citizens, and the subsequent auto emissions limits, tailoring rule and last month’s greenhouse gas limits for new power plants. And she spoke of the agency’s just-finalized emissions rule for natural gas drilling and refineries, which does not directly regulate methane emissions, but will in effect limit them.

But she made no mention of any new steps to regulate greenhouse gas emissions, only noting that the agency will take comment on the proposed greenhouse gas rule for new power plants, and turn to the next round of car and truck rules that are due in September.

Jackson also noted that EPAs waiting on several court rulings over the endangerment finding, auto standards and the tailoring rule — expected this summer from the U.S. Court of Appeals for the D.C. Circuit.

The conference’s opening day was marked by numerous company announcements and the release of a new Ceres/Sustainalytics report evaluating 600 leading US companies on their progress – or lack of it – on sustainability.

“Don’t let the weak economy and election-year rhetoric fool you, the Ceres conference proves sustainability is gaining traction and is making businesses more profitable,” said Mindy Lubber, president of Ceres.

Among the day-one highlights:

Wells Fargo: Announced substantial commitments to accelerate the transition to a ‘green’ economy, including $30 billion in loans and investments by 2020 to support green technologies such as energy efficiency, renewable energy and other environmental innovations.

SAP: Delivering on commitments made at last year’s Ceres conference, SAP announced the positive impact of new and enhanced energy-saving software solutions for its clients around the world. For manufacturers alone, these solutions led to 5.7 million tons of carbon pollution reductions and $500 million in energy savings in 2011.

Evaluating 600 Companies on Sustainability: Ceres and research firm Sustainalytics announced a new report assessing 600 U.S. companies on their progress on sustainability. The report findings – based on an analysis of how companies are responding to environmental and social challenges such as climate change, water scarcity and supply chain conditions – shows individual examples of strong leadership, but significant need for overall improvement.

Levi Strauss & Co: At last year's Ceres conference, Levi Strauss & Co. announced a bold commitment to improve factory and worker conditions in its global supply chain. The company's efforts to date on the project, done in close collaboration with Ceres, are outlined in a new white paper. The company is piloting the project at five factories in Bangladesh, Cambodia, Egypt, Haiti and Pakistan.

Bavaria Award: Tessa Tennant, president and co-founder of The Ice Organisation, has been awarded the fourth-annual Joan Bavaria Award for Building Sustainability into the Capital Markets. The Bavaria Award is presented annually by Ceres and Trillium Asset Management to an inspiring leader working to move capital markets toward a system that balances economic prosperity with social and environmental concerns. The award’s name honors Joan Bavaria, a pioneer of social investing who founded Ceres and Trillium Asset Management. Bavaria passed away in 2008.

Lisa Jackson, administrator of the US Environmental Protection Agency will close the final day of the conference at 2:00 PM on Thursday, April 26.

A full agenda can be found at: http://www.ceres.org/conferences/program. Reporters interested in attending the event are asked to contact Peyton Fleming, 617-733-6660, fleming@ceres.org

Follow Ceres on twitter @CeresNews and the conference #Ceres12

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.

The findings - based on an assessment of how 600 U.S. companies are responding to environmental and social challenges such as climate change, water scarcity and supply chain conditions – show individual examples of leadership but significant need for overall improvement.

“While there are encouraging pockets of sustainability leadership in the U.S. business community, far too many companies are only taking small, incremental steps,” said Ceres president Mindy Lubber, in announcing the report at the opening of the Ceres annual conference today in Boston. “Sustainability has yet to gain traction at anywhere near the scale and speed required given the global threats we face.”

“We’re encouraged by the leadership shown by some companies and expect that their success will spur others to better leverage sustainability to identify risks and seize opportunities in an increasingly competitive global marketplace,” added Michael Jantzi, CEO at Sustainalytics, who joined Lubber in announcing the report.

The report evaluates companies based on specific expectations in the The 21^st Century Corporation: The Ceres Roadmap to Sustainability, a how-to guide for companies to achieve sustainability by 2020. The evaluation was based on company data available as of Dec. 31, 2011.

The report highlights dozens of company examples in hopes of inspiring others to take similar actions. For instance, Alcoa, Xcel and Intel are relative pacesetters in sustainable corporate governance practices; Baxter and Ford are setting a high standard in stakeholder engagement; and Exelon, Nike and the Coca-Cola Company are ahead of the pack in performance on metrics for reducing environmental impact and improving workers conditions.

Intel is cited specifically for linking executive and employee compensation to company environmental goals such as reducing energy use and greenhouse gas (GHG) emissions; in the two years since it started the program, the company has cut energy use by 8 percent and GHGs by 23 percent.

Coca-Cola is credited for being on track to meet its ambitious performance goal of improving water efficiency by 20 percent by the end of this year (against a 2004 baseline.) Other cutting-edge performance examples: Nike’s new partnership to implement a water-free fabric dyeing process, Kohl’s Department Stores achievement of net-zero greenhouse gas emissions at its stores, Pinnacle West using recycled urban wastewater (about 20 billion gallons a year) to cool its Palo Verde nuclear power plant and EMC building a new energy-efficient “virtual data center” to move data from physical storage to an entirely virtualized IT infrastructure (the shift has already saved the company more than $23 million).

But in the report’s four-tier assessment system, just a quarter of all companies surveyed were in the top two tiers for progress on governance, while 24 percent have some degree of meaningful stakeholder engagement. On corporate performance metrics, only 13 percent of the companies evaluated on human rights policies and programs were ranked in the top two tiers. And just a third of the 600 companies had time-bound targets for reducing greenhouse gas emissions in direct operations.

Lubber and Jantzi said companies are missing a big opportunity by not fully embracing sustainability. “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,” they wrote in the report.

Anne Stausboll, CEO of the California Public Employees’ Retirement System (CalPERS), echoed the sentiment, saying: “The future will belong to innovative companies that understand that building long-term shareholder value and being an industry leader requires the integration of sustainability principles at every level, from the C-suite to operations and throughout supply chains.” CalPERS is the nation’s largest public pension fund with about $235 billion in assets under management.

The report provides a framework for investors who can use the report’s findings, case studies and sector trends to inform their decision-making and engagement strategies.

In the end, wrote Lubber and Jantzi, closing the sustainability gap “will require a collaborative effort among investors, businesses, non-governmental organizations and other stakeholders concerned about the future of the planet and the economy.”

All four groups, more than 500 strong, were on hand in Boston today for the start of the annual Ceres conference at which the “Road to 2020” report was unveiled.

The new “Road to 2020” report can be found at: www.ceres.org/roadto2020

An agenda and other information for this year’s Ceres conference are at: www.ceres.org/conference

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

Sustainalytics provides environmental, social and governance (ESG) research and analysis as well as responsible investment services to investors around the world. The firm offers global perspectives and solutions that are underpinned by local experience and expertise, serving both values-based and mainstream investors that integrate ESG information and assessments into their investment management. For more information visit www.sustainalytics.com

“I can’t think of anyone more deserving to win this year’s Bavaria Award,” said Mindy Lubber, president of Ceres. “Tessa is an inspirational leader who has worked tirelessly for more than 20 years integrating environmental and social concerns into investing and business decisions. She has taken Joan Bavaria’s original vision of advancing socially responsible investing and expanded it to the markets in Europe , and now Asia, creating real impact beyond the U.S.”

Tennant co-founded The Ice Organisation (myice.com), which encourages consumers to purchase more sustainable products and services from a wide range of retail partners, mobilizing mass consumer purchase power to reduce carbon emissions and mitigate the effects of climate change. She also co-founded the UK's first equity investment fund for sustainable development in 1988, now called the Jupiter Ecology Fund.

She was Chair and co-founder of the UK Social Investment Forum, which promotes responsible investment and other forms of finance that support sustainable economic development. She also co-founded the Carbon Disclosure Project (CDP), which has enabled hundreds of companies and investors to better understand, report on and mitigate risk from carbon pollution and climate change.

In 2001 she co-founded the Association for Sustainable & Responsible Investment in Asia (ASrIA) and remains on the Board. Based in Hong Kong, ASrIA is a leading nonprofit organization promoting sustainable investment practices in Asia, including fostering SRI products and services and providing training, research and other resources.

The Bavaria Award is presented by Ceres annually to an inspiring leader working to move capital markets toward a system that balances economic prosperity with social and environmental concerns. The award’s name honors Joan Bavaria, a pioneer of social investing who founded Ceres and Trillium Asset Management. Bavaria passed away in 2008.

“Tessa has been instrumental in elevating sustainability as a business and investor issue across the globe,” said Trillium CEO Matt Patsky. “She has created multiple funds and organizations that are driving sustainable investment behavior and having a real impact on business, the environment and the global economy.”

In the early nineties, Tennant served as a member of the UK Government's Advisory Committee on Business and the Environment, and helped develop HRH The Prince of Wales's Business in the Environment initiative, which educates senior business executives on practical ways to integrate social and environmental solutions into their business operations.  She is also Chair of the Global Cool Foundation.  She has served as a World Wildlife Fund UK Ambassador and is a Fellow of the Schumacher Society.

"I'm deeply honored.” Tennant said in her acceptance speech. “This award is as much for the people in Hong Kong at the Association for Sustainable & Responsible Investment in Asia, and for the people in London at the Carbon Disclosure Project and other initiatives I've been involved with, as it is for me. Joan Bavaria has been a complete heroine of mine all my working life. She gave me that confidence to just go out and do it."

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.

About Trillium Asset Management
With a history spanning three decades, Trillium is the oldest independent investment advisor focused exclusively on sustainable and responsible investing. Trillium manages over $1 billion in assets for clients including high net worth individuals, foundations, endowments, religious institutions, and other non-profits. To learn more about Trillium, please visit http://trilliuminvest.com.

That’s because companies have extraordinary opportunities right now to lead in building a sustainable global economy, by being part of the solutions to the world’s most pressing environmental and social challenges. Whether it’s reducing global warming pollution, limiting the use of water and other scarce resources or ensuring better treatment of employees in supply chains, there is much companies can and must do.

Twenty years ago, hundreds of world leaders, NGOs, international institutions and concerned citizens gathered in Rio de Janeiro for the United Nations’ “Earth Summit.” In June, the U.N. will convene Rio+20 to assess global progress on Agenda 21 – the blueprint for economic growth, social equity and environmental protection adopted at that Summit – and to chart a future course against a backdrop of intensifying climate change, increasing water and natural resource scarcity, and a widening gap between rich and poor.

Part of Rio+20 will be the Corporate Sustainability Forum, a global effort to engage the private sector on building a sustainable economy for a sustainable planet. This aligns perfectly with Ceres’ mission to mobilize business and investor leadership for a sustainable world, and Ceres will be in Rio pushing for accelerated action and results.

Urging corporate action isn’t enough, however. Companies need guidance and specific tools to help them evolve into environmentally and socially responsible enterprises that contribute to the creation of a sustainable economy.

Ceres has been a leader in providing such tools. Two years ago, we unveiled The 21^st Century Corporation: The Ceres Roadmap for Sustainability, a how-to guide for companies to achieve sustainability by 2020. The Roadmap contains 20 specific expectations in critical areas of governance, stakeholder engagement, disclosure and performance. It’s also a framework for investors to use in evaluating whether companies are preparing themselves for long-term success and value creation in the 21^st century – by meeting the risks and seizing the opportunities of climate change, clean energy, natural resource scarcity and other challenges.

The Road to 2020: Corporate Progress on the Ceres Roadmap for Sustainability, set for release at our annual conference April 25, is our first assessment of progress on The Roadmap. The Ceres/Sustainalytics collaboration evaluates the progress of 600 U.S. companies. We scrutinized how far they’ve come in implementing sustainability across their platforms and how much work remains. In addition to the written report, our interactive web site will help users optimize the assessment for their own purposes. It includes tables and graphs showing company sustainability performance in key sectors.

The report will show there is much more business can do to elevate its game on sustainability risks and solutions. Companies already doing so – General Electric, Intel and Nike, to name a few – are seeing the financial upside of strategies, operations and products built with a low-carbon, resource-constrained global economy in mind.

Among the sustainability issues getting close attention in the report is water. Key sectors across the economy – from high-tech and agriculture to food/beverage and electric utilities – face major financial and operational risks from water scarcity and changing precipitation patterns driven by climate change. The Roadmap highlights the need for strong water stewardship, and based on this framework Ceres has developed a cutting-edge tool, the Ceres Aqua Gauge, to help companies and investors improve their scrutiny and management of water risks.

The Ceres/Sustainalytics report will show that while some businesses, such as Coca-Cola Company and Exelon, are boosting their attention to water risks, most are giving it inadequate attention.

Rio+20 is a promising platform for enhanced private sector/NGO collaboration to scale up business sustainability performance.  To take full advantage, we need to get practical by embracing tools such as the Roadmap and the Aqua Gauge.

Our Road to 2020 assessment is an important reality check on where business stands and the pressing urgency of doing more. We cannot afford another 20 years of baby steps given the colossal challenges we face.

Let’s get moving now.

But this spending, whether on energy efficiency, renewable energy or new fossil fuel and nuclear power plants, must reflect new global realities if utilities are to avoid adverse impacts on their own bottom lines, as well as ratepayers and investors.

That’s the conclusion of a new Ceres report, Practicing Risk-Aware Electricity Regulation: What Every State Regulator Needs to Know. The report, authored by industry and finance veterans, examines the options and finds almost without exception, the riskiest investments - the ones that could cause the most financial harm for utilities, ratepayers and investors - are large base load fossil and nuclear plants.  Increasing spending on energy efficiency, distributed generation and renewable energy lowers the risk and cost of utility resource investments – as recent decisions by utilities such as Xcel and PacifiCorp show.

“This is no time for backward-looking decision-making,” said Mindy Lubber, the president of Ceres, which commissioned the report.  “Diversifying utility portfolios by expanding investment in energy efficiency and clean energy reduces risk to utility customers and shareholders alike.”

“There is a lot on the line and it’s critical that utilities and regulators get it right,” said Ron Binz, the report’s lead author and a 30-year veteran of utility and energy policy, most recently as chairman of the Colorado Public Utilities Commission.  “A regulator’s analysis should not stop with the levelized cost of a resource: The risk of the resource to ratepayers and investors must be considered as well. Of all the options we reviewed, nuclear power is the riskiest option and energy efficiency is the least risky and lowest cost option.”

Due to aging power plant fleets, evolving technologies and environmental regulations, U.S. electric utilities will invest at roughly twice recent levels for the next two decades. And state utility regulators will have a huge hand in how that money is spent.

“If history is a guide, fewer than 700 state regulators will serve in office during the next 20 years,” the report states. “Each regulator will, on average, vote to approve more than $6.5 billion of utility investments during his or her term.”

The report’s authors analyzed the costs and risks involved in meeting America’s power needs through a variety of strategies, from constructing large centralized power plants, to reducing demand through energy efficiency and deploying distributed generation and renewable energy sources.

The report ranks utility resources according to the long-term costs for each option, including capital, operations, and maintenance. It also ranks resources on their exposure to specific risks, from delays and overruns related to permitting and building a plant to regulatory risks such as carbon and other pollution controls and potential problems involving fuel, financing, and rate setting.

The report concludes that the energy option with the lowest level of risk and lowest costs is energy efficiency.  But the authors note that utilities tend to be rewarded for supplying more power, not reducing demand.

“The cheapest, least risky power plant is the one a utility doesn’t have to build, and ratepayers don’t have to underwrite,” Binz said. “But utilities can only invest in energy efficiency when regulators make it financially worthwhile - for example by adding performance-based financial incentives for efficiency and by eliminating the financial reward for selling more electricity.”

“It falls to state electricity regulators to ensure that the large amount of capital invested by utilities over the next two decades is deployed wisely,” noted Susan Tierney, managing principal at the Analysis Group and a former Massachusetts Public Utility Commissioner who wrote the report foreword. “It is vital that their decisions reflect the needs of tomorrow’s cleaner and smarter 21st century infrastructure and avoid investing in yesterday’s technologies. Poor decisions could cost ratepayers, investors and taxpayers hundreds of billions of dollars and have costly impacts on the environment and public health.”

“As we enter yet another major construction phase in the utility sector, I worry about overly ambitious projects that create what we in the financial world call significant ‘event risk’,” added Denise Furey, a consultant and former utility analyst at Citigroup and Fitch Ratings who helped author the report. “A sizeable negative event would more than likely impact the company’s debt ratings and the costs of capital. This would not be good for the company in question, consumers and investors.”

Other lower-cost, lower-risk energy options included onshore wind, geothermal and biomass co-firing. The report also points out that costs for distributed solar PV and wind have fallen significantly since 2010, while costs for building nuclear power plants have increased in the wake of the Fukushima disaster.

“Just as having a diversified financial portfolio makes sense, so does having a diversified energy portfolio,” Lubber said. “Mixing supply and demand-side resources, distributed and centralized power generation, and fossil and non-fossil fuels – this is the best way to manage risk and keep costs down.”

Click here to read the full report.

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, 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