“If risk reduction is not achieved, challenges around insurance will continue,” Swiss Re’s Mark Way told a workshop audience at the Ceres annual conference this month in San Francisco. “Uninsured losses will be, and have been, a significant drain on microeconomic growth with increased burden to taxpayers.” Way noted that only 37 percent of weather related losses were insured globally in the past 10 years.

Cities have a key role in taking preemptive steps that can reduce both insured and uninsured losses. First, they can attack the root of the problem by acting on carbon pollution, the primary driver of a warming world. Dozens of U.S. cities have set ambitious goals to reduce their carbon footprints.

Adele Simmons of Metropolis Strategies discussed the Chicago Climate Action Plan, a climate change mitigation strategy launched in 2008 with the goal of reducing Chicago’s greenhouse gas emissions to 25 percent below 1990 levels by 2020.

The plan focuses on energy efficient buildings, renewable energy sourcing, clean transportation and climate adaptation.

Last year Chicago-area companies like Jones Lang LaSalle (JLL), and United Airlines joined a Green Ribbon Committee for businesses to implement a Sustainable Chicago roadmap by 2015. Hyatt has set a goal to reduce energy use, greenhouse gas emissions, and waste by 25 percent and to reduce water use by 20 percent.

The city’s Climate Action Plan also includes resiliency measures to reduce exposure from climate physical impacts, such as more extreme heat waves that can trigger asthma outbreaks and more hospitalizations. Strategies include innovative cooling measures, protecting air quality, completing research on the urban heat island effect and engaging the public and businesses on how to take their own steps.

In Boston, similar activities are already underway. The Boston Green Ribbon Commission is working to build private sector support for efforts to adapt to climate change by coordinating with Mayor Thomas Menino’s Climate Action Plan. A main goal is to reduce overall greenhouse gas emissions 25 percent by 2020 and 80 percent by 2050. Among the specific measures: new LEED-Certified police stations and libraries and reducing tailpipe emissions of 500 city school buses by 90 percent. The city is also instituting resiliency measures, such as restoring East Boston salt marshes for better flood control and requiring elevated buildings in new development projects, such as the city’s waterfront Innovation District.

Deeper engagement to bring governments, policymakers and businesses together on climate resiliency is another must. A good example is Ceres’ Climate Resilience Project, a series of workshops in San Diego, Toronto and Boston, that have brought together property owners, bankers, urban planners, and insurance companies (such as Swiss Re) to discuss climate trends, and how they can work to find solutions to increasing property damage and human impact. These workshops will assist insurers in considering how the industry’s risk assessment tools can be adapted to better incorporate risk factors like infrastructure vulnerability.

It’s not that renewable energy is a bad investment—in fact, as I’ve explained before, clean energy projects provide exactly the kind of stable, consistent returns that long-term investors love. For example, when Warren Buffett’s Berkshire Hathaway subsidiary MidAmerican Energy Holdings issued a $850 million bond offering for its Topaz Solar Farm last year, it was oversubscribed by nearly $400 million.

Investors want in on renewable energy investments; however, the types of investment vehicles available today are limited. Some of these limitations can be addressed by extending the same benefits that fossil fuel and real estate developers have enjoyed for years. New legislation and a call for clarity from the Internal Revenue Service could make two investment structures, Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs), the new alphabet of renewable energy investing.

MLPs and REITs could help to get some institutional capital off the sidelines and into play, but it is important to note that these measures alone will not open the floodgates to renewable energy investment. They are positioned to become part of a broader toolkit, one that the federal government has used successfully in the past to develop domestic energy resources.

Just as shale gas developers were supported with roughly $10 billion in tax credits, along with millions more in research and development funding, the Production Tax Credit and Investment Tax Credit remain essential tools within the renewable energy industry. MLPs and REITs will provide complementary benefits as the industry matures, and most important, the proposed changes will help to level the playing field.

How? For decades, Congress has enabled investors to bundle energy projects like oil and gas pipelines and other fossil fuel developments under a structure called the Master Limited Partnership, which is taxed like a partnership but trades like a stock. Most of the investors we work with through our Investor Network on Climate Risk, for example, are investing primarily in stocks and bonds, so the liquidity that MLPs offer is appealing. In other words, investors like MLPs because they can buy and sell their shares in the public markets, and project developers like them because they can access cheaper capital through the markets.

Unfortunately, the tax code currently restricts MLPs to projects with “depletable” resources. This restriction was originally designed to prevent companies of all kinds from reformulating themselves as MLPs to avoid corporate taxes—even the Boston Celtics were an MLP for a time—but it has the effect of supporting fossil fuel projects while shutting out renewable energy developments. Not exactly the level playing field developers are looking for.

The Master Limited Partnerships Parity Act, re-introduced today by a bipartisan group of senators, hopes to achieve parity in the treatment of renewable and fossil energy. When the bill was first introduced last year, lead sponsor Sen. Chris Coons (D-Del.) said, “Congress should be setting a realistic and stable policy pathway to sustain innovations in domestic energy development, and help the market work to its fullest potential. That starts with leveling the playing field and giving renewable energy the same shot at market success as fossil fuels.”

Real Estate Investment Trusts offer similar but complementary benefits to those presented in the MLP proposal. REITs have become a popular investment option for institutional and individual investors. They’re a big part of the S&P 500, and if you have a retirement account, chances are you have some REITs in your portfolio. A broad variety of properties—from billboards to prisons to cell phone towers—have all used the REIT structure to reduce financing costs and increase investment opportunities for a broader range of investors.

Currently, IRS rules are unclear on whether solar projects can qualify as REITs. Clarifying these rules to include renewable energy is such a logical and fair proposal that it has gained bipartisan support, along with MLP reform, even in a radically divided Congress. Late last year, a bipartisan group of 29 U.S. lawmakers sent a letter to the President calling for changes to both MLPs and REITs.

As the renewable energy industry matures, more investment opportunities will open up for institutional and individual investors alike. In fact, a number of finance experts, including Credit Suisse, expect loans from small solar projects around the country to be bundled and sold into the capital markets, as just one example.

However, for the time being, a couple simple fixes can level the playing field in the energy sector and expand opportunities to a broader range of investors through MLPs and REITs. Let’s make it happen.

Not really. A retail bank borrows your money, combines it with other deposits, and lends it back out to larger projects. It hopes to earn a greater return from its lending and financing projects than it promised to provide your deposits. Some of these are simple to see and understand, like the corner bakery expansion or your neighbour's mortgage. Others are so complex and convoluted that even finance professionals poorly understand them.

A bank's success or failure lies with correctly valuing assets and assessing risk within its lending portfolios. The housing bubble happened in part because banks overvalued assets, believing that home prices would continue to rise, even when economic indicators pointed elsewhere. They also misunderstood the inherent riskiness of their investments, believing them to be safer than they were.

Unfortunately, there are now signs that we're on the verge of another bubble. A carbon bubble.

This year, Boston Common Asset Management and other investors filed a shareholder resolution at PNC Financial, a Pittsburgh based retail bank and significant lender to mountain top removal, an extremely environmentally-intensive coal mining process. We also filed with JPMorgan Chase, the leading lender to coal utilities. We asked for information from both institutions about how they plan to manage climate risk, and their assessment of the ways in which their lending and financing contribute to global warming.

From a risk perspective, climate change brings looming regulation and legislative uncertainty. Climate disruption, meanwhile, puts any property or industry with a weather dependency at risk. Think ocean-front real estate, agriculture, forestry, tourism, anything in a flood zone or a water scarce region. Banks, which consider their loans according to risk tranches, need to be incorporating these new patterns into their models. Banks also face reputational risk, should their brand become associated with the financing of a highly environmentally damaging project.

In addition, investing in a coal dependent infrastructure continues a dependency on harmful technology, requires assumptions that there will be no shifts in consumer sentiment, and that current rates of greenhouse gas emissions will be allowed to continue. HSBC Global Research released a "Coal and Carbon, Stranded Assets: assessing the risk" report in June, 2012 which stated that "that carbon constraints post-2020 could impact DCF [discounted cash flow] valuations of coal assets by as much as 44%." If this is correct, the ability of coal and carbon dependent companies to generate the revenues required to service their debt may be called in to question.

We were able to withdraw our resolution at JPMorgan Chase because the company made progress on the issue. It has begun to develop a greenhouse gas management and assessment process and has committed to publish an environmental and social risk assessment policy.

However the conversations at PNC Financial have not been so successful and our resolution has remained on the ballot, to be voted on 23 April 2013. Given the climate crisis, we know that a business based on current emissions levels is unsustainable. As investors, we want to ensure that the PNC board and top management understand climate change as a financial issue and the implications it may have for their business.

However, the problem isn't just about climate risk impacting investor returns. Banks and other financial institutions contribute to climate change through their financed emissions, which are the greenhouse gas footprint of loans, investments, and other financial services. A bank's financed emissions can dwarf its other climate impacts and enable a significant amount of greenhouse gases that would not otherwise have been released.

It's clear that businesses based on current emissions levels are unsustainable. As investors and as citizens, we must "pop" the carbon bubble now. In doing so, we protect both our economy and our environment.

Meredith Benton is client portfolio and shareholder engagement manager at Boston Common Asset Management, an investment manager and a leader in global sustainability initiatives.

Droughts in the north, floods in the south. Toxic industrial runoff, overdrawn ground water and even bloated pigs and dead ducks in major waterways. The list of China's water woes is long and appears to be growing.

We all know that China is the supply chain hub for the American economy. Nearly everything we use -- mobile phones, TVs, handbags and even U.S. Olympic team clothing -- is made in China, where export jobs support 200 million workers.

Yet despite the avalanche of news reports and stomach-churning photos, I've found it challenging to get to the bottom of the many water risks facing the industrial suppliers of U.S. companies. Media censorship and poor government data means limited access to information for many corporate managers we speak to at Ceres who are only beginning to understand the complicated nature of the water risks facing their Chinese supply base.

So, what do we know about the Chinese water situation?

Some statistics speak for themselves: At least 50 percent of Chinese urban groundwater and 90 percent of urban rivers are considered polluted. About half of all wastewater is released into the environment untreated, affecting ecological and human health alike. And a government assessment released just last week found that half of China's rivers -- 28,000 in all -- have simply "disappeared" since the country's waterways were last surveyed in the 1990s.

Bad water means a weaker economy. The World Bank says that on the low end, China's water woes already cost the country at least 2.3 percent of GDP per year. Some are saying there is potential for the economic burden to get significantly worse. Investment manager HSBC notes that approximately 45 percent of China's GDP currently originates from water-scarce provinces, and that the country is betting on additional industrial growth in 14 of the most water-stressed provinces.

Sounds bad, right? But what does this mean for your suppliers, or your suppliers' suppliers?

Water coming into factories is often too polluted for use and pre-treatment is pricey

Although China mandated the construction of thousands of new wastewater plants in its 10th Five-Year Plan (2001-2006), far fewer actually were built due to funding shortfalls. Of those that were built, half either were operating improperly or not at all. The state's low capacity to treat water supplies has placed a heavy onus on businesses to invest in technology and services to provide clean water required for their operations.

Water shortages are still slowing down production

Forty-nine factories closed in Beijing in 2009 due to water shortages, while some steel factories and power plants were moved to the coast. Every year Chinese factories face water shortages on the order of 12 million cubic meters -- that's about 24 times the volume of the world's largest super tanker. Reports have suggested that this loss in industrial output could be worth as much as $28 billion annually.

Industrial energy costs are going up, in part due to water issues

The greatest limiting factor to China's rising energy demand will be water availability. About 85 percent of China's power capacity is in water-scarce regions and in the first six months of 2011, severe drought in the south crippled hydropower generation along the Yangtze River and also impeded shipments of coal to thermal power stations. The results were staggering: In the first quarter of 2011, China's five largest utilities reported nearly $1 billion in losses from their coal-fired power plants. These losses were passed on to industrial users, whose electricity rates were hiked, while residential users' rates remained unchanged.

Western companies face significant reputational threats over pollution

It's not clear if the actual number of industrial water pollution incidents is on the rise. What we do know is that the Chinese media is freer to report on incidents that do happen -- and loudly. In February, a reporter in Weifang in Shandong province wrote a blog post that accused local paper mills and chemical plants of pumping carcinogenic industrial waste directly into the city's underground water supply and encouraged others to upload pictures of their polluted waterways, triggering a flurry of other bloggers across China to post similar evidence and accusations, prompting the local government to offer a $16,000 reward for anyone with information.

In this context, Western companies and their suppliers are growing targets for disgruntled citizens and NGOs. Recent campaigns by the influential Institute of Public and Environmental Affairs have focused on significant wastewater violations linked to the Chinese suppliers of more than 40 global apparel brands. Greenpeace has mounted a parallel campaign demanding that the fashion industry "detox" its suppliers' factories, eliminating all toxic wastewater discharges. Similar campaigns against Apple and others in the IT sector also have contributed to a broader discussion of supply chain responsibility in the industry as well as a number of new company commitments.

But enough with the doom and gloom; in my next post, I'll look ahead to signs of enlightened regulatory efforts, as well as new data resources and initiatives that are helping reduce the water impacts of Chinese manufacturing.

Jonars Spielberg contributed to this piece.

You might think the only way for investors to express their opinion over a company's performance and practices is to buy or sell their shares. In fact, that's not the case. Since the financial reforms of the Great Depression era, investors have been able to present shareholder proposals that can deeply influence the way a company operates — from how it pays its CEO to how it handles CSR.

Described in the Securities Exchange Act as a "recommendation or requirement that the company and/or its board of directors take action," shareholder proposals — also known as shareholder resolutions — have traditionally been used to address corporate governance issues. Issues such as asking companies to split the roles of board chairman and CEO, and requesting the ability to nominate board members and review executive compensation.

In recent years, however, investors are increasingly using the power of shareholder resolutions to address climate, energy and sustainability — issues that affect long-term performance. This movement has its roots in the campaigns driven by socially responsible investors, like religious institutions who have long made their social, environmental and governance policies a cornerstone of their investment practices.

So, why are shareholders speaking up on sustainability? Institutional investors have a fiduciary duty, which means their investment strategies must serve the collective long-term interests of their beneficiaries or customers. If investing in less sustainable stocks is good for current beneficiaries but undermines the broader economic future for younger ones, are they meeting that standard? Conversely, if they change their portfolios and returns suffer, are they favouring younger beneficiaries over older ones?

That's where shareholder engagement comes in. Each year, my organisation, Ceres, co-ordinates and tracks the number of climate and sustainability resolutions that are filed by investors affiliated with our Investor Network on Climate Risk. Over time, that number has increased exponentially, from 10 climate-related resolutions in 1999 to 109 filed in 2012 (in 2013, investors are on track to keep the same pace). These resolutions cover everything from requests to issue sustainability reports, to highly specific recommendations to address the risks of hydraulic fracturing, limit greenhouse gas emissions or manage water use. A recent analysis by Ernst & Young shows that environmental and social shareholder resolutions led all other major proposal categories on 2012 proxy ballots, accounting for about 45% of resolutions. Just two years ago, environmental and social resolutions made up 30% of proposals.

Climate-related resolutions have increased hugely, from just 10 filed in 1999 to 109 in 2012. Photograph: Ceres

And it's not just the sheer number of resolutions that's on the rise. Over the past few years, nearly half of the resolutions filed have yielded an agreement in which the company in question commits to take action. In these cases, the investor then withdraws the resolution, and it never goes to vote at the annual meeting.

For those climate-related resolutions that go to vote, shareholders have also become much more supportive. In 1999, the average resolution received 5% support. Since 2007, however, the average affirmative vote has been well over 20%. These resolutions are all "advisory" in the sense that management is not required to act in response to a majority vote, but when you can get more than 20% of shareholders to agree on anything, management is well served to listen to their demands.

Most important, these resolutions are yielding action from companies and changing the way firms do business. Investors in Ceres' network have convinced companies like Avon, Hershey, and Smucker's to source 100% certified sustainable palm oil, an ingredient that is otherwise grown on plantations that displace carbon-capturing rainforests and animal habitats.

Earlier this year, a group of investors pressed oil and gas firms to end the wasteful burning of natural gas in North Dakota's Bakken region, a phenomenon that not only creates greenhouse gas emissions but can also be seen from space. After a shareholder resolution filed by Mercy Investment Services and a productive dialogue with the company, Continental Resources, the region's largest oil producer, set a public goal of achieving "as close to 0% flaring as possible." This commitment is cleaning up one of the oil and gas industry's more wasteful and environmentally destructive practices, and it's encouraging other producers to do the same.

As the impacts of climate change continue to mount, investors will continue to press for improved disclosure and performance on mitigating these risks. Over the course of the week, my colleagues will discuss their ground-breaking achievements on corporate sustainability through their shareholder advocacy efforts in our "Why we file" series.

Rob Berridge is senior manager of Investor Programmes at Ceres, which coordinates the $11tn Investor Network on Climate Risk.

Climate change and extreme weather are fundamentally changing the United States, and American taxpayers are paying a huge – and growing – cost.

The U.S. Government Accountability Office warned in February that climate change is a “significant financial risk to the federal government.” It threatens everything – not just federal lands and buildings, but food, flood and crop insurance and disaster relief.

And who pays for all this? We do – the American taxpayers. So a threat to the government’s wallet is a threat to our own bottom line. Here are some examples of the escalating costs Americans are already bearing:

FOOD

Taxpayers subsidize the federal crop insurance program that was created during the 1930s Dust Bowl to protect farmers against crop losses. Today, we’re experiencing another devastating drought, and federal crop insurance losses have tripled in the past three years to $16 billion in payouts for 2012. That’s a cost of $51 a year for every man, woman and child in America.

And these costs are likely to continue – the latest numbers from the US Drought Monitor show nearly 67 percent of the contiguous U.S. is now experiencing some level of drought.

FLOOD

The National Flood Insurance Program (NFIP) is staggering under massive losses after Superstorm Sandy, which triggered more than 115,000 new claims in just the first two weeks after the storm.

Although NFIP collects about $3.5 billion a year in premiums, the amount of claims the agency has paid out has exceeded the amount collected in four of the past eight years, leading to increased borrowing by the federal government (in other words, taxpayers) to fill the gap. Last year’s losses in Sandy’s wake are expected to approach $8 billion. That’s $25 for every American.

Keep in mind, that figure doesn’t even include the $50 billion of disaster relief that Congress approved in January for Sandy-impacted states. And with sea levels rising and storm surges reaching further inland because of climate change, risks to coastal communities and costs to taxpayers will continue to rise.

FIRE

While Eastern states flood, many Western states are going up in flames. In 2012, more than 9.2 million acres burned in wildfires – an area larger than the state of Maryland – making it the third-worst fire year in U.S. history. In 2012, the Forest Service overspent its available fire suppression budget by $400 million, as it has almost every year for the last 20 years, transferring millions of dollars away from other land management projects. The costs are not only borne by the federal government; Wyoming and Montana spent more than $90 million of state money fighting wildfires in 2012.

Climate models show a likely increase in fires in coming years. A study by Headwaters Economics found that even a one-degree rise in temperatures would like lead to a 300 percent increase in acres burned, and a 100 percent increase in fire suppression costs.

STATE TAXPAYER EXPOSURE

Extreme weather, influenced by climate change, creates other taxpayer risks. State governments are increasingly liable for the cost of hurricane damages as private insurers pull out of at-risk locations, leaving state taxpayers subsidizing insurance loss claims for homes and businesses. The state insurer in Florida, for example, is carrying the burden of more than one million homeowners’ policies – a financial catastrophe just waiting for state taxpayers the next time a major hurricane slams hit Florida. State government loss exposure in hurricane-prone states, such as Florida, Texas and Massachusetts, now exceeds $885 billion, a 16-fold jump from 1990.

These trends are chilling reminders of the sweeping economic impacts we are now all facing from warming global temperatures. As you pay your taxes on April 15, you should also consider what your political leaders – in Washington and your state capital – are doing to address climate change. Let’s hope, for your wallet’s sake, they’re tackling the issue head-on.

Mindy Lubber is the president of Ceres, a non-profit organization mobilizing business leadership on climate change. She contributed this article to LiveScience’s Expert Voices: Op-Ed & Insights.

In the wake of a disaster like Sandy, it’s easy to point fingers—at industry, regulators, government officials—but several years ago, I came to the conclusion that society is not going to solve our most vexing environmental problems by simply deciding who’s to blame. Instead, we must shift the levers of power by involving the major players in our capital markets.

When a strong storm can bring the world’s largest financial institutions to a standstill, it is crystal clear that the challenges of climate change are inextricably linked to our economy. At Ceres, we work with major corporations, large institutional investors, and others to leverage their power to address climate change, water scarcity and other environmental threats.

Market players are logical actors and they respond to clear market signals. Right now, without a price on carbon, we’re sending the signal that carbon pollution is free. And when things are free, you get more of them. We need honest pricing that will bring corporate interests and environmental realities in line.

When it comes to climate-related challenges, it’s in the long-term interest of corporations, investors and other major economic players to adjust business-as-usual models in favor of new, more sustainable models that ensure future prosperity. Getting them to see their own long-term self-interest can be a daunting challenge, however, but we’re making progress.

Take the example of Ford Motor Company, a long-time Ceres collaborator. Ford has undergone a remarkable transformation over the past decade; it has gone from being a part of the problem to a visionary part of the solution by rethinking virtually every aspect of its business and putting sustainability at the core of its strategy.

For decades, every effort in Washington to raise fuel economy standards and thereby reduce oil consumption and greenhouse gas emissions had been met with stiff opposition from the carmakers who argued it was too costly, too difficult, and would result in cars Americans wouldn’t want to drive. In 2011, when the Obama Administration sought to raise average fuel economy standards for cars and trucks to 54.5 miles per gallon by 2025, it found unlikely allies in Detroit.

Ford acknowledges quite publicly that fuel-efficient cars and trucks are the wave of the future – it’s what customers want, it’s where the company wants to be “best of class.” What a refreshing change from a decade ago when “gas guzzling” cars and trucks was all they could talk about.

Today, Ford is on the leading edge of the development of a new generation of hybrids and electric cars. It is challenging Toyota’s dominance in this market in part with a $135 million investment in an advanced electrification center in Dearborn that will employ a thousand engineers. The company is deeply engaged with a range of stakeholders, listening to their concerns and advice and integrating them into strategy. It’s measuring and reducing its water usage worldwide. Ford’s water consumption is down eight percent per vehicle made between 2010 and 2011, and the company has set a goal of a 30 percent reduction by 2015. For Ford, sustainability is now a core business strategy that is improving competitiveness, creating jobs, and adding to the bottom line.

Ceres has been an instrumental partner in Ford’s transformation; we work with many large companies to bring them along the road to sustainability. There have been disagreements, pushing and pushback, but ever since Ford signaled its desire to become a sustainable company by joining Ceres in 2000, we have been working towards a shared goal, even if we sometimes disagree about how to get there and how fast we need to move.

This approach of constructive engagement has paid off, both for Ford, which is as profitable as it has been in years, and for the planet. Ford today is a sustainability leader because we have worked together, changing the paradigm of how the business of sustainability gets done.

We do, indeed, have a very long road to travel, but change is brewing and it is up to capital market players to chart the path towards a sustainable prosperity, one in which we build an economy within the limits of nature. I believe it is possible, and we can’t wait until the next storm strikes for our work to begin.

Mindy S. Lubber is President of Ceres, the leading coalition of investors, environmental organizations and other public interest groups working with companies and investors to build sustainability into the capital markets and address sustainability challenges such as global climate change.

This article was published in partnership with the Skoll World Forum on Social Entrepreneurship, to be live-streamed April 10-12 from Oxford, U.K.

In Bangladesh, workers are demanding safe and healthy workplaces. In China, where some of the most highly publicized abuses of worker rights have occurred, there are labor shortages despite China's massive population. And in Phnom Penh, Cambodian workers are striking for higher wages to help them build a better life for themselves and their families.

Levi Strauss & Co. sees this changing labor landscape as an opportunity, which is why they have convened the meetings I am attending here in Phnom Penh. Working with my organization, Ceres, the company is pioneering a new approach to supply chain management, one designed to promote worker well-being in five core areas: economic empowerment, good health and family well-being, equality and acceptance, educational and professional development, and access to a safe and healthy environment.

Also attending these meetings are representatives from some of LS&Co.'s supplier factories, local NGOs and other brands who are discussing plans for testing this bold initiative in five pilot factories in Cambodia, Bangladesh, Egypt, Haiti and Pakistan.

Listening to the "worker voice" is essential to this approach. In each of the pilot factories, workers were asked about their needs, their working conditions, and for input on how their workplaces and their lives could be improved. The quantitative survey and qualitative studies were conducted by an independent third party and finalized through a consultative process that involved a variety of stakeholders. Though priority needs vary across the factories, the surveys revealed many common concerns: fair wages, access to health care, harassment in the workplace, access to clean water and financial literacy.

As we progress through two days of discussion and brainstorming, it is obvious these suppliers see their workers as their competitive edge in business. As one put it, "we want to be the employer of choice and the supplier of choice." These businesses recognize that worker satisfaction is essential to achieving those goals. But how widely is this sentiment shared among suppliers both within and outside of the apparel sector? And is it translating into action?

At some, it is. One Bangladesh-based supplier represented at the meeting seems to be seriously examining how worker satisfaction drives business success. They have launched several initiatives providing services such as food to expectant mothers, free medical care, free transportation to and from work, and awards for attendance and production, all of which are designed to improve the lives of their employees. To determine if these programs are having a positive impact, the supplier evaluates progress with specific key performance indicators, such as turnover, absenteeism and avoidance of worker strikes, comparing these with benchmarks for similar companies. I found the results compelling.

This all sounds very encouraging, but sitting here in Cambodia -- a center of apparel manufacturing -- I wonder: How do we bring these efforts to scale? How do we convince thousands of suppliers to support the well-being of the 335,000 garment workers in Cambodia? Or the 3.6 million garment workers in Bangladesh?

The supplier has shown that investing in worker programs can have distinct business benefits, and that may persuade others to take similar steps. But, to be successful over the long term, these efforts must be "owned" by the supplier, the workers and the local communities; they can't be imposed from up high. Collaboration will be essential, and best practices and lessons learned will have to be shared.

Importantly, companies in the apparel sector and beyond must communicate to their vendors that to be "a supplier of choice" truly means being an "employer of choice," and reward suppliers with a proven commitment to worker well-being with more business and longer-term contracts.

Consumers, too, have a role to play. They can exert their power -- through the purchase of their electronics, sneakers or jeans -- by choosing companies that take a stand for worker rights, and avoiding those that do not.

No single company -- even when partnered with a handful of committed suppliers and dedicated NGOs -- can meet this challenge alone. The business of worker well-being has to be everyone's business. From here in Phnom Penh, the road ahead looks long, but the journey has begun.

I arrive in Phnom Penh on a Monday expecting a mad crush of people, cars, buses, bicycles and motorbikes, but it's as calm as a Sunday morning in my hometown of Ottawa. It's the Buddhist holy day, meak bochea, the day Buddha predicted he would achieve enlightenment and enter into nirvana.

Though my goals aren't quite so lofty, it is enlightenment I'm after. I'm trying to get a glimpse into the world of the hundreds of thousands of workers who labor in Cambodia's many garment factories making products such as Levi's jeans. Indeed, Levi Strauss & Co. is the reason I'm here.

More than 20 years ago, LS&Co. became the first multinational apparel company to establish a comprehensive workplace code of conduct for its global suppliers. The code was visionary for its time, and became a model for many other companies. But LS&Co. concluded two years ago that the code, while important, is not enough; the company has to expect more from its suppliers, and itself, to improve the well-being of those who make the world's most famous jeans and other Levi apparel.

That means focusing not just on factory compliance, but also on broader worker issues like health care, maternal health and gender equality. This ambitious, long-term commitment formally kicked off a year ago with a joint LS&Co./Ceres report, "Improving Worker Well-Being: A New Approach to Supply Chain Management."

In Phnom Penh, LS&Co. has gathered representatives from its suppliers, NGOs, other brands and partners across the industry to discuss the best strategies and tactics for improving working conditions. Some sample topics include increasing fire and electrical safety training, boosting clean production practices and improving the interaction between workers and management.

LS&Co. is urging its suppliers to take steps to improve relationships with workers and the labor unions that represent them. The meeting room is filled with translators working furiously to interpret the candid discussion -- the buzz they create is both fascinating and distracting to witness, as one wonders how much of the debate is being lost in translation.

Throughout the meeting, there is a high priority placed on labor and management communication. As I look around the room, I see representatives eagerly taking notes while discussing leading-edge strategies for improving labor and management relations, an important step in protecting the rights and improving the lot of workers. One supplier in particular talks about establishing a new department devoted to expressly improving worker, management and union communications, where regular meetings between senior executives, management and labor unions occur, and where worker inquiries or complaints must be addressed within three days.

When LS&Co. first announced its intent to launch the Improving Worker Well-Being program, the company said, "You must expect more, to get more." While this meeting is with company managers, not workers, and is focused on compliance with LS&Co.'s current code of conduct, the message is being sent that the company is expecting more, much more.

The groundwork is being laid here for an ambitious effort to improve workers' lives. LS&Co. will pioneer this effort, starting with five pilot factories in Cambodia, Bangladesh, Egypt, Haiti and Pakistan. During the rest of my time here, we'll be exploring the possibilities for realizing this bold vision and the opportunities for bringing it to scale.

Stay tuned.

According to a poll released last month by Fallon Research, nearly 80 percent of Ohio voters support laws requiring the state to produce a portion of its electricity from clean energy sources like solar and wind.

Yet, despite this overwhelming support for a policy that’s already on the books, an Ohio State Senator is seeking to repeal the state’s Alternative Energy Portfolio Standard, which calls for 25 percent renewable energy by 2025.

Why?

“It is my strong conviction that the choice of energy supply should come from the demands of the free market, and not from policy makers and environmental lobbyists,” the Republican Senator said.

At 80 percent support, the demands of the free market - that is, consumers who purchase power each day - seem pretty clear in Ohio. And 28 other states with Renewable Portfolio Standards (RPS) would agree

RPSs have been a big hit across the U.S., catalyzing billions of dollars of investment, thousands of new projects and hundreds of thousands of good-paying jobs, including 30,000 new jobs in 2012 alone. And as more wind and solar projects are built, production costs keep falling. In Midwest states, for example, cheaper wind energy has helped reduce wholesale electricity costs by 40 percent since 2008.

Yet, despite these gains, renewable energy standards are under attack in numerous states, often at the behest of fossil fuel interest groups. So far, fortunately, most of these efforts are falling on deaf ears.

In Kansas, one such group is seeking to roll back a 2009 law mandating that 20 percent of the state’s electricity come from renewable energy by 2020. This, despite the fact that the RPS has created 13,000 new jobs in Kansas, has generated $7 billion of economic activity and has strong bi-partisan and business support. Their effort failed.

“Investment in the renewable energy economy is creating jobs across all employment sectors,” says Republican Kansas Governor Sam Brownback, a vocal clean energy supporter and one of nine Republican governors in the Governor’s Wind Energy Coalition.

In Arizona, the nation’s largest producer of solar energy per capita, the Arizona Corporation Commission is seeking to scuttle a requirement that 15 percent of the state’s power come from renewables by 2025. Within weeks of its announcement, dozens of renewable projects were stopped, including major projects with the Department of Defense and Wal-Mart. Last week, the Commission abandoned the repeal effort.

Investors see huge economic and job creation potential for renewable energy. The state renewable mandates alone could generate up to $400 billion of private investment by 2030. But stop-and-start policy cycles would send the wrong signals.

As Bennett Freeman, senior vice president at Calvert Investment Management, wrote in a recent column supporting Arizona’s RPS, “Policies like the state renewable-energy standards are key.”

Leading U.S. companies also see an opportunity in turning to renewable energy. A Ceres report released late last year showed that a majority of Fortune 100 companies have renewable-energy goals, greenhouse gas reduction goals, or both. They’ll need strong consistent policies to help them meet those commitments.

Meanwhile, the attacks keep coming. One day after the Arizona Corporation Commission abandoned its repeal effort, a North Carolina legislator filed a bill to roll back North Carolina’s clean energy mandate.

Voters, investors and businesses agree on renewable energy standards, but if they keep quiet on their support, they could let the 20 percent overrule the 80. And, to me at least, that doesn’t look like the demands of the free market at work.

My colleague Berkley Adrio and I had a chance to witness this first hand this month in New York City, where on opposite sides of the city, we saw vexing questions about the nature of freshwater’s value being debated by religious investors, mainstream asset managers, community activists and multinational corporations.

Downtown, Goldman Sachs co-sponsored an event, ‘Water: Emerging Risks and Opportunities’, with GE and the World Resources Institute. Despite the winter mess outside, nearly 300 asset managers, water infrastructure and energy sector executives came to learn about opportunities for investing in water and the growing water demands of the United States’ booming unconventional energy sector.

Uptown, the Interfaith Center for Corporate Responsibility – an organization with an impressive 40-year track record of faith-based shareholder activism – convened a roundtable on the obligations of companies to respect the human right to water. Seventy religious investors, major water-intensive companies, and grassroots activists from around the globe came together to tackle the question of what companies can and should do to ensure their operations “do no harm” to water supplies of local communities.

Investors at the Goldman event who are allocating capital to “water solutions” very well may be driving the green technologies that can help the industrial companies at the ICCR session clean up their acts. But the problem for companies is that in most places, water is so cheap that investing in these solutions can sometimes be hard to justify on a traditional ROI basis, if not on a moral one.

So what is water’s worth? Your response depends on how we measure its “true” value.

EPA’s senior advisor on water, Ken Kopocis, warned the Goldman audience that this was no easy exercise: “Can you really give water a price? In a stream it’s free, and when you don’t have it…it’s priceless.”

Indeed, water is increasingly scarce and contested in many regions, including many parts of the United States. But according to traditional economic thinking, that scarcity should drive up the price of the good in question, and in turn moderate demand. But water is no ordinary good, and its price is the function of messy, local political processes. In the U.S. for example, it tends to be cheapest where it’s least abundant, including in desert communities in Utah, Nevada and California.

In theory, “water markets” should help address this scarcity. As David Sunding, UC Berkeley water economist (and a reviewer of a Ceres study on water risk in the municipal bond market) noted at the Goldman event, there are “huge arbitrage opportunities” in water because different users pay vastly different amounts – i.e., farmers vs. residential users (a case in point is T. Boone Pickens selling in 2011 Ogallala aquifer water owned by Texas farmers for over $100 million to a group of municipalities that were fast running out of surface supplies).

But while water trading is seemingly viable, the “reality on the ground has proven to be quite different,” Sunding says. Why is that? Too many local rules and restrictions that make water trading cumbersome. But just as important are massive engineering challenges of moving heavy water long distances.

No one knows that better than Patricia Mulroy, head of the Southern Nevada Water Authority and a keynote at the Goldman event, who spent nearly $2 billion to build a new intake pipe at water-starved Lake Mead and is seeking to spend billions more to pipe water 263 miles from eastern Nevada to Las Vegas.

As the person responsible for maintaining water security for the driest city in the country, Mulroy says the true value of water is about the cost of physically moving it. As she put it: “A human right to water? Sure. You come to me and I will tell you ‘here’s a bucket’ – go to Lake Mead and take all you want. It’s the hardware that isn’t free.”

In this world of growing scarcity, how do we balance the roles of pricing and governance for allocating a finite and essential resource?

At Ceres we are driving innovations in both of these arenas. We are working with the University of North Carolina Environmental Finance Center to identify the water utility rate structures that most effectively convey the scarcity of water while maintaining stable revenues and ensuring affordable access.

We’re also working with large corporate water users like Coke, Suncor and Ford to help them identify opportunities to improve their water stewardship in their own operations and also play a more effective role in advocating for stronger governance of these limited resources in water-stressed regions.

The markets can be an effective tool for allocating scarce resources in most circumstances. However, markets without effective governance systems won’t do the job of protecting the needs of the least able to pay and those of future generations.

This blog is also featured on www.nationalgeographic.com

Boarding a puddle jumper in Dallas, I picked up a copy of USA Today and opened to the headline “Wealth Rises in the USA’s Heartland”. It was a fitting start to my trip to Midland, Texas. As it turns out, my final destination had reported the second highest per capita income in the nation. Only the bankers of Stamford, Connecticut were making more money than the average Midlander in 2011.

If you have been following the energy sector as closely as I have, you might have guessed the cause: oil. The U.S. is in the midst of an energy boom, with the International Energy Agency predicting that the U.S. will be almost self-sufficient in energy by 2035. The country’s resurgence in oil and gas production is largely attributed to advances in drilling technologies, most prominently hydraulic fracturing, which has unlocked shale oil and gas resources previously thought unrecoverable.

Over the past several months, my colleague Ryan Salmon and I have been researching the effect of hydraulic fracturing on water resources. Our goal is to assess the potential risks associated with this industrial process and inform investors in Ceres’ Investor Network on Climate Risk on the water risks and issues they may face in specific regions, across the many stages of the water lifecycle. I was on my way to see this phenomenon firsthand in Midland, a city of roughly 100,000 inhabitants that sits in the middle of the Permian Basin in Western Texas.

Hydraulic fracturing has quite literally changed the American landscape. As the airplane descended, I could see dozens of well pads dotting the horizon (see photo). The airport walls were lined with advertisements for drilling gloves, pipe lubricants and other specialty products. I would not have been surprised to see a rig in the middle of the runway.

At dinner that night, I struck up a conversation with a waitress named Anna. She told me how the Midland community had changed during the latest rush. Hotels are full, food prices are rising and specialized labor is hard to come by. Hiring a contractor can take up to a year, as demand for skill labor has skyrocketed along with the boomtown economy.

While she agreed that oil had been a boon to many local businesses, Anna told me that sudden wealth had left the community divided. Those with family members working in the industry feel the boom is a blessing; those that do not feel otherwise as they face the burden of local inflation with no income upside. Others are feeling the pressure in their rents. A house on Anna’s block that used to rent for $600/month two years ago now rents for $1,600. Midland had been through boom times before, she reminded me. The key is to remember that a bust always follows.

For the moment at least, Midland is flush. By my estimates, an owner of one section of land (640 acres) can make between $500,000 to $2,500,000 on just the lease of the land to oil drillers before taking into account any additional income from royalties once the oil starts to flow. This bonanza can be divisive in this region, as ownership of the subsurface minerals sometimes rests in one set of hands, while the ownership of the land rests in another. In that case, a mineral rights-owner reaps a significant financial benefit, while the surface owner has none.

Though Midland has quickly realized the value of its land, the community’s approach to valuing and managing its already scarce water supplies has lagged behind the boom. Hydraulic fracturing is a water-intensive practice, and citizens and local businesses are now competing with the oil industry for increasingly scarce freshwater supplies.

I grew up in region with many similarities to Midland—southern Alberta—, which is equally flat as a pancake and also prone to drought-like conditions. Unlike Midland, southern Alberta can source some of its water from the nearby Rocky Mountains and seasonal snowpack. Midland, on the other hand, relies heavily on groundwater, increasingly so after all but one of its surface reservoirs dried up during the drought of 2011.

The precipitous decline of the city’s water supply didn’t seem to be the result of the thirst of a growing population—everyone seemed to drink bottled water, due to some issues with the taste. But the resulting credit downgrade of the town’s water authority clearly illustrates the need for better water management. Midland is far from the only town affected by this phenomenon, and is the topic of a recent Ceres white paper on credit trends in the water sector.

These water-related tensions fueled by the town’s economic lifeblood—the oil and gas industry—are likely to define the coming years in Midland. In my next post, Ryan and I will describe our experience on-site at a hydraulic fracturing operation, where all of these issues intersect.

In just the past two weeks, New Jersey and New York have announced sweeping changes to limit future development in vulnerable coastal areas. San Francisco is also instituting a “managed retreat” of a key coastal highway and other critical public infrastructure due to rising sea levels.

Promising ideas are also surfacing in Washington. Among those, a thoughtful initiative from SmarterSafer.org, a network of insurance groups, taxpayer advocates and NGOs (including Ceres), which recommends that federal authorities require statewide resiliency mitigation plans before states can receive federal disaster assistance. The network also wants to require communities participating in the National Flood Insurance Program to adopt stronger building codes and conduct a vulnerability assessment of critical facilities.

A common thread in all of these efforts is reducing economic losses and taxpayer exposure from climate change impacts.

“Instead of scattershot, ad hoc approaches after a disaster strikes, we should be planning for these events all along and make communities and infrastructure more resilient and less vulnerable,” said Steve Ellis, vice president for Taxpayers for Common Sense, speaking in support of the SmarterSafer plan. “Every dime of taxpayer funds spent on disaster recovery should help ensure that we don’t have to spend that dime again in a future disaster.”

U.S. taxpayers are being ravaged by climate-influenced economic losses. The devastating drought across much of the country will cost taxpayers a record $16 billion of crop insurance losses, and last week they saw President Obama sign a $50.5 billion disaster relief package to help Hurricane Sandy victims. While the relief bill is obviously necessary, taxpayers should be rightfully disappointed that the package contains no provisions requiring stronger planning measures to protect against more powerful future storms.

Insurers are also feeling the financial pinch of more pronounced extreme weather. Among those are property/casualty insurer Chubb, which last week reported a 77 percent drop in fourth-quarter profits due to $882 million of Sandy-related losses to its major portfolio of high-end Northeast homes. The Travelers Cos. also saw a 51 percent drop in quarterly profits, a direct result of Sandy-related claims.

The mounting losses are getting insurers’ attention.

“We’ve embraced the notion that weather is different. I don’t know why. I’m not a scientist,” Travelers CEO Jay Fishman told CNBC last Friday. “If you’re not impressed with what the weather has been doing over the last few years, you’re not keeping your eyes open.”

Insurance regulators are also paying attention. The National Association of Insurance Commissioners is now requiring climate change risks to be included when examiners audit the financial condition of insurance companies.

“I want to make sure that the industry that we regulate is adapting to climate [change] in a positive way so that they don’t get blind sided, or more importantly that we don’t see insurance companies pulling out of markets or raising rates to the point where they’re unaffordable,” said Washington Insurance Commissioner Mike Kreidler, who advocated for including climate risks in the NAIC’s Financial Examiners Handbook.

These efforts are surely encouraging, but whether Congress has an appetite for more comprehensive changes, such as SmarterSafer’s ideas, remains a big question. And that’s before even considering the most important change of all – adopting comprehensive legislation to reduce the carbon pollution causing climate change in the first place.

But what if there's not enough demand for water to pay for these projects?

This might seem like an implausible question in a region defined by growth and expansion for over a century. But in fact, demand for water is falling in many parts of the country. Between the 1970s and the late 2000s, the amount of water used by American households fell everywhere — by tens of thousands of gallons each year in Phoenix and Seattle, to nearly 100,000 gallons a year in Las Vegas.

The trend is due to a slew of reasons, including smaller households, water-efficient indoor fixtures, conservation programs and the protracted economic slowdown that devastated housing markets, especially in the West. But even with the economic recovery and projected population growth in many Western cities, the tendency to assume that household use will stay steady is demonstrably out of line with reality.

Declining demand has surprised many water-system managers and created complex financial challenges for ensuring future water supplies. For those systems planning to finance multibillion-dollar projects, the challenges are especially daunting.

Like those in the rest of the country, Western water projects are typically financed by issuing bonds to cover a project's upfront costs. The subsequent debt and interest costs are then repaid to bondholding investors using revenues the water utilities generate by selling water. The arrangement worked well when the federal government bankrolled most projects. But those days are over: Federal funds have largely dried up.

That means water utilities must assume far larger debt obligations to finance big-ticket projects. It also means they need to sell more and more water, and at higher rates, to repay those debts.

For water-challenged cities like Las Vegas and San Antonio, which have seen the benefits of strong water conservation programs, this creates a financial catch-22. Las Vegas was an early pioneer in demand management, when, in the 1990s, it began rewarding homeowners for tearing up their lawns and replacing the grass with desert vegetation. The program was a big success, reducing water demand by 18 percent.

To help offset this evaporating demand, Las Vegas turned to connection fees paid for by new households that were added to the system. But when the housing market stalled, that lucrative revenue source plummeted. Las Vegas saw its water connection fees from new housing starts fall to $3 million in 2010, from a peak of $188 million during the housing boom.

As a result, the Southern Nevada Water Authority has recently begun allowing customers to replant the lawns they were once paid to tear up. It's a short-term revenue fix that only contributes to the region's dire water-supply shortage.

So how necessary are some of these hugely expensive proposals, especially when demand management has proven effective in reducing water-supply pressures? Moreover, if water managers push ahead in building these expensive projects, what financial risks will ratepayers and investors have to take on?

For those thinking the risk scenarios are implausible, take a look at the Las Vegas Valley Water District. Nearly $2 billion of its bond debt was downgraded in 2011, due to the double whammy of declining water sales and emergency capital expenses to finance a massive new intake pipe from water-deprived Lake Mead. Consider as well Colorado Springs, whose water system was placed on a credit watch last March in light of the slow economic recovery, rising water rates and a nearly $1.5 billion capital program to build a new pipeline, which will pump water from a tributary of the Mississippi River.

Lessons can also be learned from Australia, which responded to severe water shortages by financing a bevy of expensive new water desalination plants. Today, four of the six plants have been placed on standby due to declining water demand, triggered in large part by higher water rates necessitated by the projects' costs. The nation's first large-scale desalinization plant in Florida faces a similar problem.

Here's the bottom line: Price-sensitive demand, growing populations and climate change trends are creating unprecedented challenges to our Western water resources. How water managers solve these challenges — and pay for them — should be less about pie-in-the-sky solutions and more about old-fashioned thrift.

Sharlene Leurig is a contributor to Writers on the Range, a service of High Country News (hcn.org). She is a water-financing expert at Ceres, a national nonprofit group based in Boston that advocates for business leadership on climate change.

Late last year, NASA released new high-definition photographs of the Earth at Night. In these photos, you can see the city lights of Minneapolis and Chicago glittering against the night sky. A little further west, a patch of lights burns almost as bright in rural North Dakota. The source? The state’s booming oil and gas industry.

As developers have raced to coax oil out of the Bakken shale formation through hydraulic fracturing, they have created a new “metropolis” of oil drilling pads in rural North Dakota – and the oil fields are creating far more than just light pollution.

In the Bakken, much of that light is produced by burning off—or flaring—natural gas that is produced as a byproduct from oil wells. Modest investments are being made in pipeline and processing infrastructure to capture and get the natural gas to market, as well as other solutions such as using it to power onsite generators. But in the race to get the higher-priced oil out of the ground as quickly as possible, many companies are simply burning it.

According to the North Dakota Industrial Commission, approximately 240 million cubic feet of gas is flared every day in the state’s oil and gas industry. If that energy were captured, it’d be enough to heat half a million homes. (Just to be clear, that’s 500,000 homes’ daily heating demand up in smoke each day.) Not only is flaring a massive economic waste, it also affects regional air quality and creates significant greenhouse gas emissions that are wreaking havoc on the climate.

Acting on these concerns, investors at Mercy Investment Services have filed a shareholder resolution with Continental Resources, a major Oklahoma-based oil developer operating in the Bakken, requesting that the firm “adopt quantitative, company-wide goals, based on current technologies, for reducing or eliminating flaring in all operations and facilities under the company’s financial or operational control.”

Mercy Investments is right to raise the issue with Continental, which recently bought up $650 million in Bakken real estate. And they’re not the first investors to voice their concern over flaring. Last year, investors representing $500 billion in assets sent a letter to 21 of the industry’s largest shale oil producers, including Continental, urging them to reduce or eliminate flaring.

Their message? The flaring of natural gas represents a waste of valuable product – hundreds of millions of dollars of lost revenue – and “annual emissions of at least 2 million tons of carbon dioxide, as much as adding 384,000 cars to the road.”

Unless the industry takes more aggressive action, flaring will continue at present levels and might even increase along with booming production. North Dakota officials say they would like to reduce flaring to below 10 percent, but enforcement of flaring regulations has been lax at best.

As one of the biggest players in the Bakken, Continental should demonstrate leadership in tackling this important problem.