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August 15, 2013
US SIF Offers Guides on Climate Change Investment for Retail and Institutional Investors
by Robert Kropp
Warning of the urgent crisis that is climate change, the guides provide basic information on voting
proxies, filing shareowner resolutions, and public policy advocacy.
Many sustainable institutional investors disagree with the campaign to divest holdings in fossil
fuel companies launched by 350.org last year. “To
divest is to relinquish those shares to another owner who may not be practicing active ownership,”
aith Center on Corporate Responsibility (ICCR) points out. “This approach, in effect, serves to
strengthen management control. ICCR members advocate for amplifying our collective voice by
bringing more shareholder advocates to the table – that is, we support engagement.”
Whatever one's position on divestment may be, the campaign by 350.org—along with recent
insights into the natural boundaries of the planet and stranded fossil fuel assets—have apparently
raised awareness in the sustainable investment community about the need to act decisively on
investing to help combat climate change. Not only has ICCR published four pages of insight from
which the above quote is extracted; Ceres has
published The 21st Century Investor as well, which outlines ten
steps for investors to incorporate sustainability into their decision making.
US SIF – The Forum for Sustainable and Responsible
Investment has weighed in on the issue as well, with a pair of brief guides designed to help both retail and
institutional investors direct their investments to address climate change. Each guide begins with
a brief overview of the nature of the crisis: “To have a chance at staying within the 2°C limit,
climate scientists say the world’s human population must add no more than about 565 gigatons of
carbon dioxide to the Earth’s atmosphere,” the guide for institutions states. “However...oil and
gas companies as well as the countries, such as Venezuela and Saudi Arabia, that control and
develop fossil fuel reserves, have reserves sufficient to put another 2,795 gigatons into the
Moreover, the guide continues, “many fossil fuel companies and other
companies continue to lobby against measures such as a carbon tax or regulations to cut carbon
emissions from electrical power plants. Numerous prominent companies pay dues, make contributions
to or sit on the boards of organizations that oppose legislation and regulation to curb greenhouse
Both guides offer instruction in the approaches familiar by now to most
institutional investors. Each emphasizes the importance of reviewing the performance of portfolio
companies and voting on shareowner resolutions, and describes the process for filing resolutions.
The institutional guide includes information on the range of holdings available to institutions as
well, including the growing popularity of alternative investments such as private equity and
The public face of sustainable investment has traditionally been that of
institutions, which have the resources available to advocate for long-term investment horizons that
incorporate environmental, social, and corporate governance (ESG) criteria. So it is especially
welcome to have a guide directed at retail investors, many of whose investments are in mutual funds
which for the most part have lagged in incorporating sustainability.
The first step
recommended for retail investors with holdings in mutual funds is to educate themselves about their
funds' activities and contacting them to encourage policies on investing to curb climate change.
Many mutual funds and exchange-traded funds already invest according to sustainability criteria,
and retail investors should consider switching to them if they are dissatisfied with the ESG
performance of the funds they currently hold. The guide also includes information on banking to
curb climate, and as with institutions as well recommends that retail investors add their voices to
advoocacy for effective public policy.
SRI World Group, Inc. All Rights Reserved.