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July 15, 2014
Ways to Assess Corporate Action on Climate Change
by Robert Kropp
The Carbon Tracker 200 list provides information on the unsustainable practices of the world's
largest fossil fuel companies, and Ceres collaborates on a searchable database of climate change
disclosures by US companies listed on the Russell 3000 index.
When the Unitarian Universalist
Association (UUA) announced its new fossil fuel divestment policy, the resolution stated that
the UUA would divest its holdings in the Carbon Tracker 200 within five years.
What is the CT200? Originally assembled by the Carbon Tracker Initiative—the organization whose 2011
report Unburnable Carbon focused the attention of investors and others on the concept of stranded
fossil fuel assets—the CT200 list the world's 200 largest fossil fuel companies. The list is
currently maintained by Fossil Free
Indexes, an environmental, social, and corporate governance (ESG) index and research company.
To be precise, the CT200 lists the 100 largest oil and gas companies and the 100 largest
coal companies. Noted and links to media coverage included in the rankings describe investment and
reputational risks incurred by the companies due to environmentally unsustainable business
practices. The list also reports on the reserves on the books of each company, measured in gigatons
As the fossil fuel divestment movement grows increasingly mainstream—even
BlackRock recently partnered with the Natural Resources Defense Council (NRDC) to
launch an “equity global index series that will exclude companies linked to exploration, ownership
or extraction of carbon-based fossil fuel reserves”—the smart long-term investment money would seem
to be on divestment.
But as UUA's carefully crafted divestment policy points out,
divestment alone will probably not enough to steer the world to a low-carbon economy. That is why
the Association was explicit in its determination to maintain the level of shareowner engagement
that it has developed over its years as an institutional investor.
Besides, as the UUA's
Simon Billenness pointed out to SocialFunds.com in a recent conversation, the fossil fuel
divestment movement is “also influencing the way shareholder activists engage with companies that
are not in the fossil fuel industry, like electrical utilities.”
Investors rely on the
climate change disclosures of companies to assess whether how those companies are responding to
climate change, both in strategies to reduce greenhouse gas (GHG) emissions and prepare for the
business realities of a low-carbon economy. In 2010, the Securities and Exchange Commission (SEC)
published interpretive guidance for corporate reporting on climate change; “certain existing
disclosure rules...may require a company to disclose the impact that business or legal developments
related to climate change may have on its business,” the Commission stated at the time.
provide investors with improved access to corporate climate change disclosures, Ceres has collaborated with Jackie Cook of CookESG Research to provide a searchable database of
such disclosures by companies listed on the Russell 3000 index. Only half of Russell 3000 filers
had something to say about climate change in their 2014 10-K filings, the database reveals.
“Robust climate-related data from companies is a critical need, but it’s still lacking,” said
Mindy Lubber, president of Ceres.
“This portal helps investors make sense of textual
climate disclosures, conduct company-to-company comparisons and identify best practice,” Jackie
Cook added. “The full value of the SEC’s 2010 interpretive guidance can only be realized if we
actually monitor companies’ climate disclosures and act on the information – or absence of
The tool will be extended in the future, Ceres states, “to include US and
non-US companies and coverage on a broader range of sustainability issues, including hydraulic
fracturing and water availability, which also pose material risks and opportunities to a range of
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