The news on sustainability is not good. The Paris treaty is not enough to keep global warming under 3 degrees C.
Multi-lateralism which is crucial to agreements on environmental protection is under fire from new nationalist and populist movements.
Greenhouse gas concentrations in the atmosphere today are at levels similar to when sea-level was much higher. Government is gridlocked. Deforestation continues. Growing populations seek to live carbon intensive first-world lifestyles as wealth concentrates in upper reaches of society and the value of labor diminishes with increasing automation.
So who or what is going to step in and lead decisively on issues which require action? There is at least one answer left, and that is a novel and motivated group of corporate leaders and investors which comprises the mostly hidden foundation of our global economy. Why would they do this? The honest answer is essentially because it is in their own self interest over the not so long term horizon. What is appearing as inevitable environmental and social meltdown can no longer be ignored.
What I’m talking about is a new organization of investors and CEOs called The Strategic Investor Initiative (SII), a project from CECP, a CEO-led coalition that believes business can be a force for good in the world. Now before you raise your eyebrows and tune out, consider that there is a group of investors already committed to engage, with an astonishing $15 trillion in assets under management. These include Blackrock, Vanguard, State Street, Morgan Stanley and other mega-forces in the investing community.
Also at the table are the senior executives of some of the largest global corporations, including Merck, IBM, BD, Walmart, Dow and others.
So what are they doing? Well, on February 27th, they will start their work at a day long session in New York City where 10 CEOs will present for the first time their strategic plans to this group of long-term focused investors. These plans will incorporate all forms of material risk and opportunity, including the emerging social, environmental and governance risks which must be addressed in order to ensure economic and environmental vitality. These plans will be broadcast live for public consumption, and investors will be engaging directly with questions on key issues. The plans will also be incorporated into regular corporate reporting, alongside traditional quarterly financial updates.
Why does this matter? Well for one, it’s the beginning of a new normal, regular cadence of engagement between investors and corporate leaders, in a public manner, which will allow for transparency around tough financially relevant questions.
These are questions like: transparency around green house gas emissions? Or, what are the plans for reducing those emissions in line with Intergovernmental Panel on Climate Change (IPCC) guidance over time as regulation intensifies around carbon? Or, what is the prognosis for reducing the risk of water shortage on your operations in drought stressed areas as our climate changes? Or, how do you intend to maximise your talent pool by improving diversity and inclusion across your operations and supply chain?
Note that this entire effort is of course voluntary. These CEOs and investors are doing this on their own accord, in order to help demonstrate to their peers what leadership looks like in a world which so dearly needs it. Let’s watch this carefully, and with enough public engagement, we can perhaps all drive this new initiative to increasing prominence, scrutiny and leadership.
Disclosure: Tim Nixon serves on the Advisory Board for the Strategic Investor Initiative.
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