A Landmark Year for Equality and Sustainability
Nov 12 2021
2021 has been a landmark year for shareholder engagement on climate, sustainability and human rights. Record high majority votes on legislative initiative and new corporate commitments from companies show that collaborative investor stewardship initiatives are driving impressive and sometimes surprising results.
Multiple studies published in peer-reviewed scientific journals indicate that 97 percent or more of current climate scientists agree that climate-warming trends over the past century result from human activity. In addition, most of the leading scientific organizations worldwide have issued public statements endorsing this position.
A new report released by the Ceres Accelerator for Sustainable Capital Markets reveals that the physical impacts of climate change could amount to more than a $250 billion risk annually for the largest U.S. banks. This assessment — based on 96 large U.S.-based companies … reveals that only 40 percent have engaged directly with lawmakers on science-based climate policies and even fewer are assessing and acting on misalignments found within their trade associations.
The physical impacts of the climate crisis have become increasingly obvious. This last summer has been marked by historic climate devastation—from severe flooding and drought, to unprecedented wildfires and heatwaves, and back-to-back hurricanes ravaging coastlines. These extreme weather events are more and more frequent and costing dozens of lives and tens of billions of dollars in damages. But fortunately, there are ways to mitigate both the physical impacts and the economic costs of the climate crisis.
Climate change not only poses financial and material risks to companies and industries, but also systemic risk to financial markets. Given the nature of this systemic risk, logic would dictate that corporate actions would be proportional to the risk faced and aligned with the latest science on climate change. Yet Ceres’ recent assessment of 96 large U.S.-based companies indicate only 40% have engaged directly with lawmakers on science-based climate policies and a smaller number yet are assessing and acting on misalignments found within their trade associations.
The Intergovernmental Panel on Climate Change (IPCC) has recently published landmark findings on climate change, stating that “the greenhouse gas emissions spewed out by fossil fuel burning, forest destruction and other human activities are now clearly destabilizing the mild climate in which civilization began.” Population growth is imposing stress on the world’s resources, including growth in human-produced greenhouse gas emissions and the associated effects on the Earth’s climate.
The most important consequence of population growth is overuse of finite resources and depletion of fisheries, wetlands, forests, groundwater, and rare earth minerals. Continued population growth will stress agricultural production, leading to potential food shortages. It will also accelerate urbanization, deplete the stock of world forests, increase the incidence of poverty, and add to unemployment.
This is becoming a major concern with the increase in productivity, the continued centralisation of the means of production for economies of scale, with higher efficiency and productivity, and all that accompanies the advent of Industry 4.0, which I will focus on in a forthcoming blog.
Peter J. Spinney