February 9, 2010
In case you missed the big game, after forty long years of misery, loyal New Orleans Saints fans can finally take off the brown paper bags, show their smiling faces and happily ask, “Who Dat?” It’s quite a sight considering it’s their first Super Bowl Championship ever.
Know what other long standing institution had a big “first” last week? The SEC, ironically enough. On January 28th, after a vote of 3-2, the SEC made history. It issued a signal for publicly traded companies to provide guidance regarding climate risk in SEC filings (http://www.incr.com/page.aspx?pid=1194). This is the SEC’s first official move regarding the impact of climate change on businesses, and guess what… it barely generated any news.
On Wall Street, the “golden rule” has always been “He who has the gold makes the rules.” Well, in this case, the “clarion call” was made by 80 asset owners with $8 Trillion in total assets. They have the gold! Maybe that’s what is needed to get on the scoreboard. It’s about time that someone listens to what investors are saying.
If you say hogwash, look at the results of a December 2009 survey from the Social Investment Forum (www.socialinvest.org/documents/Investment_consultant.pdf.). The survey looked at investment consultants who are the gatekeepers for pension funds, foundations, endowments, and high-net worth investors with assets that ranged from $100 Million to $1 Trillion. These are the same folks who vote with their pocketbooks.
The consultants were asked about “positive selection according to sustainable themes.” 49% said sated that themes such as climate change have a positive impact on portfolio performance. “There is unanimity that client interest will not decrease and nearly 90% believe it will grow over the next three years.” Again, it’s good to see that someone is listening.
Hats off to the 3 brave souls at the SEC, and certainly, the assets owners. Many agree, including me, that this decision did not need to take this long, nor be this close. And while this is just the first step in what will be a lengthy and much debated topic, it was a good first step nonetheless.
As I’ve said time and time again, I leave my personal political feelings at the door. I’m a life-long finance guy, and I have zero interest in using climate change as a social, moral or political platform. But I think the SEC’s move is a major plus for the investment world. Investors need to be aware of all variables impacting their investment decision (long or short), and transparency is the name of the game. Businesses may not want to disclose the impact of climate change on their bottom line, but some of the most powerful and influential investors in the world do, and they’re starting to make their voices known.