Time is running out for averting catastrophic climate change. The recently released sixth report of the Intergovernmental Panel on Climate Change contains more precise and alarming predictions of expected climate disruptions based on direct observations of the changes already underway and on improved climate models. It is now clear that keeping the warming below 1.5°C, as laid out in the Paris agreement of 2015, would require the whole world, not just rich countries, to get net emissions of carbon dioxide down to zero before 2050 – a huge challenge for our political and economic systems.
In light of the urgency of the matter, we are assisting our clients in identifying ways in which their investments can support the alignment of our economies to a net-zero emission pathway. This includes forceful engagement strategies with large emitters in their portfolios, targeted investments in clean energy infrastructure and in carbon capture technologies, investments that enhance carbon sinks in soils and forests, and investments in companies providing break-through innovations.
onValues is stepping up its engagement in support of initiatives that contribute to understanding planetary boundaries and assessing their relevance for financial and investment decisions. In this context, our founder was recently invited to join the board of Global Footprint Network. The Network is famous for its comprehensive set of Ecological Footprint metrics and related advocacy. The Ecological Footprint continues to be the only metric that holistically compares human demand on nature against nature’s capacity to regenerate. It is based on simple, straightforward accounting – not on arbitrary scoring. Since its inception, Global Footprint Network has calculated Footprints of countries for each year that UN data has been available. Its engagement reach includes:
Milton Friedman’s 1970 essay, “The Social Responsibility of Business Is to Increase Its Profits,” has just turned 50 and this is prompting a range of initiatives calling for a shift to “stakeholder capitalism” responsible to workers, communities, suppliers and the environment as well as to investors.
A year ago, 181 CEOs members of the Business Roundtable pledged themselves to the stakeholder approach instead of the “shareholder supremacy” preached by Friedman. “It is good that the business community has awaked,” economist Joseph Stiglitz recently said in The New York Times. “Now let’s see whether they practice what they preach.”
One of the advocacy initiatives recently launched is Imperative21, whose goal is to champion an “economic system that is designed for interdependence, invests for justice, and accounts for all stakeholders”, as B Lab’s Jay Coen Gilbert, one of initiators of Imperative21 recently wrote in the New York Times.
The stakeholder approach has long been part of the framework that onValues uses in advising its clients. After 30 years of sustainable investing experience, we have enough evidence that professionally managing and taking into account stakeholder concerns is key to the long-term success of both companies and investors.
onValues is officially endorsing the Club of Rome's call to action to global leaders in relation to the ongoing Corona crisis.
It states that "[...] It is important to acknowledge that the planet is facing a deeper and longer-term crisis, rooted in a number of interconnected global challenges. [...] About 70% of [emerging infectious] diseases originate in animals (mainly wildlife). Their emergence results from human activities such as deforestation, expansion of agricultural land and increased hunting and trading of wildlife. [...] How leaders decide to stimulate the economy in response to the corona crisis will either amplify global threats or mitigate them. The risk is making nearsighted decisions that increase emissions and continue to degrade nature in the long term".
It concludes by calling on leaders to have the foresight to make their economic recovery plans truly transformative by investing in nature regeneration, low carbon development and sustainable agriculture and food systems.