These are the top issues the ESG world is focused on in 2020

01/14/20 • 22 min

All Things Sustainable (formerly ESG Insider)

"Baby steps are equivalent to nothing in this day and age.” This is what Mindy Lubber told ESG Insider, an S&P Global podcast about the environmental, social and governance issues shaping company strategies and investor decisions. Lubber is CEO of sustainability nonprofit Ceres, and she was talking about how slowly many companies are reacting to climate change and disclosing their environmental risks.

In this first episode of 2020, ESG Insider talked to Lubber and other key stakeholders across the ESG world about the issues they are focused on in the new decade. The sluggish response to rapidly worsening climate risks was a recurring theme.

"Given the immediacy of climate change, I am constantly surprised at the slow reaction of the markets of institutional investors," said Christopher Ailman, chief investment officer of the California State Teachers' Retirement System. CalSTRS is the 2nd-largest U.S. pension fund with a $248 billion investment portfolio.

Even companies that recognize the threat of climate change continue struggling with how to measure and disclose it. The lack of relevant, quality and comparable ESG data was another recurring theme among attendees of Sustainable Finance Week, a series of events in New York City where policymakers, asset owners and managers and corporations from around the globe convened in December.

"CEOs are thinking about it. Insurance companies, frankly, are already pricing it in. Investors need to wake up and recognize this is a factor they've got to think about in their portfolio," Ailman told ESG Insider.

The lack of standards continues to create survey fatigue. Corporations are devoting a lot of time and money to filling out surveys from all different stakeholders about their ESG data — a common refrain at ESG conferences.

The Sustainability Accounting Standards Board is working to address this problem. SASB is a U.S. nonprofit organization developing disclosure standards for material ESG factors, and ESG Insider spoke to Jeff Hales, chair of SASB's Standards Board, during the group's annual symposium.

There is a potential upside to survey fatigue, however, as we hear from the head of U.S. stewardship and sustainable investing for Legal & General Investment Management America in the episode.

Listen to the episode, and subscribe to ESG Insider on Soundcloud to catch future episodes.

(Photo: AP)

There is a potential upside to survey fatigue, however, as we hear from the head of U.S. stewardship and sustainable investing for Legal & General Investment Management America in the episode.

Listen to the episode, and subscribe to ESG Insider on Soundcloud to catch future episodes.

(Photo: AP)

Previous Episode

Inside the campaign to end forced labor in Uzbekistan's cotton fields

In this episode of ESG Insider, S&P Global Market Intelligence reporter Gautam Naik takes listeners inside the campaign to end forced labor in Uzbekistan's cotton fields. He visited Uzbek cotton fields during the 2019 harvest, sat down with human rights activists and interviewed government ministers trying to change the system.

A decade ago, Uzbekistan forced more than one million doctors, teachers, nurses and even schoolchildren to head out into the fields each autumn and bring in the cotton crop. Back then, a good chunk of Uzbek cotton – produced under harsh conditions of forced labor -- ended up in thousands of shirts, jeans and shoes sold by western fashion brands. But as more and more companies stopped using Uzbek cotton, something unexpected happened: the government backed down and decided to aggressively roll back its state-sponsored forced-labor regime.

For investors and asset managers who worry about the risks of labor exploitation in consumer supply chains, the Uzbekistan cotton story is a rare thing -- a vivid example of how corporate pressure can lead to enduring change in the global fight against forced labor.

Listen to the episode to learn more, and read the story on spglobal.com: https://bit.ly/2sCX1Wq

Subscribe to ESG Insider to catch future episodes.

(Photo: AP)

Next Episode

'No board in America wants to face that': Proxy reform, Fink's letter and ESG

Wall Street's top regulator is moving to fundamentally reshape the proxy process, one of the key avenues shareholders use to engage with companies on environmental, social and governance issues.

In the latest episode of ESG Insider, a podcast hosted by S&P Global, we talk to stakeholders about what the proxy rule changes the U.S. Securities and Exchange Commission is weighing could mean for companies and investors.

Some investors worry that proposed rule changes could make it harder for shareholders to engage with companies through the proxy process. "When you cut off the opportunities for new ideas to emerge ... you are denying the marketplace the opportunity to vet those ideas and the marketplace will be poorer for it," says Jonas Kron, director of shareholder advocacy at Trillium Asset Management, a firm that uses ESG factors to manage about $3 billion in assets and has submitted shareholder resolutions at major companies.

Advocates for change say proxy rule updates will bring needed sanity to a process that has morphed into a political tool. " The shareholder proposal process in our viewpoint has been subverted over the last several years from being one of a communications device between shareholders and companies ... and instead is being used by certain special interest activists to push agendas or issues that they can't make progress on in Washington," says Tom Quaadman, executive vice president at the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness, discussing why the chamber has lobbied for these changes.

Regulators are actively considering proxy rule modifications, but some say the private sector — not government — will provide the biggest catalyst for change. In early 2020, BlackRock Inc. CEO Larry Fink wrote a game-changing annual letter urging chief executives around the world to make more robust ESG disclosures using existing frameworks from the Sustainability Accounting Standards Board, or SASB, and the Task Force on Climate-related Financial Disclosures, or TCFD. BlackRock is the world's largest asset manager and its CEO has considerable clout, explains Robert Jackson, who recently finished his term as an SEC commissioner.

"Companies across America right now I can assure you are talking seriously about what they have to do to come in compliance with those standards because if they don't, they're going to face a skeptical BlackRock come proxy season next year," Jackson says in an interview with ESG Insider. "Almost no board in America wants to face that."

Listen to the episode, and subscribe to ESG Insider on Soundcloud, Spotify, Apple Podcasts, or wherever you get your podcasts.

(Photo: AP)