Next week on February 8, 2018, The Investment Integration Project (TIIP) and Morningstar will co-host an event that explores the ways in which investors can go beyond daily portfolio management activities like ESG integration and impact measurement and reporting and seek to influence the broader environmental, societal, and financial systems within which they operate.
Carole Laible, CEO of Domini Impact Investments will be speaking about our company’s pioneering work on systems-level issues and stability. Domini is focused on the influence investors can have on systems beyond their portfolio through our Environmental Societal Financial Systems Initiative, working to evaluate and increase Domini’s systems-level impact. The publication of a report on this work in slated for the first quarter of 2018.
The event will take place at Morningstar's headquarters at 22 W Washington St, Chicago, IL 60602, and will begin at 8:30am (registration opens at 8:00am) and will conclude by noon that day. The event will serve to launch their new joint report on the Roadmap to Measuring the Effectiveness of System-Level Investing Approaches, written by William Burckart, Steve Lydenberg, and Jessica Ziegler of TIIP.
In addition to remarks by Carole Laible, confirmed speakers include Craig Pfeiffer, the President & CEO of Money Management Institute, Jon Hale, the Head of Sustainability Research at Morningstar and Anna Snider, the Head of Due Diligence, Global Wealth and Investment Management CIO Office at Bank of America, among others.
As this year’s catastrophic hurricane season has demonstrated, climate change is affecting where and how humans live. Warmer oceans and air are causing more destructive hurricanes like Hurricane Irma, the strongest storm ever recorded in the Atlantic Ocean. Across the US, homes and communities are facing climate threats, from intensified and prolonged wildfires in California to dramatic coastline erosion in New Jersey.
In developing countries, where populations may rely directly on their surroundings, the impact of climate change is particularly direct and dire. Natural disasters can force whole populations to move. We can already see communities pushed out due to more gradual changes, like drought or excessive heat, lack of resources or opportunities and the human conflicts that these pressures cause. The humanitarian crises in Syria and Yemen were exacerbated by drought and an unprecedented tropical cyclone, respectively.
The scale of climate change-induced migration will likely be huge, yet defining who qualifies as a climate migrant and for their movement has barely begun. To help improve the climate migration dialogue Domini hosted an event during NYC Climate Week 2017 that brought together art, science, and our community.
An exhibition of 22 works by the photojournalist and filmmaker Ed Kashi offered glimpses into the human effects and causes of climate change the world over. A member of VII Photo Agency, Kashi is recognized for his complex imagery and compelling rendering of the human condition.
The keynote talk was given by Alex de Sherbinin, associate director for science applications at the Center for International Earth Science Information Network (CIESIN), within the Earth Institute at Columbia University. Dr. de Sherbinin is a geographer with a focus on climate change vulnerability mapping and climate change-induced migration. His full remarks and slides can be found below. The night was an exciting opportunity for our community to connect and consider this complicated problem and the people it affects.
Read more about climate migration: http://climatemigration.org.uk/
Watch the full remarks here:
This month, Domini officially signed a statement of support for the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). Domini seeks to serve our clients’ financial well-being while preserving and enhancing the environment and society through responsible asset management. We believe investors have an obligation to acknowledge and address the impact of their actions on financial, societal and environmental systems. Climate change is one of the most significant systemic risks we face, and the TCFD framework is a critical tool for assessing how this risk will affect corporate value. Most importantly, we expect that companies that use the TCFD framework to measure and disclose their climate-change readiness will take action to better manage these risks. These disclosures will help to make the business case for strengthening the resilience and integrity of Earth’s climate, a prerequisite for creating long-term value.
The creation of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures was announced in December 2015 by Mark Carney, chair of the organization and governor of the Bank of England. Eighteen months later, the TCFD released their recommendations for voluntary, consistent disclosures to help investors understand the material financial impacts of climate-related risks and opportunities on an organization. The TCFD framework recommends that companies consider four key areas where climate-risks should be analyzed: governance, strategy, targets and metrics, and risk management. The three main areas of risk they identify are physical risk, transition risk, and litigation risk. Because climate risks are particularly difficult to assess, a key recommendation of the Task Force is the use of scenario modelling. The Taskforce recommends that companies begin by reviewing risks under a 2-degree global warming scenario. Steve Lydenberg, a principal at Domini, wrote a paper on the use of scenarios for long-term risk management that was considered “required reading” by the members of the Taskforce as they developed their recommendations. We were also pleased to submit comments to the TCFD earlier this year.
The TCFD’s recommendations were presented to the G20 summit in Hamburg in July. The Task Force’s mandate has been extended through September 2018 to support and monitor adoption of disclosure guidelines by companies.
[New York, NY] - Domini is proud to announce that we have signed the Stockholm Declaration, re-affirming our support for the United Nations Sustainable Development Goals (UN SDGs). The Stockholm Declaration was organized by the GRI and UN Global Compact in May 2017. The pact allows the global investment community to announce their commitment to using the UN SDGs as a framework for investing. The declaration also serves as a call for a reporting framework that will allow investors to record progress towards the common goals. The full declaration can be read here.
The UN SDGS are a collection of 17 targets that form a framework for creating and maintaining sustainable development by 2030. They were approved by the UN General Assembly in 2015, and set an ambitious agenda to reduce inequality and fight poverty, protect resources and health, and combat climate change. Explore the SDGs here: http://www.un.org/sustainabledevelopment/
Domini’s core goals of universal human dignity and ecological sustainability are fully aligned with the UN SDGs, and our impact investing standards map to the goals. Reaching the SDG targets will create strong and resilient environmental and social, as well as financial, systems. However, according to the UNCTAD, achieving them will require an estimated investment of $5-7 trillion globally. This level of investment is possible, as each of the 17 goals present myriad business and investment opportunities, but it remains important for investors to work together to disclose and promote investment to meet the goals.
Your voice can be heard. International leaders and policy makers are at the UN climate summit, currently underway in Bonn, Germany. It was at this summit in 2015, then in Paris, when nearly 200 countries submitted proposals for cutting their greenhouse gas emissions. With Syria joining the Paris agreement on climate change this month, we are optimistic about progress, but at the same time saddened by the lack of support by our country.
History has shown that when government action is lacking, private enterprises and citizens fill the gap. We are pleased to report that a delegation of US businesses, cities and states led by California Governor Jerry Brown and former New York Mayor Michael Bloomberg carry our message globally - America is still in.
Domini has signed the “We Are Still In” pledge alongside 1,219 state and local officials, businesses, investors and universities, signaling our continued commitment to the emissions reduction goals of the Paris Agreement and the preservation of our planet. Climate change is one of the most pressing challenges we face today. Domini supports the global transition to a low carbon future. We consider the impact of climate change and its risks across all our mutual funds through implementation of our Impact Investment Standards and engagement with corporations and public policy makers.
We encourage you to get involved, spread the word using the tag #StillIn and consider the effect that you have on our planet.
Warmer oceans are causing changes so strange, even scientists are scratching their heads. For three years, starting in late 2013, the eastern Pacific Ocean experienced a persistent warm water mass dubbed ‘the blob.’ The blob formed off the west coast of North America, causing record-high temperatures. Warm-water sharks and tuna were spotted off Alaska and tropical sea life reached the Californian coast. The largest toxic bloom of algae on record, stretching the entire West Coast of the United States, shut down crab fishing, costing local economies over $48 million. Disappearances of important parts of the food chain, like nutritious shrimp-like krill, caused mass die offs of sea life, including otters, whales, fish, and birds. Emaciated seals and sea lions washed ashore by the hundreds, starving at 20 times the yearly average and sickened by the neurotoxic algae.
This dire scene could be a preview of a world where climate change has advanced, and some research suggests this situation may have been exacerbated by human-induced warming. However, this winter the warm water mass finally dissipated and ecosystems appeared to stabilize. But one weird exception is confounding marine biologists, grossing out beach-goers, and dismaying fisherman.
Pyrosomes- squishy, hollow sea creatures native to equatorial waters- are swarming the Pacific coast of North America by the tens of thousands. These translucent invertebrates look like bumpy pinkish sea cucumbers- some types can grow up to 60 feet but they are usually around six inches long. Their name comes from the Greek for ‘fire-body’ because they are bioluminescent. Pyrosomes cluster in large groups and are ‘colonial:’ each individual is made up of many small multicellular animals called zooids.
Pyrosomes were previously rare (and strange) enough to be nicknamed the “unicorn of the sea”- they usually stay in deep waters up to 700 meters in the open ocean and aren’t well studied. But now these animals are so thick for several hundred feet in the water table that scientists are concerned when they finally decompose they will deplete oxygen in the surrounding water.
The invasion began this winter when pyrosomes appeared in unprecedented swarms from Northern California all the way to Alaska. During one University of Oregon research expedition this May, a net scooped up 60,000 in five minutes. And no one knows why they’re here.
Scientist haven’t determined where the ‘fire-bodies’ came from, when they will go away or what their effect will be. Pyrosomes filter-feed on phytoplankton, which is also a staple food for krill, and could potentially disrupt food chains. The unusually warm waters may have caused pyrosomes to flourish far out of their range, but no one knows for sure. And while the pyrosome swarm is still barely understood, scientists are concerned this startling change signals greater disruptions occurring.
In fishing grounds from Oregon to Alaska, fishermen’s hooks and net are clogged with the tubular bodies of pyrosomes. Many are having a hard time pulling up anything else, crippling fishing operations. Researchers report that any time they or fishermen go out, there are pyrosomes “as far as the eye can see.” The impact on local fishing economies could be significant.
This strange phenomenon is a striking illustration of the unforeseen effects of climate change and the dramatic disruptions ecosystem shifts cause. Whether the pyrosomes’ appearance is a direct result of anthropogenic warming or not, we can expect more bizarre and troubling consequences of climate change, even if we can’t predict them.
Although the U.S. government has announced its intention to withdraw from the Paris Agreement, progress on emission reductions will continue. The U.S.’s withdrawal from the Agreement sacrifices the country’s ability to lead on groundbreaking climate policy. However, it does not prevent us from continuing to innovate and reduce emissions in the U.S. These tasks have now been moved from the federal purview to cities, states, and corporations. The shift may even engage more diverse and numerous stakeholders in the process of slowing climate change.
Many of these constituents have already stepped up to fill the void in setting and adhering to environmental standards in service of new low-carbon industries and jobs. Stakeholders are taking matters into their own hands, with one coalition of cities, states, universities, and corporations named “We are Still In”, helmed by Michael Bloomberg, petitioning to join the Paris Agreement as non-state actors. The former New York City mayor announced that he is confident the U.S. can meet its emissions reduction pledge without federal policy. Another group of twelve states including New York and California, which collectively produce 30% of the U.S.’s annual GDP and 18% of its carbon dioxide emissions, formed an alliance also pledging to meet the Paris emissions reductions goals. Last Tuesday, Hawaii was the first state to formally pass a law committing to those goals. We expect to continue seeing next steps on emissions reductions and environmental protection emerging from private sector innovation, allied with measures at the state and local level.
Abroad, the U.S.’s withdrawal could have counterintuitive consequences. Many of the remaining 195 signatory countries – including the rest of the G7 countries – have re-affirmed or doubled down on their commitment to the emissions reduction pledges. Regional powers like China and India may step into positions of leadership on climate, furthering progress on coal-use reduction and sustainability measures. Earlier this year China announced plans to invest $361 billion in renewable energy by 2020. This global picture provides myriad opportunities for forward-thinking American companies and investors.
Back home, market trends and developments in energy and efficiency will have significant bearing on emissions outcomes. According to Shin Furuya, Vice President for Responsible Investment Research at Domini, the fundamental economics of energy have started to shift. Some industries are taking steps toward decoupling from fossil fuel, notably the auto industry, largely due to disruptive innovation in battery technology. Bloomberg analysts have predicted the shift to electric vehicles could drastically reduce the demand for oil within the next ten years. Last year, battery prices fell by 35% and the installed capacity of solar power in the U.S. doubled. On a larger scale, industries and asset managers are incorporating understandings of climate change risks to a new, comprehensive degree. Sustainability has been recognized a strategic business consideration, rather than a fleeting trend.
The U.S.’s emissions reporting obligations under the Paris accord will continue until November 4, 2020, the date of official exit. After that point, a new administration could re-join the accord. In the meantime, there will be many opportunities for the private sector to lead through their emissions reduction work. The reality of the U.S. withdrawal from the Paris Agreement is that it will not halt the progress toward combating climate change.
Domini has signed the “We Are Still In” pledge alongside 1,219 state and local officials, businesses, investors and universities, signaling our continued commitment to the emissions reduction goals of the Paris Agreement and the fight against climate change. Read the full pledge at http://wearestillin.com.
In July 2010, the United Nations General Assembly explicitly recognized the human right to water and sanitation. This notion has formally been incorporated into United Nations Sustainable Development Goal 6. Protecting and restoring water-related ecosystems and improving water quality by reducing pollution are crucial components of this goal.
Seven years later, however, this basic human right still needs protection at the legislative level here in the United States.
The 1977 Surface Mining Control and Reclamation Act was strengthened under President Obama at the end of 2016 with the Stream Protection Rule, a regulation that essentially restricted coal companies from dumping mining waste into streams and waterways. At the time, the Interior Department stated this rule would protect 6,000 miles of streams and 52,000 acres of forests by keeping coal mining debris away from waterways.
However, on February 2, 2017, the Senate voted to repeal the Stream Protection Rule, and two weeks later, President Trump signed the repeal into law.
March 22 is officially recognized by the United Nations as World Water Day, with a specific focus this year on wastewater. Water pollution is a serious and ongoing threat to the environment and the health of surrounding communities. Since Domini’s inception, coal-mining companies have been excluded from our portfolios by our Impact Investment Standards. The abundance of factors connecting coal mining to water pollution and climate change are just some of the many reasons Domini has never invested in these companies.
Today, on World Water Day, we acknowledge the immense influence humans have on the fragility of the global water system and, as investors, recognize the responsibility that we have to help protect it.
In January, more than 630 investors and corporations signed a statement asking the incoming administration and Congress to continue moving us toward a low carbon economy, and not to walk away from the historic agreement on climate change reached in Paris last year.
You can find the statement at lowcarbonusa.org. Alongside our name, you will find the names of some of the largest companies in the world. Today, that statement has grown to include over 1,000 companies and investors headquartered in 46 states.
Perhaps even more importantly, more than 200 major companies have made public commitments to set “science-based targets” for reducing their greenhouse gas emissions. This means that they will seek absolute reductions in line with what climate science demands, while continuing to grow their companies. These commitments replace climate goals that improve efficiency but may not actually reduce emissions as companies grow.
These climate commitments are not based on political ideology, but on a pragmatic, hard-nosed look at reality. These companies—among the largest in the world—have done the math, and they see the risk. As a recent Scientific American article proclaimed, “physics doesn’t care who was elected president.” Commitments based on an accurate understanding of reality will remain.
Just last week, one of the world’s largest money managers installed a statue of a defiant little girl, facing down the famed Wall Street bull. They did this to raise awareness of the need to increase the number of women on corporate boards. They did not do this solely out of the goodness of their hearts. They did this because they recognize that diversity is good for business.
All of this reinforces a core belief we have always held: small things matter. When we look back over the course of our history, we see that movements are made of individuals. We can all applaud the billionaire philanthropist or private equity investor looking to make a real impact, but those investors are riding the crest of a wave. Looking back, we see one small investor after another merely seeking to build a college fund or a retirement account that reflects their concern for human rights and environmental sustainability.
For many, it began with a small voice that said “I don’t feel right investing in that company.” These are the change-makers that brought us to a world where the largest companies in the world now monitor their supply chains for child labor and environmental abuses.
Many of these corporate commitments began with a call from a responsible investor, explaining how business can be strengthened by taking sustainability seriously. Investors large and small helped to make the case to company after company, year after year, and our voices are being heard. There is much more work to do, but there is also much to celebrate.
Every day, the news seems to give us more cause for alarm. But this is not the time to flinch or to turn back. We have been here through Democratic and Republican administrations, doing what we do—using social and environmental standards to select our investments, engaging companies to move them in the right direction, and finding ways to make a direct impact for communities in need.
We are working to ensure that the capital markets serve society, and not the other way around. We are part of a community of responsible investors that is larger, stronger, more innovative, and more effective than it was ten or twenty years ago, and we have more allies than ever before.
Your investment portfolio may seem like a small thing. When it is invested responsibly, however, it can serve as one more link in a chain of accountability that will not be broken.
For many years, Domini has incorporated concerns about the environmental risks of companies owning and producing fossil fuels into our investment standards. Over time, we have gradually eliminated an increasing number of these firms from our holdings as our concerns about a variety of environmental and safety issues, including climate change, have increased.
We have never held coal-mining companies, and have historically approved very few major integrated oil companies. In recent years, we have excluded the few integrated oil companies that we had previously approved, and eliminated an increasing number of the smaller oil and gas companies from our list of eligible investments, due to concerns over safety or the environment.
We had historically favored companies focused on the production of natural gas because it burns more cleanly than oil. But as innovation took hold and hydraulic fracturing became widely used, we began to differentiate between the records of these natural gas companies. Due to increasing concerns about methane emissions, safety and community health issues, we gradually reduced the number of natural gas companies approved, until we divested from this segment of the energy industry entirely.
We exclude companies that are substantial owners and producers of oil or natural gas reserves and are included in the Integrated Oil & Gas or Oil & Gas Exploration & Production Industries as defined by the Global Industry Classification System (GICS), as well as companies significantly involved in coal mining.
We have made each of these decisions in light of the financial, environmental and moral concerns associated with fossil fuels and in recognition that an increasing portion of the responsible investment community has found divestment a productive avenue to further debate on climate change, one of the most important and difficult issues of our time.