The facts are clear and unambiguous: increasingly extreme weather, including unprecedented heatwaves, droughts and flooding will continue to have a material impact on business operations. Risks are growing, not falling.
As we noted in out June, 2021 comment to the SEC on climate change disclosures, we have been objectively, independently measuring the social impact of investment activities since 1989. 2002 saw the first international adoption of our approach, when we helped develop Social Performance Indicators for Banks, (https://www.creativeinvest.com/SocialPerformanceIndicatorsfortheFinanceIndustry.pdf) building on our work in rating women and minority owned banks. There, we specifically included social measures that detailed and described the impact (or lack thereof) these Asian, Black and Hispanic banks had on their community. What we learned there we have attempted to apply over the years, with varying levels of success, failing mainly due to bigotry and racism, and, to a much lesser extent, our own incompetence.
Yet, our work continues, having quantified the impact environmental issues have on company stock prices in 2011 and 2015. (https://www.eventbrite.com/e/how-environmental-issues-impact-stock-returns-tickets-2029288657)
We stated, on February 5, 2015, in testimony to the Norwegian Ministry of Finance (http://www.creativeinvest.com/NorwayTestimonyFeb52015.pdf):
"As the market value of environmental, social and governance factors continues to grow, companies and investment managers will engage in fraudulent practices related to these factors. These practices will range from simple falsification of environmental, social and governance records to more sophisticated, but no less fraudulent methods related to environmental, social and governance ratings."
Note that, on September 22, 2015, automaker Volkswagen admitted that defeat devices used to cheat emissions testing were installed in 11 million vehicles worldwide.
On January 15, 2010, during a discussion on Race, Class and the Environmental Movement, we explored solutions for health/wealth disparities, the structure/metrics of injustice, and ideas for advancing equity.
See: https://www.prlog.org/10490189-race-class-and-the-environmentalmovement.html and https://drive.google.com/file/d/1LUCWzdGTyh92SqiUXjsiZ-ugM4eFGab/view?%20usp=sharing
As the SEC approaches this issue, it will be important to correctly attach and identify the persons, industries and countries responsible for climate change liability, since significant global and national taxation will be required to correct the problem.
While we support the SEC effort, our long experience at the front of the field tells us that we are at the start of the beginning of this process. Discrimination and exclusionary practices based on race are operational in economics, investment and finance, including at regulatory bodies, as evidenced by the dangerously dishonest statement one SEC Commissioner made in opposing the proposed rule.
Unfortunately, the mechanisms currently in place to deal with climate-related risks suffer from the same flaws that were highlighted in the George Floyd protests: it is clear that the world has not, so far, been able to work together in an even-handed, open-minded, equitable and just manner. While we see little evidence of meaningful change, we refer to the following, hopeful signs:
Seaweed as a Substitute for Russian Fertilizer. Evan Li, Impact Investing Intern. Charlotte Latin School: https://www.impactinvesting.online/2022/03/seaweed-as-substitute-for-russian.html
Climate Change and the OCC. Emily G. Fowler, Impact Investing Intern, McGill University: https://www.impactinvesting.online/2022/03/climate-change-and-occ-emily-g-fowler.html