“Behold, my child, the Nordic man, and be as like him as you can,” exhorted Hilaire Belloc in Talking (and Singing) of the Nordic man.
That was before “Taking the Temperature“, a recent report from Insight Investment and Ethix SRI Advisors, found the 40 largest companies in the Nordic region are lagging significantly behind their European peers in their management of climate change risks and opportunities.
Am I the only one who thought, along with Belloc, the Nordic region was full of hearty outdoor types who would understand the importance of climate change? Apparently, although the companies surveyed are trying to sort out their governance and management with respect to climate change, most of them expect to increase their greenhouse gas emissions in the future.
It is particularly ironic given the commitment of the Norwegian government pension fund to ethical and sustainable investment. Clearly the domestic fund, which invests solely in Norwegian securities, has failed to demand sufficient of its investee companies.
Rainforest in Panama
Did you have an egg or bacon for breakfast? Did you use shampoo or showergel containing palm oil this morning? If you did, the chances are a little bit of the rainforest was destroyed for your morning.
“We are eating the rainforest every day without knowing it,” says Andrew Mitchell, head of the Forest Footprint Disclosure project steering committee and executive director of the Global Canopy Programme. If you are a fund manager, your investments are also probably responsible for large swathes of tropical rainforest being bulldozed.
Carbon clouds on the horizon
Even investors who are confirmed sceptics when it comes to global warming may soon have to take account of companies’ carbon emissions. A report from the Investor Responsibility Research Center Institute and environmental data provider Trucost looks at the theoretical impact of applying a price to carbon emissions for companies in the S&P 500. With the US Congress currently considering the American Clean Energy and Security Act of 2009, this may not remain theoretical much longer.
A key point is that companies are not all equal in how affected they will be. According to the report, carbon costs would amount to less than 1per cent of operating margin for 203 companies, while 71 companies could see earnings fall by 10 per cent or more. Companies in the utilities sector are likely to be hardest hit.
Financial institutions are in the dog house again. This time the sector is gaining attention for being the worst performer to manage its environmental, social and governance risks in 2008.