Jan 14, 2020
"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.