Investors urged to back engagement on eco-efficiency at major companies

SRI fund firm Boston Common Asset Management and the California State Teachers Retirement System (CalSTRS) are urging investors to throw their weight behind a new “Eco-Efficiency” initiative to promote resource efficiency at leading companies.

The pair has teamed up to turn the spotlight on energy, water and waste efficiency at investee firms, launching an engagement programme and calling on fellow investors to co-sign letters.

“We believe that companies can reduce operational costs, mitigate climate change and supply chain risks, and more effectively achieve corporate sustainability goals through what may be termed “Eco-Efficiency”, Boston Common said in a letter to circulated to investors.

“Our immediate goal is to encourage companies to achieve rapid, absolute, reductions of greenhouse gas emissions within their own operations and supply chains. Our end goal is to prompt companies to redesign their products and processes in ways that are appropriate for the new era of carbon budgets and water scarcity,” it continued.

Several large industrial companies have been selected for engagement because research has identified them as being in “industries where energy efficiency or energy productivity investments will lead to the biggest reductions in energy use/energy savings”.

Investors are being asked to back the letter by the end of the month, even if they are not shareholders in the company.

The initial engagement series will culminate in a report published by Boston Common and US-based advocacy group Ceres early next year, offering insight into best practices and key questions for investors on the topic.It will also enable Boston Common to “benchmark company performance on ‘eco-efficiency’”.

Calling eco-efficiency “low hanging fruit for addressing climate change”, Boston Common formally launched the initiative in June with letters to companies including
3M, Panasonic, Akzo Nobel, Origin Energy, and Taiwan Semiconductor Manufacturing.

“We raised the issue in person with Panasonic’s CFO.”

“We raised the issue in person with Panasonic’s CFO in June,” the firm says in its latest investor update. “In the coming months, we plan to engage additional portfolio companies in direct meetings and calls.” Companies across all sectors will be engaged, including those in the top 1000 greenhouse gas emitters in the MSCI All Country World Index.

The initial engagement focus:

Data, Analysis, Reporting – collecting, managing, tracking, and reporting on energy and water data, including emissions
Targets – SMART (specific, measureable, assignable, realistic, and time-related) internal and external carbon emissions reduction, energy, and water efficiency targets;
Capital Allocation – allocating capital, types of funding, and fair financial evaluation of eco-efficiency projects
Governance of Sustainability – assessing climate and water risks, incorporating Eco-Efficiency strategies and policies, and public lobbying
Board Leadership and Responsibility – board oversight and senior management responsibility of the company’s energy and water use, efficiency investments, and performance