BofA’s Finucane Says ESG Gauges to Drive Change: Summit Update

The second and final day of the Bloomberg Sustainable Business Summit focused on topics ranging from the business case for sustainability to building the workforce of the future.

Speakers included chief executive officers from Maple Leaf Foods Inc. and Ball Corp., as well as academics and executives from asset managers and companies including Bank of America Corp. and Blackstone Inc.

The Sustainable Business Summit is being organized by Bloomberg Live, a division of Bloomberg LP, the parent company of Bloomberg News. More information about the event can be found online and on the Bloomberg Terminal.

Companies May Take 15 Years to Reap Return on Sustainable Efforts, Mars Executive Says (4:30 p.m. NY time)

Companies may take as long as 15 years to get a return from their sustainability efforts, according to Mars Inc.’s chief procurement and sustainability officer.

There aren’t many companies, particularly in the consumer-goods industry, that are getting a return from the consumer yet on their sustainability moves, Barry Parkin said. In the short term, those efforts are going to hurt the financial return, but it’s the “right thing to do” and sets companies up for the longer term, he added.

“We hope that in time consumers will recognize the brands that are doing the right thing, but that’s extremely challenging at the moment,” Parkin said. “I think you’ve got to think 10, 15 years to do that.

Many global companies are touting their sustainable efforts as they face pressure from shareholders, customer and employees. BlackRock Inc., the largest asset manager in the world, said this year it would make sustainability a top investment rationale. Microsoft Corp. plans to invest $1 billion to support work on carbon-reduction technologies and Citigroup Inc. vowed to spend the same amount on efforts to help close the racial wealth gap.

Canadian Housing Agency Mulls Climate-Compatible Housing Bond (1:15 p.m. NY time)

Canada Mortgage and Housing Corp. may form a climate-compatible mortgage bond to help direct capital to investors and homeowners with more environmentally friendly properties, said Steve Mennill, the Canadian housing agency’s chief climate officer.

It also may create a climate-compatible index or a score that’s applied to mortgages that are being insured and securitized, he said.

“You would probably look at the energy efficiency of the house itself, those that are highly energy-efficient, well-insulated and have heating and cooling systems that are low-carbon,” Mennill said.

The bond would also take into account other factors such as whether a home is located in a high-density area since that affects things like the choice of transportation. The denser the area, the lower car usage is, Mennill said.

Blackstone to Start Pushing Portfolio Firms to Cut Emissions by 15% (12:47 p.m. NY time)

Blackstone Group Inc. plans in 2021 to begin pressing companies in its portfolios to cut their emissions by 15% over the next three years, according to the firm’s global head of ESG.

“We have taken the 10 years of experience and learning that our chief sustainability officer and his team have accumulated, and we formalized it into a program that we can launch at scale across the broader portfolio,” said Alison Fenton-Willock, who’s also a senior vice president at Blackstone.

BofA’s Finucane Says ESG Gauges to Drive Change: Summit Update

Maple Leaf Sets Ambitious Environmental Targets (12:40 p.m. NY time)

Maple Leaf Foods Inc. aims to be the most sustainable protein company on earth, said Chief Executive Officer Michael McCain.

The Canadian meat and plant-based protein processor made its environmental sustainability commitments about five years ago, when it announced plans to reduce its “footprint” by 50% by 2025.

Since then, Maple Leaf has lowered its emissions by 24% to 25%. The company joined 289 other companies around the world last year in making aggressive pledges in accordance with science-based targets.

“It’s involved capital commitments along the way to improve efficiencies in everything from our manufacturing sites, but it also involves progress in some really advanced technologies in agriculture,” McCain said.

Divestment From High-Carbon Emitters Is a Problem, Calpers Says (12:27 p.m. NY time)

Divesting from high-carbon-emitting companies is problematic because doing so doesn’t help reduce emissions, said Anne Simpson, interim managing investment director at the California Public Employees’ Retirement System.

If investors’ objectives are to dispose of assets to manage risks, then divestment is fine, she said.

But “the problem is if we walk away and hand over our shares to someone else, the company is off the hook and we are still exposed to the risks of those emissions going up into the atmosphere,” Simpson said.

Climate-change activists are pushing pension plans and large investors to rethink their fossil-fuel holdings. In January, the New York State Common Retirement Fund, the third-largest U.S. public pension fund, said it may divest from coal-mining companies that aren’t ready to move away from relying on thermal coal for profits. Others have said the best way to fight for cleaner energy is by remaining as an investor.

BofA’s Finucane Says ESG Standards to Drive Change (11:20 a.m. NY time)

ESG efforts represent a big business opportunity, but they require a lot of work for companies to meet more clearly defined standards, according to Anne Finucane, vice chairman of Bank of America Corp.

It’s “quite difficult to whitewash or greenwash” third-party evaluations from groups such as the Task Force on Climate-related Financial Disclosures or Sustainability Accounting Standards Board, she said. “The other thing is: Did you reduce your carbon footprint? Did you, or didn’t you? You can’t whitewash that, you either did or you didn’t.”

Still, the pandemic has slowed ESG efforts because companies are contending with broader economic challenges such as high unemployment.

“It’s hard to start a small business or support a small business when it’s virtual or the doors are shut, so sure, it slows things down,” she said. “We’re trying to do a lot of workarounds,” including working with universities and committing funds to affordable housing and health care.

BofA’s Finucane Says ESG Gauges to Drive Change: Summit Update

ESG Investors Should Make Sure They’re Proud of Everything They Own, Rockefeller’s Shah says (10:50 a.m. NY time)

Investors who say they incorporate environmental, social and governance issues into their investment analysis and decisions should be able to justify all of their holdings, said Rajiv J. Shah, president of the Rockefeller Foundation.

“I would encourage all the investors here to just make a simple pledge that you’ll look at your portfolio and demand that you’re proud of everything you’re investing in from the perspective of its overall impact on society,” Shah said. “That’s ultimately what ESG investing is all about.”

To make a positive impact, investors could take this a step further and invest in “very specific instruments that have unique social benefits,” such as social impact bonds, he said. They should also increase their level of ambition and “be even more active than simply checking the box on ESG investments as they run their portfolios,” he added.

Executive Compensation May Hold Key to Achieving Carbon Neutrality, Berninger Says (10:30 a.m. NY time)

Bayer AG, the giant German drugs and chemicals maker, is one of many companies committing to be carbon neutral. Its strategy for achieving that goal involves a combination of emissions measurement, compensation incentives for executives and a focus on new innovations, said Matthias Berninger, Bayer’s senior vice president of public affairs and sustainability.

Berninger said when he joined Bayer two years ago he did a back-of-the-envelope calculation of the emissions in the firm’s vast supply chain and said it was comparable in size to those of India, the world’s second-most-populous country. “That just gave me an understanding of how big the systemic relevance of a company like Bayer is in the space,” he said.

To help the company achieve its goal of becoming net zero by 2050, Bayer has teamed up with the science-based target initiative, which helps companies set greenhouse gas emission reduction targets consistent with the Paris climate accord. It also has tied the long-term compensation of its managers to decarbonization targets: 10% of the CEO’s salary, as well as pay for a number of top managers, will depend on the firm’s success in removing carbon emissions from its value chain, Berninger said.

The “single most important impact that we can have is in innovation,” Berninger said. This could come in the area of addressing methane emissions from agriculture and removing carbon from the atmosphere, he said.

Hype Over Green Hydrogen Has Firm Basis in Reality, Oxford’s Hepburn Says (7:25 a.m. NY time)

Anticipation among environmentalists and clean tech enthusiasts that green hydrogen can play an important role in the decarbonization of the global economy is growing. There’s a lot of hype, but there is plenty of substance to the claims that hydrogen can fulfill a meaningful role, said Cameron Hepburn, a professor of environmental economics at the University of Oxford.

BofA’s Finucane Says ESG Gauges to Drive Change: Summit Update

“It’s serious in a way that it wasn’t, you know, the last time we had a big hydrogen hype,” said Hepburn. The key reason for this is the economics are now much more favorable for green hydrogen production, in part because renewable energy costs have decreased, he said.

“It’s got some way to go before you would expect massive scale and a kind of complete takeover of the molecular components of the energy system, but it seems obviously that’s kind of where we’re headed,” he said.

Europe, the most progressive jurisdiction for climate policy, is also encouraging the hydrogen revolution with its comprehensive green plan, said Claire O’Neill, managing director for climate and energy at the World Business Council for Sustainable Development. The region’s policy makers are doing a great service to hydrogen by paying a lot of attention to the “boring” but important parts of hydrogen production such as shipping terminals and storage facilities, she said.

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