Wednesday, May 25, 2005
The Business end of global warming
By Michael H. Crosby
Corporate America is shifting gears on global warming. Until recently, leading U.S. companies were either in denial -- questioning whether climate change was really happening -- or trying to ignore the issue and its impact on their assets and operations. But in the past few weeks, major corporations have begun moving forward to address what scientists agree is a looming crisis.
The most dramatic move came May 9, with General Electric announcing its "ecomagination" program, a $1.5 billion commitment to new energy-efficient products and renewable energy technology.
Four of the country's largest utilities have issued reports describing how they would be affected by legislation requiring them to reduce emissions that cause global warming and their strategies for meeting the reduction targets.
And just last month, Ford Motor Co. agreed to issue a similar report.
Campaigns by religious institutional investors influenced all of these developments. Today, people of faith from different traditions and very different perspectives, from progressive Roman Catholic communities to conservative Protestants, are engaging business leaders on these issues.
In response, executives at home and abroad finally are beginning to recognize that global warming is a genuine threat to our environment, our economy and our investments.
But there are still holdouts -- companies that cling to flat-Earth notions and fund so-called think tanks challenging the data that even Bush administration scientists now accept.
One of these is Exxon Mobil, perhaps the most visible holdout even among its petrochemical peers. The company has funded at least 40 policy groups and supposedly independent media outlets in its effort to discredit the science of global warming.
In its annual shareholders meeting Wednesday in Dallas, Exxon Mobil faces a resolution from Christian Brothers Investment Services that asks for peer-reviewed research justifying the company's stance that global warming is uncertain and that there are gaps in climate science.
Another resolution from the Midwest Province of the Capuchin Franciscans asks Exxon Mobil to report how its operations will meet the greenhouse gas reduction targets in countries that have adopted the Kyoto Protocol.
You would think that a company so heavily invested in the global warming debate would willingly provide this information to its shareholders. Instead, Exxon Mobil fought to prevent these resolutions from being presented to its shareholders, appealing unsuccessfully to the Securities and Exchange Commission for their withdrawal.
Even in the Bush administration, which has sided with the skeptics, there is growing acknowledgement of global warming and the need for action. In fact, the Energy Information Administration, an independent branch of the Energy Department, announced in April that the impact of proposed limits on global warming gases would not materially affect average economic growth rates through 2025.
Other governments are acting to check carbon pollution. More than 140 countries have adopted the Kyoto Protocol -- policy initiatives that will reduce emissions of carbon dioxide and five other greenhouse gases. In the United States, 28 states have enacted programs to reduce these emissions.
According to the insurance company SwissRe, the economic costs of global warming could grow to $150 billion in a decade, hitting insurers with $30 billion to $40 billion in claims -- the equivalent of one World Trade Center attack every year. The insurance company AXA estimates that approximately 20 percent of the world's gross domestic product will be impacted by the effects of global warming.
But all too often, the gloomy forecast is not sufficient to effect change in corporate policy. That is why the Interfaith Center on Corporate Responsibility, a coalition of 275 faith-based institutional investors with more than $100 billion in assets, and the Coalition for Environmentally Responsible Economies have coordinated interfaith efforts to apply economic pressure.
Americans have always taken the lead in industrial innovations. We can solve global warming if we apply ourselves. Some companies understand that acting first is not only the right thing to do but also provides a long-term competitive advantage. Religious investors are proud to take part in the dialogues that shepherd these actions.
As institutional investors, we have a fiduciary duty to seek sustainable returns based on sound financial and environmental practices. As people of faith it is also our duty to care for the Earth and its creatures.
These values drive our efforts, and we urge all of our companies to stop dragging their heels and get on the bus.