Greenhouse Gas Management Challenges: The View from Sustainable Investment

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Presentation at the Carbon Management Council's June 5, 2008 webinar, Corporate Action: Designing Practical Sustainability Programs. Presentation by Dr. Julie Fox Gorte, SVP for Sustainable Investment, Pax World Management Corp.

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Greenhouse Gas Management Challenges: The View from Sustainable Investment

  1. 1. Greenhouse Gas Management Challenges The View from Sustainable Investment Julie Fox Gorte Senior Vice President for Sustainable Investment Pax World Management Corporation www.paxworld.com
  2. 2. Emissions Management at Pax World <ul><li>Issues typical for: </li></ul><ul><ul><li>Small firm </li></ul></ul><ul><ul><li>Tenant </li></ul></ul><ul><ul><li>Management of satellite offices </li></ul></ul><ul><ul><li>Service provider </li></ul></ul><ul><li>Sector-specific issues </li></ul><ul><ul><li>Sector/industry standards for all firms’ management of GHG emissions </li></ul></ul><ul><ul><li>Can we eat our own cooking? </li></ul></ul><ul><li>Actions </li></ul><ul><ul><li>Carbon neutral (including travel emissions) </li></ul></ul><ul><ul><li>Offsets with Native Energy </li></ul></ul><ul><ul><li>Member of Investor Network on Climate Risk </li></ul></ul><ul><ul><li>SEC petition </li></ul></ul>
  3. 3. Greenhouse Gas Management Challenges: Sources of Risk <ul><li>Regulatory risk </li></ul><ul><li>Litigation risk </li></ul><ul><li>Reputational risk </li></ul><ul><li>Supply chain risk </li></ul><ul><li>Competitiveness </li></ul><ul><li>Physical risk </li></ul>
  4. 4. Greenhouse Gas Management Challenges: Emissions Management <ul><li>Flexibility: how dependent are emissions on long-lived assets? Dell & AEP examples </li></ul><ul><li>Technology: can GHGs be replaced? Nike example </li></ul><ul><li>Control: how much of the emissions imprint does the company control? Ford example </li></ul>
  5. 5. Corporate Management of Climate Risk: Sectoral Differences Source: Societe Generale
  6. 6. Investment View of Climate Risk Modeling Source: Societe Generale <ul><li>Assumptions </li></ul><ul><li>Use imputed figures for emissions unless better information is available </li></ul><ul><li>Auction raises the net cost </li></ul><ul><li>Assume ability to pass upstream/downstream is typical of sector </li></ul>
  7. 7. Physical Risk
  8. 8. Investor Actions to Understand and Manage Climate Risk <ul><li>Investor Network on Climate Risk action plan </li></ul><ul><ul><li>Require asset managers, consultants, and financial advisors to consider climate risks </li></ul></ul><ul><ul><li>Invest in clean tech </li></ul></ul><ul><ul><li>Improve energy performance of real estate portfolios </li></ul></ul><ul><ul><li>Urge comprehensive corporate responses to climate risk </li></ul></ul><ul><ul><li>Help investors evaluate and address climate risks </li></ul></ul><ul><ul><li>Expand climate risk scrutiny and collaboration by investors and analysts </li></ul></ul><ul><ul><li>Push for guidance from the SEC (petition filed in 2007) </li></ul></ul><ul><ul><li>Encourage companies and investors to support government action on climate policy </li></ul></ul><ul><ul><li>Support policies to maximize energy efficiency </li></ul></ul><ul><li>Global Warming Shareholder Campaign: 68 resolutions in 2007/8 </li></ul>
  9. 9. Investor Actions, continued <ul><li>UNEP FI: Asset Management Working Group and Climate Change Working Group </li></ul><ul><li>Carbon Disclosure Project </li></ul><ul><li>USCAP </li></ul><ul><li>IIGCC </li></ul><ul><li>Ceres </li></ul>
  10. 10. Summary <ul><li>Climate change creates many sources of risk, to companies and to investors </li></ul><ul><li>Need to evaluate each source thoroughly and carefully, and be transparent about climate risk and opportunity management </li></ul><ul><li>Every risk is someone’s opportunity </li></ul>

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