1. Business stepping up to the table because of public uncertainty
Third Partners joined more than 600 leading businesses and investors in signing a business-backed call-to-action on climate change. The letter â€“ addressed to President-elect Trump, President Obama, Members of the US Congress, and Global Leaders â€“ calls for three actions:
- Continuation and amplification of U.S. low-carbon policies
- Investment in low-carbon economy to boost investor confidence
- Continued participation in the Paris Climate Agreement to limit temperature rise to 2 degrees celsius
The business community cites cost-effectiveness, innovation, job creation and risk of failing competitiveness of the American economy.
2. Investors as the new climate champions
ESG investing has taken off in the US recent years and the market shows no sign of slowing down. More and more research is providing investors with confidence that they can employ socially responsible investing strategies without sacrificing returns and, potentially, even gaining some additional financial upside. Research from Barclays in late 2016 showed bond portfolios with an ESG tilt had a small performance advantage.
The Green Bond market is also poised for strong growth in 2017. The first Sovereign Green Bonds were recently issued by Poland and France. Several other countries have expressed their intent to follow suit this year. As sustainable investing goes mainstream, investors want better data and may find themselves in the somewhat unexpected role of climate change advocates.
3. Data certainty and planning
Data and analytic resources for investors are growing in number and quality. Despite issuing more ESG information in their sustainability reports, corporations often take a piecemeal approach to data collection and analysis. This happens for three reasons:
- Sustainability evolved for most companies as a response to external pressure or risk, rather than a profit opportunity.
- Sustainability data within companies come from disparate sources
- Much of this sustainability data is unstructured (unlike the neat rows and columns of structured financial data).
Tools to collect & organize data, the skills to analyze it, and overall availability of data is on the rise. More extensive data collection and analysis tools for sustainability is being integrated for internal decision-making, not just for external reporting.
4. Climate change disclosure pivots towards corporate risk
Most large US companies are already reporting at least some portion of their greenhouse gas emissions. While this gives stakeholders an understanding the company’s contribution to climate change, investors are asking for an analysis of climate change impacts on company operations. Raw numbers and business impact are two different things.
The newly released findings from the Financial Stability Board Task Force on Climate-related Disclosures recommends (among other things) that companies disclose climate-related risks and opportunities to the company under different future states â€“ including a 2-degree scenario. For more, read our list of four key takeaways from this report.
5. Skyrocketing interest in health, well-being, and productivity in building standards
In the world of sustainable workplaces and facilities, healthy is the new green. Americans spend upwards of 90 percent of their time indoors, much of that time spent in buildings loaded with toxic chemicals, poor air quality and unhealthy nutrition options.
The WELL Building Standard connects design and construction best practices with positive outcomes for human health and well-being. A newly discovered financial bottom line for businesses is driving rapid adoption of the standard.
The return-on-investment from healthy buildings is easy to illustrate. In the long run, businesses spend far more on wages and healthcare costs for their workforce than they do on building design, construction, leasing and energy.
In 2017 Third Partners will become an early adopter of the â€œWELL APâ€ certification — the design and construction practitioner credential for achieving performance under the new WELL Building Standard.