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Investors aren’t buying it.

Sustainability, that is.

Even though Sustainability-driven companies can compete and even perform their competitors and return value to their shareholders.

Here’s how BrownFlynn senior consultant Christopher Thomas put it in Greenbiz.com

“The vast majority of investment capital is still directed to assets judged best to deliver risk-adjusted appreciation rapidly with little direct concern for the environmental and social impacts core to the CDP and other ESG disclosures. “

Allow me to translate.

Most investment money gets placed on bets that deliver short-term monetary gains. Without concern for how a company hurts the planet or people.

That’s a problem. Because we need the investor community to start pouring money–on a global scale–into Sustainability-minded companies so that environmental and energy solutions get to scale.

Here’s the full article via Greenbiz.com:

Do investors care about companies’ climate change disclosure?

Taken at face value, more evidence surfaced this month supporting a close relationship between company market performance and the disclosure of environmental, social and governance criteria. Less clear is when more investors will reward ESG disclosure and inspire nondisclosing companies to get on board.

The sky’s not entirely bleak, though. I see breaks in the clouds from maturing and incipient reporting structures (CDP & GRI & SASB), disclosure requirements and shareholder involvement.

A few to check out:

Deloitte: Finding the Value in Environmental, Social, and Governance Performance

Carbon Disclosure Project: A third of the world’s invested capital calls for corporate environmental data through the Carbon Disclosure Project

ProxyPreview: Helping Shareholders Vote Their Values

Ceres: 2013 Shareholder Resolutions

I believe that the investor community can be encouraged to shift the status quo of short-term gains towards a longer-term Sustainability-driven approach. I take heart from the growing evidence that pressure–positive or otherwise–from shareholder resolutions concerned with climate change and energy gets results.

I just hope the shift happens soon enough to make a difference.

Getting Sustainability solutions to scale is going to take a lot of money.

But at present, the investor community is not placing their bets on Sustainability-driven companies.

That’s a disconnect to me, because the business case for doing so is solid. Research  shows that businesses that make Environmental, Social and Governance (commonly known as ESG) factors part of their strategy do just as well in the marketplace. Sometimes even better.

The research borne this out in 2011, and it’s still true today.

Via Harvard Business School http://www.hbs.edu:

The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance

Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The outperformance is stronger in sectors where the customers are individual consumers instead of companies, companies compete on the basis of brands and reputations, and products significantly depend upon extracting large amounts of natural resources.

So why isn’t the investor community on board?

Cary Krosinsky’s work is all about understanding and bridging this gap between investors and sustainability. And, approaches for getting money flowing towards positive sustainability investments.

I heard Cary and Steve Viederman speak Mar. 4 on Getting Investors Engaged in Sustainability at the Bard MBA Sustainable Business Series.

Cary is Executive Director of the Network for Sustainable Financial Markets, and teaches Sustainability & Investing at Columbia University and University of Maryland.  Previously, he was senior vice president for Trucost, a company that helps organizations measure their environmental impacts. He’s also an author of Evolutions in Sustainable Investing: Strategies, Funds and Thought Leadership (Wiley Finance).

First, the bad news.

Status quo is strong.  The people who make investment decisions have deeply entrenched beliefs and behaviors about how to make money.  Monolithicly so. Cary’s company, the Network for Sustainable Financial Markets, just released research that finds only 1% of global assets under management overall are managed by investors looking at sustainability.

Via sustainablefinancialmarkets.net:

NSFM White Paper – The State of Ownership (the real size of SRI Assets + the Systemic Nature of Equity Ownership)

1%.

So at least we know where we stand. Now on to changing it.

Cary suggested a positive investing mindset to work with the status quo rather than against it. This means focusing on adding Sustainability-minded assets to a portfolio–what’s possible–rather than focusing on what we shouldn’t buy.   As an example, he mentioned Bill McKibben’s 350.org college endowment fossil fuel divestment campaign. Instead of lobbying to cull  fossil fuel-related investments from university endowments, a positive approach would be to add a percentage of Sustainability-focused investments to a university’s investment portfolio.

I’m really taken with this concept because it has significant potential to create change from the top-down. It’s really the simplest idea in the world. Put our energies towards finding sustainable solutions instead of stamping out fires. It takes more time and energy to say, “What should we do?” instead of “Stop that,” true, but these are conversations worth having. Taking the time it takes, takes less time.

I’m all in for the “and also” top-down, bottom-up, sideways innovating systemic solutions that keep us away from the brink of a 2 degrees-hotter planet. I believe in the scientific consensus about our world becoming fundamentally less hospitable to human life if we don’t.

Putting all issues of money aside, as climate change realities become the new normal (resource scarcities, extreme drought, rising sea levels), business and investors have real skin in fixing things.  If we don’t come up with cures for our environmental and energy problems, there’s not going to be a world in which to invest money.

Many thanks to the Bard MBA program for the chance to hear about Cary’s research and contributions to the Sustainable Investing field.

Shall we blame it on the rain?

Or maybe point at melting icecaps, rising ocean levels, tornadoes, tsunamis, and blistering drought?

Whatever the catalyst, many of the world’s biggest businesses are wide awake and moving on the climate change challenge.

They get that the world needs to slow down greenhouse gas emissions–pronto–or there won’t be nearly as nice a world for anyone who wants to run a business.

Not to mention live happily or raise kids.

That’s what I heard over and over yesterday from business leaders around the globe on Carbon Disclosure Project’s (CDP) web conference.

CDP is a worldwide non-profit independent coalition of businesses committed to reporting and reducing greenhouse gas emissions and sustainable water use.

The call was timed to coincide with CDP’s latest climate change report on its S&P 500 members:  “Accelerating Change to a Lower Carbon Future”.

Everyone on this web conference is fully on board that Sustainability progress is explicitly linked to business success.  So no surprises there. But what did surprise me was the candor with which they spoke about everything else.

There was frank talk about U.S. consumption patterns and foot-dragging on energy initiatives, the need for developing countries to be able to grow, and sobering data about how close we are to the 2-degrees point of no return.

One question really caught my attention was this: How do we enroll leaders for change at companies who don’t stand to benefit in the short term? (The question didn’t get any answers on the call, but I’m not sure there is one other than a combination of incentive carrots and regulatory sticks from government.)

A highlights video of the 2-hour call hasn’t been made available yet, but in the meantime, he’s an excellent write-up by BusinessWeek senior editor and content chief Diane Brady. She also ably moderated the call.

Via businessweek.com:

Climate Change Becomes a Business Reality

The takeaway from the discussions today with a mix of business leaders and investors at the CDP Global Climate Change Forum, which I moderated from New York, is that growing private-sector efforts to reduce greenhouse gases simply can’t move the needle on its own.What’s needed is government action to curb emissions through everything from taxes, carbon caps, and credits that can be traded, as well as incentives to invest in projects and products that may not pay off for years.

Businesses understand that climate change is real, that it is irrevocably changing our planet, and that they hold significant responsibility to make it better. Fewer emissions. Less water. Decreased pollution. Restored ecosystems. Healthier workplaces and homes.

Now that it’s a becoming reality for the business world, we need to ensure that the U.S. government is on board as well. And in serious action.

That’s where we all come in as citizens.