What is Ceres & how it got started

Ceres is a nonprofit organization transforming the economy to build a just and sustainable future for people and the planet. The organization was formed after the Exxon Oil Valdez Spill when a group of investors came together saying they need to understand more about the environmental practices of companies out of fiduciary responsibility. Steven explains that if Exxon had had a double-haul tanker, they wouldn’t have spilled the oil, it would have saved the company lots of money, preventing a big impact on the stock price, and it would have been better for the environment. Since then, the network of investors has grown and now represents $60 trillion of assets under management, encompassing some of the largest players like BlackRock, State Street, and others, and lots of small and medium-sized ones, too. Ceres helps them on their sustainability journey to set net-zero plans and engage in policy work at the state, national, and international levels. Additionally, they work with some of the largest Fortune 500 companies, on Capitol Hill, and in 17 state capitals in the United States. 

The scoop on the Ceres Accelerator for Sustainable Capital Markets

The Ceres Accelerator, which Steven and Yamika are specifically involved with, aims to integrate sustainability into the capital market through corporate governance and financial information. It was founded by the leadership of Mindy Luber, the board, and others. The team has grown to 23 members. Steven explains that corporate governance is a key focus area for them as their theory of change is that to do something big, the Board of Directors has to be involved. This work involves training boards, getting them to think about topics, writing articles, and corporate lobbying. Their second big bucket of work is in the financial sector. As Steven points out, if you want to move society to have net-zero plans, everything works on having debt, equity, and insurance. He mentions that affecting the debt, banks, equity, and investors ensures that things can move a lot faster, so the Accelerator engages with these stakeholders, both on voluntary efforts and with regulatory efforts from the Security and Exchange Commission (SEC), Federal Reserve, and states.

The SEC rule change that would require companies to disclose climate risks

Steven says that you can’t manage a problem if you can’t measure the problem first. He says there’s a need to understand how big the issue is and what the levers are to change it. So in companies, it’s critical to have consistent climate disclosure. He reveals investors have been asking for decades and they want to know what the risks are, so they know where to put their money. Another point mentioned is that the U.S. is lagging behind in this process; there are no eight countries that have mandatory corporate climate disclosure in place. The SEC, after lots of discussion with the public, issued a draft rule this past March that will require public companies to disclose some environmental information on climate risks in their reporting. It’s still unclear with the exact requirements will be, but Steven hopes a rule will arrive in the coming weeks.

Ceres’ recent analysis & report on the lobbying activities of S&P 100 companies

Yamika recently authored a Ceres report looking at the level of alignment between climate commitments and statements on emissions reductions from companies and their engagement in climate policy. The assessment covers both direct advocacy and indirect advocacy through trade associations. She’s found that a lot of the companies have the right processes in place in terms of assessing climate risks. Most of them have set either net-zero or emissions reduction targets that have been disclosed, and see climate change as a material risk in their 10K filings. Many companies also have pretty comprehensive board oversight of these risks and the decision-making processes that are happening. On the other hand, Yamika explains that only 50% of companies have engaged directly in climate policy. It’s a significant improvement from the last time Ceres did the benchmark in 2021, which was about 10% of companies, but at the same time, 29% of companies are still lobbying against climate policy. The majority of them have not taken any steps to address the misalignment between them, their trade associations, and their positions on climate policy. This is significant for companies to consider as they have the right mechanisms, systems, and strategy in place to address the emissions reduction curve, but they are in essence working against themselves and sabotaging their strategy by being members of these trade associations or paying into trade associations that are obstructive against climate policy. 

Addressing greenwashing through another proposed SEC rule

Concerns about greenwashing are valid. Steven says that the SEC is working on another rule to address greenwashing on ESG, and Ceres submitted comments a few months ago. He says that they think there should be a common set of rules, just as there is with other elements in terms of labeling. Today, there are funds that claim to be clean or green, yet come to find out that they’re really invested in fossil fuels – that’s greenwashing. Steven explains that by having a common set of rules, a definition that has to be public, or at least for funds to announce how they’re defining clean or green, or whatever it might be, then you as a consumer can make the informed decision that affects the purchasing of your food and other products, as well as where you invest your money.

Resources Mentioned

• Ceres
• Ceres Accelerator for Sustainable Capital Markets
• Ceres Report: Responsible Policy Engagement Analysis 2022
• SEC Proposed Rule for Climate Risk Disclosures
• Ceres Global 2023

Connect with Steven Rothstein & Yamika Ketu

• Connect with Steven on LinkedIn
• Connect with Yamika on LinkedIn

Connect With Jason Rissman

• InvestedInClimate.com 
• On LinkedIn
• On Twitter

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