Like it or not, most decisions today are based on economics. It’s the way our system is put together and it has been, in many ways, successful in generating innovation and prosperity, for many if not for all. That fact is not one that is likely to change easily, though the system’s shortfalls are beginning to show up like cracks in a once impenetrable façade. Prominent questions that arise, for anyone when pondering a choice, whether it’s an individual or a large company, tend to fall along the lines of:
- Can I afford it?
- Is it a good investment?
- Will taking this action lead to more prosperity?
When we talk about large-scale change, we can talk about two kinds of change — one that works within this paradigm, or one that challenges it. I’m not here today to argue the respective benefits of each, but instead to acknowledge the fact that working within the system, if possible, has distinct advantages, given the deep interdependencies between the financial world and the world at large.
So, within this context, looking at an issue like climate change and the large-scale actions required to adequately address it, the question of whether these actions can have an economic upside is critical. If we had to rely strictly on a sense of civic duty and social responsibility, that would surely be a harder road.
With that in mind, the CDP S&P 500 Climate Change Report 2014, from the Carbon Disclosure Project (CDP) is good news.
CDP was engaged by a group of 767 major investors representing an enormous amount of money, some $92 trillion, to assess all the companies in the S&P 500 Index based on two things:
- Their level of disclosure regarding carbon emissions
- Their performance in responding to the need for action.
If you think that’s a lot of money, you’re right. In fact, if there is no double-counting here, $92 trillion represents over 38 percent of all the money in the world. So if the group of people and institutions representing 38 percent of the world’s wealth want to know, as investors, what the companies in the S&P 500 are doing about climate change, that ought to give some people pause as to how truly important this is.
So what did they find out? After looking at these metrics and correlating them with the financial metrics of the companies that participated, CDP made the following statement. Click to continue reading »
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