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Decision and Policy Analysis Research Area – DAPA

95 reasons to have a little faith in the investment community

Great news coming out of the investment industry – and no, that’s not an oxymoron.   As we discussed a few weeks back, the SEC is now mandating climate change disclosure, which means that investors have succeeded in expanding financial health criteria by pinpointing corporate social responsibility and environmental management as indicators of risk and opportunity.

This week the investment community continued it’s march for increased environmental disclosure and better corporate practices – a CERES report a few weeks back highlighted a staggering 95 climate change resolutions (a 40% increase from the 2009 filing season) that have been filed in 2010 by investors and managers for over 82 US and Canadian companies.  Some of the nations largest companies were targeted, including those in agriculture, food, and forestry.  Here is a list of companies whose investors are demanding more information on how they plan to mitigate the impacts of climate change and offset company contributions.

Below is a shorted list of companies engaged in agriculture, forestry, and food trade, and the areas investors are asking for increased disclosure:

  • General Mills: (filing pending):  Report on rainforest impacts, palm oil policy to reduce green-house gas emissions (GHG)
  • Sara Lee: (filing pending):  Report on rainforest impacts, palm oil policy to reduce green-house gas emissions (GHG)
  • Proctor and Gamble:  Forestry policies
  • Smithfield Foods:  (filing pending) Report on concentrated animal feeding operations (CAFO),  GHG reduction plan
  • Weyerhaeuser:  Report on impacts to rainforest and sustainability, report on rights of indigenous people (costs/benefits)
  • Walmart:  Adopt Climate Change Principles
  • Safeway:  Adopt Climate Change Principles

Supply chain sustainability, small growers, and climate change mitigation

Climate change principles range from considerations about energy and emissions to overall efficiency in supply chains and product sourcing.  How can companies offset climate change contributions through small farmer integration?  How can they convey value to investors because of changed sourcing practices?

For agriculture, the case for small farmer inclusion in supply chains speaks to the potential for small growers to contribute to changing corproate practices by establishing value to investors in any number of the following ways:

1. By prompting agribusinesses to define, measure and meet social/environmental impact goals. Beyond creating income and jobs for impoverished communities, this means providing or assisting in the encouragement of basic services that contribute to a secure and sustainable workforce.  GRI, are all offering emerging frameworks for sustainability benchmarking and reporting.

2. By meeting supply and product diversity goals and innovating ahead of the unforeseen effects of climate change and agriculture.

3. By shifting business practices to be more inclusive of small growers can prompt innovation and establish new business models.

4. By encouraging the development of a new generation of middle men who supporting small grower participation

5.  By establishing new partnerships between NGO’s, governments, and the private sector for investment in small farmer capacity building, organization, education, and sustainble cultivation practices at the farm level.  This can contribute to higher quality, higher yields, new varieties, and

The significance?

The significance is that despite the disspointment at COP 10 or the unwillingness of governments and states to regulate business activity that negatively affects society and the environment, investors do.  The effort is certainly not wholly altruistic, but a nod to the strategic importance that investors believe companies will, eventually, have to account for carbon emissions and supply chain sustainability at a later point.  As the financial times reported last week,

Better get the framework in place now, so the risks all this will pose to US companies will become clear. That will give them a better sense of the potential impact on their investments.

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