Private Dollars With the Potential to Drive Public Good
Featured Events | Oct 16, 2019 | Michael Benigno
Just a few days before NYC Climate Week was set to begin, CEOs and academic thought leaders on corporate sustainability took part in a Sustainability Panel at the McNally Amphitheater, underscoring the potential for finance and private wealth to be recognized as important agents for social and environmental change.
The program was part of the Museum of American Finance Evening Lecture Series in partnership with Fordham Gabelli School of Business.
For a long time, climate change had been viewed as a massive, public problem. But as the demand for environmental, social and governance (ESG) information grows among investors, many corporate leaders are becoming increasingly motivated to adopt business strategies that serve the public good.
Jean-Yves Fillion, CEO of BNP Paribas USA, highlighted recent BNP Paribas projects such as one with Italy’s largest electric utility to directly fund renewable energy, and another with the government of Chile to launch the first sovereign green bond in Latin America, which together attracted some $5 billion of interested investors.
“Clients are leaning toward action, and we need to motivate more companies to embrace the path to becoming green – banks and the funding are there,” Fillion said. In 2017, all BNP Paribas offices across 72 countries became carbon neutral.
The Promise of Private Wealth
Martin Whittaker, CEO of JUST Capital, pointed out that in terms of dollars the private sector is four to five times the size of public funds; it’s also 10-20 times the size of global philanthropy. “Capitalism and free enterprise must be a positive force for change,” he said.
Using surveys and other qualitative and quantitative input, JUST Capital measures and ranks companies on issues that Americans consider most important to them. The JUST 100 is an annual list of 100 companies that perform the best in light of key issues such as the treatment of workers, customer satisfaction and care for the environment.
Whittaker emphasized that even though some of the most meaningful ESG metrics might be the most closely guarded, if investors have the right information, they will continue to buy from and invest in companies that are creating long-term value and positive impact for the environment, for people and the economy.
Ultimately, his was a positive and hopeful view for a new capitalism that is rooted in mainstream values. “Without capitalism working for more people, nothing ends well. And the path we’re on, where the markets are working better and better for fewer and fewer people, in itself, isn’t sustainable. The best source for change is business as a source for good.”
And, despite challenges, ESG data is becoming more sought after, and also easier to understand. Raymond McDaniel, president, and CEO of Moody’s outlined some of the most recent ESG additions to Moody’s credit rating process, including plans for scoring frameworks tied to carbon transition and governance for all publicly traded corporations.
“Sustainability is becoming a board-level issue,” McDaniel said.
Making Bold Moves
Business leaders like Lynn Good, president, chairman, and CEO of Duke Energy, are responding to the demand for action – and not just information.
In the 14 years since Duke Energy first started publishing a sustainability report, Good has seen environmental concerns transition from separate and distinct initiatives to a crucial part of business strategy.
The company, one of the largest energy holding companies in the U.S., has already reduced carbon emissions by 31 percent since 2005. Then, on Sept. 17, Duke Energy announced an updated climate strategy with a new goal to be carbon neutral – net-zero – by 2050. The company is also accelerating its near-term goal by cutting its carbon dioxide emissions by half or more from 2005 levels by 2030.
She said Duke Energy’s approach will be a mixture of forward-looking technological advances, not a focus on just one tactic.
“I’m talking often about the fact that I don’t believe I have all the technologies today to get to net-zero by 2050,” she said. “You have to recognize you need breakthroughs in my business around storage, around carbon capture, energy efficiency, and demand response. We shouldn’t get married to a single technology today and think that if we invest there we’ll solve the problem because I think we’ll waste precious resources and not achieve what we want to.”
Balancing many different stakeholders is also required.
“Taking the passion of people and entrepreneurs and capital gets people excited and delivers results – not stepping away from stakeholders,” Good said. “I continue to bring stakeholders into the conversations. You’re never going to make everyone happy, but you can try to get to a common ground with a willingness to listen.”
A Promising Future
“I think there is a tectonic shift happening,” said Satya Tripathi, UN asst. secretary-general, and head of NY Office at UN Environment. “The private sector needs to be in the room to have a meaningful conversation so that they are part of the solution.”
Barbara Porco, director of the Gabelli School’s Center for Professional Accounting Practices, pointed out how much has changed since early sustainability reports came out from companies like Ben and Jerry’s. When the ice cream company published its first environmental report in 1988, it seemed like a countercultural move. But, today, as panel moderator Emily Chasan, of Bloomberg News, shared, 86 percent of the S&P 500 publishes a sustainability report.
On the academic side, Porco commented about the accelerating interest in sustainability topics and growing course offerings at the Gabelli School. Current students have the opportunity to study sustainability issues in the classroom as early as freshman year and continue to be enriched in this new discipline throughout the business curriculum, she said.
“The school continues to meet the challenge of the growing demand for its social innovation and sustainable business courses,” Porco said.
Her excitement was echoed by McDaniel. “In the late 1990s, you could probably get the entire industry into this conference room. Today, you can’t be a CEO of a modern-day corporation without being a leader in all of these issues.”
This program was sponsored by BNP Paribas and Moody’s and was presented by the Museum of American Finance in partnership with the Fordham University Gabelli Center for Global Security Analysis.