US - More than two dozen major institutional investors, collectively managing $1trn in assets, have asked the Russell 1000 companies to actively embrace the "new reality" of ESG risks.
In a jointly-signed letter, major investors including the two largest public pension funds in the US - the California Public Employees Retirement System (CalPERS) and California State Teachers' Retirement System (CalSTRS) - as well as Calvert Asset Management, Walden Asset Management, Pax World Management Corp. and Generation Investment Management, called on companies to address environmental, social and governance issues in both their actions and required investor disclosures.
"Environmental and social sustainability issues can no longer be considered off-balance sheet issues," wrote the investors. "Rather they are material, financial issues posing both risks and opportunities to the long-term success of corporations."
.The letter comes on the heels of CalPERS and CalSTRS making formal public commitments last month to better integrate ESG factors across all their investment decision-making.
The letter was also signed by state treasurers and comptrollers from New York, Illinois, California and Connecticut, plus the AFL-CIO and Laborers' International Union of North America (LIUNA), and several church-based investment funds.
Ceres President Mindy Lubber, whose investor/business/public interest coalition organised the signatories, said mainstream investors like these can no longer stand still while companies their clients depend on fail to see these wide-ranging risks.
"We've seen enough hidden financial risks with globally-damaging economic results in recent years," Lubber said. "The collapse of financial markets, the BP oil spill, the Massey coal mine disaster and other mishaps make clear it's time that companies operate with a clear view of all their risks and costs - but also the tremendous opportunities open to those businesses across all sectors who compete by developing solutions to environmental and social issues."
The letter urges companies to use a tool developed by Ceres to catalyse comprehensive strategies and actions to imbed sustainability across all aspects of their business. That tool, the 21st Century Corporation: Ceres Roadmap for Sustainability, provides a platform for accelerating best practices in governance, stakeholder engagement, disclosure and performance across a company's entire operations and supply chains.
"We encourage you not only to design and implement a robust sustainability strategy, "but also to demonstrate to shareowners and other stakeholders how effectively you are managing sustainability risks and opportunities," the letter said.
The letter also asks companies to "use your standard investor communication vehicles-analyst calls, road shows, annual meetings-to highlight actions you are taking to address material sustainability risks and transform them into competitive opportunities."
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