Active Investor Impact Update

Fourth Quarter 2023

I

TIME100 Climate List

IV

Lauren Compere Attended COP28

VII

Engagement Highlights

II

Top 100 Women-Led Businesses

V

Net Zero Asset Manager Commitment

VIII

UN PRI Summary Scorecard

III

Biodiversity Risks & Opportunities

VI

2024 Proxy Season

IX

From the Commons

Top100 Climate List

Boston Common’s President and Founder, Geeta Aiyer, was named to the 2023 TIME100 Climate list! The TIME CO2 inaugural list honors the 100 most influential leaders driving business climate action. This is a tremendous honor recognizing decades of tireless work. Please join us in congratulating Geeta!

Q&A with Geeta on Climate Action

 

What sustainability effort do you hope will gain popularity with the general public this year, and why?

The efforts to address and reverse biodiversity loss and invest in earth renewal. Ecosystems across the world are on the brink of collapse, presenting near-term existential risks to businesses, the economy, society, and human health.

What is the single most important action you think the public, or a specific company or government, needs to take in the next year to advance the climate agenda?

The most impactful action will come from government legislation that guides corporate policy and holds companies accountable for their impact on the climate and environment. The public’s role is to demand that lawmakers support legislation that urgently addresses these critical systemic issues.

Where should climate activism go in the next year?

Activists must keep humans rights front and center in the fight to protect our planet. We must advocate for government action and policy change. We must create the impetus for investing in solutions, and the deterrents for maintaining the status quo. Climate change is not an abstract threat impacting others sometime in the future. It is happening to us here and now. Let us act with appropriate urgency.

What would you say to people who feel powerless in the face of climate change?

Small or imperfect actions today can be worth more than perfect actions tomorrow. The impacts of climate change are cumulative and interconnected, and every bit counts because there is not one perfect solution for climate change.

Courage is contagious and brings change in ways you may not recognize as powerful. But we must take action today.

What is a climate technology that isn’t getting the attention or funding it deserves, and why?

Small or imperfect actions today can be worth more than perfect actions tomorrow. The impacts of climate change are cumulative and interconnected, and every bit counts because there is not one perfect solution for climate change. All actions as intentional consumers, parents, voters, and community members will make a difference.

Top 100 Women-Led Businesses 

For the 4th consecutive year, Boston Common was recognized among the top 100 Women-Led Businesses in Massachusetts.  

Biodiversity Risks & Opportunities: What Companies Need to Know

By Lauren Compere

Human activity has significantly altered three-quarters of land and two-thirds of marine environments.[1] One million species are facing extinction.[2] Half of global GDP depends on nature at some level.[3] The world’s ecosystems are on the brink of collapse.

Resource extraction, industrialization, agriculture, urbanization, and pollution are among the human activities that have significantly altered the environment. Forests, wetlands, and oceans absorb 5.6 gigatons of carbon yearly.[4] But as the health of those ecosystems deteriorates, nature’s ability to absorb greenhouse gases will further diminish, and the consequences will be catastrophic.

A global threat requires a global response. Some regulatory efforts are already in place and investors like Boston Common AM have been engaging global companies on issues like deforestation for decades. Still missing are the necessary steps for corporate boards and management to become biodiversity competent by assessing and acting across the value chain, partnering with industry players and stakeholders, using public policy engagement to support biodiversity protection, and aligning political and lobbying activities (direct and indirect). Just as the Paris Agreement called for boards to be climate-competent, companies today must become nature-competent.

Lauren Compere Attended COP28 in Dubai

Lauren Compere was invited to speak at COP28, the annual United Nations climate summit. COP28 brought together global leaders to discuss climate change and limiting emissions in Dubai.

Lauren was in the Blue Zone, the formal conference and negotiation space managed by UN Climate Change. She participated in three panel discussions over the course of the summit:

  • November 28th: Biodiversity as Systemic Risk: Investors Taking Action
  • December 2nd: Investor views on corporate accountability aligned with the Paris Agreement
  • December 3rd: Food and Climate

ICCR Legacy Award

Steven Heim Honored

In October, Boston Common’s Director of ESG Research and long-time Indigenous Rights advocate, Steven Heim, was honored with the 2023 ICCR Legacy Award in New York alongside family, friends, and colleagues.

During his acceptance speech, Steven reminded us of the importance of individual action on issues facing people and the planet. “The issues we face together could not be larger—our very ability to survive on this planet and human freedom are at stake—and pursuing small, short-term victories will not be enough. Whatever we can do, whoever we can touch, wherever we are, it all adds up.”

Read Steven’s acceptance speech from the award reception on October 5, 2023.

Net Zero Asset Manager Commitment: 2023 Engagement Update 

2023 was Boston Common’s second year engaging top carbon emitters across our investment strategies. Engaging portfolio companies to reduce financed emissions is a part of our Net Zero Asset Managers (NZAM) commitment. Boston Common signed on to NZAM in 2021 and has prioritized engaging the highest relative GHG emitters across portfolios. In 2023, our goal was to evaluate companies’ progress on aligning climate targets with a “net zero by 2050 trajectory.”
Company NameContribution to Portfolio Emission Exposure
LG Chem10.82%
SSE Plc*10.18%
Koninklijke Ahold Delhaize NV*5.90%
Essity AB*5.87%
Xinyi Solar Holdings Ltd*3.40%
TDK Corp*3.40%
Owens Corning*2.81%
SK Hynix Inc*2.51%
Steel Dynamics**2.81%
Total47.70%

*Denotes that the company responded.

**Steel Dynamics was added to the firm-level high emitters list as of 06/30/2023.

Current Trends among high carbon emitting companies

  • There is positive momentum toward emission reduction. Companies have some level of TCFD aligned reporting and board oversight of ESG and climate risk, and most have conducted and published climate scenario risk analyses.
  • Companies have committed to Scope 1 and 2 emissions reduction targets but are lagging when it comes to Scope 3. An increasing number of high emitters have set SBTi-approved targets and net zero goals, but there remains room for improvement.
  • Companies lag on supplier engagement. Few companies require suppliers to provide actual GHG emissions data. The result is a gap between modeled Scope 3 emissions and actual Scope 3 emissions.

We conducted company research, sending out engagement letters so that we could customize outreach and identify engagement priorities. Engagement outreach focused on the following topics: governance of sustainability, climate scenarios and risk analysis, emissions management and targets, energy mix, supplier engagement, climate lobbying disclosure.

Here are some key findings:  

Governance of Sustainability

100% of the companies assessed have board oversight of ESG and climate risk included in mandates, but only 67% have ESG KPIs linked to board and executive remuneration. Best practice: Link ESG KPIs to executive compensation, including safety, GHG emissions reduction, zero waste to landfill, inclusion, and diversity.

Climate Scenarios and Risk Analysis

89% of the companies assessed conduct some form of risk analysis—most use scenarios based on a 2-degree and 4-degree future. Best practice: Focus climate scenario analysis on transition analysis and physical risk assessments aligned with the IPCC Report.

Climate Targets

100% of the companies assessed have Scope 1 and 2 emissions targets, 67% set SBTi-approved targets or have committed to SBTi. 78% have a Net Zero by 2050 (or sooner) target. Only 44% have Scope 3 targets. Best Practice: Set SBTi-approved absolute Scope 1, 2, and 3 emissions reduction targets.

Energy Mix

56% of the companies assessed have set a renewable energy target. Best Practice: Set renewable energy targets and join the RE100 and EP100 initiatives to support the climate transition.

Supplier Engagement

33% of companies have guidelines or requirements for suppliers to provide GHG emissions data. 22% of companies have preferential terms for suppliers who have emissions targets. Best Practice: Companies engage with suppliers on climate issues to reduce emissions, create visibility into scope 3 emissions exposure, and ensure commitment to the climate transition.

2024 Proxy Season: Shareholder Resolutions Filed

Shareholder resolutions are an essential part of our toolkit to achieve impact in public equities. Boston Common backs relevant ESG shareholder proposals and files or co-files shareholder resolutions when a company dialogue stalls or when a company is unwilling to engage.

Q4 Engagement Highlights

Investor Initiative on Hazardous Chemicals

Boston Common is a member of the Investor Initiative on Hazardous Chemicals (IIHC), which sent a joint letter to the 50 largest chemical producers in November. The letter urged the producers to reduce the adverse impacts of hazardous chemicals on human health and the environment and thereby limit exposure to financial risks. Read key findings of the 2023 Report. Boston Common is co-leading a related engagement with LG Chem (South Korea) and is in dialogues with Daikin (Japan) and Ecolab (US).

Nature Action 100

In September, Boston Common joined the Nature Action 100 initiative. With the support of over 200 investors with $27 trillion assets under management, the initiative addresses the urgent crisis of global nature and biodiversity loss. Investor expectations for companies include actions that will protect and restore nature and ecosystems.

Public Policy on Living Wage

In November, Boston Common signed on to the Investor Statement of Support for a Living Wage for U.S. Workers. The statement calls on US companies to take steps towards paying a living wage to direct and contract workers, in line with international human rights standards. Boston Common is engaging select portfolio holdings on this including Darden, Target, and TJX.

Emerging Markets and Climate Finance

Boston Common engaged eight Emerging Markets banks and insurance companies* on climate finance, deforestation, and biodiversity risks and impacts to better understand their climate transition plans and approaches to mitigating climate risk. Engagements focused on governance of sustainability, financed emissions, deforestation, and biodiversity.

Company engagement highlights:

  • Axis Bank strengthened its sustainability governance by establishing an ESG Committee at the board level in fiscal year 2022. The bank committed to scaling down exposure in four carbon-intensive sectors: coal (mining, logistics, and trade), thermal power, shipping, and aviation.

*Axis Bank, Bancolombia, BDO Unibank, Kasikornbank, HDFC Bank, Itau Unibanco, OTP Bank, and Ping An.

UN PRI Summary Scorecard 

Boston Common has been a PRI Signatory since 2008. In the latest PRI assessment, Boston Common received five stars in two categories.

  • Policy, Governance, and Strategy – Five Stars 

Evaluated our integrated-ESG investment policy and corporate governance structure.

  • Active Fundamental – Five Stars 

Evaluated the scope and depth of our integrated-ESG research process.  

  • Confidence Building Measures – Four Stars 

Evaluated internal and external audits of ESG processes and third-party assurance on ESG data.   

News From the Commons: Walking Our Talk

Boston Common supported the MicroLoan Foundation by sponsoring coaching sessions for BCAM colleagues during the annual WLA Coachathon. The MicroLoan Foundation is a women’s empowerment and poverty alleviation charity supporting women sub-Saharan Africa.

This quarter’s Boston Common internal education series featured guest speaker Mark Camp, the Deputy Executive Director of Cultural Survival. Cultural Survival is an Indigenous-led NGO that advocates for Indigenous Peoples’ rights and supports Indigenous communities’ self-determination, cultures, and political resilience. Director of ESG Research and longtime Indigenous rights advocate, Steven Heim sits on the board for Cultural Survival and has led Boston Common shareholder engagement work on protecting the rights of Indigenous Peoples since 2004. 

2023 marked Boston Common’s 20th anniversary. The firm celebrated its two-decade track record of environmental, societal, and economic impact with many stories to share along the way. To commemorate this milestone, the firm partnered with a local, independent, woman-owned media company to create a short video  that shares stories of the past and aspirations for the future. 

Lauren Compere joined the Global Reporting Initiative (GRI) Banking Technical Committee developing a GRI sector standard for banks. 

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