In this piece:
Active Investor Impact Update
Fourth Quarter 2023
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.
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
By Calvin Bader
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 Name | Contribution to Portfolio Emission Exposure |
|---|---|
| LG Chem | 10.82% |
| 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% |
| Total | 47.70% |
*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.
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.
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:
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
Invest with Us
This piece is intended as an editorial review of a survey of risk considerations and does not constitute investment advice, a solicitation, or an offer to buy or sell any security. Past performance does not guarantee future results. All investments involve risk, including the risk of loss of principal.
Company developments described in this report occurred during the period of our engagement but should not be assumed to have resulted from Boston Common’s activities. Where we believe our engagement contributed to a development, we describe the basis for that assessment.
References to third-party research, publications, and data sources are provided for informational purposes only. Boston Common Asset Management does not warrant the accuracy or completeness of third-party information cited herein. Readers should consult original sources and qualified professional advisors before making any investment decision.
