Peter Malik, Director, Center for Market Innovation, New York
The other day I picked up an article in the April issue of Fast Company, detailing Bloomberg’s reporting of companies’ ESG data, or Environment, Social and Governance. Curtis Ravenel, Bloomberg’s sustainability director, has done a great job in mainstreaming the previously “extra-financial” data by including it in company reporting. And he has done it the only way possible: by treating environmental reporting as highly relevant to the company bottom line. Bloomberg’s approach is yet another example of a gradual but irreversible shift in corporate relationship with the environment: namely, the treatment of environmentally sustainable conduct as a profit center. The increasing number of shareholder resolutions requiring companies to report on their environmental impact proves that investors incorporate this line item in their investment decisions. And initiatives such as the one by Dow Chemical where this corporate examines how to include ecosystem services on its balance sheet as assets are a welcome addition to this trend.
All this makes our work at NRDC’s Center for Market Innovation more and more mainstream. Which is of course a good thing: the only way business will adjust its relationship with the environment is if it can make money by doing so. This may sound crass, but it is true. There is an increasingly visible dividing line between companies which continue to treat the natural resources through a merely extractive lense, and ones which are actively preparing themselves for the future which will treat nature and the earth’s resources in a more holistic – and finite – manner. One example is Shell which started to include the cost carbon emissions in all its internal corporate decisions. As a result it will be far better prepared for a world where carbon is globally priced, be it via a formal carbon trading system or via more implicit mechanisms. Here at CMI we do a lot of work with real estate owners and developers, retrofitting their spaces for energy efficiency. While the uplift in asset performance post-retrofit is only beginning to be felt as the market gradually recovers, energy efficiency will be one of the main determinants of haves and have-nots in real estate in the near future.
So I applaud Curtis Ravenel’s leadership at Bloomberg. It further builds momentum in the right direction. Sustainability needs to be understood in both environmental and financial sense. And the more of us are pushing in that direction the better.