As the Senate moves forward with the cap-and-trade debate, what role is the business community playing in lobbying efforts? During today's OnPoint, Mindy Lubber, president of Ceres, an investor network working to address sustainability challenges, explains how her group is trying to influence the Senate's climate debate. She gives her take on recent criticism of the U.S. Chamber of Commerce and its stance on climate legislation and addresses whether Ceres is pressuring its business partners to leave the chamber. Lubber also discusses the latest on the push to have the Securities and Exchange Commission oversee climate-related disclosures.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Mindy Lubber, president of Ceres, an investor network working to address the sustainability challenges. Mindy, thanks for coming on the show.
Mindy Lubber: Thank you for having me.
Monica Trauzzi: Mindy, Ceres is taking part in the We Can Lead campaign for comprehensive climate legislation and you're pushing for the Senate to pass legislation this year. From an investor's standpoint, what are the risks for not acting on climate this year?
Mindy Lubber: Well, we're here with hundreds of investors, financial leaders and business leaders making the case that addressing climate change, really, the time has come not only to address it now, but that it is as much a financial and a business issue as it is an environmental, public health, national security issue. It's all of those things, but acting that, what we need to do is we need to put a price on this carbon pollution because that will send the right message to the capital markets that we're going to cap carbon. We're going to put a limit on it and that is the right market signal to jump-start the clean energy economy. People are not going to make major massive investments in renewables, in efficiency until they know we've really put a cap on the amount of carbon we're going emit into the air. So not acting, not passing legislation means we're going to delay the transition to a clean economy. We're going to remain behind. The four largest developers of solar and wind energy are no longer in the United States. They're Germany. They're Japan. They're China. We need to catch up. We need to be leaders. We need to create the jobs here at home, as well as of course working with other countries, and that is going to require a level playing field, Congress to act and say we need a cap on carbon. We need a price on carbon pollution. Right now carbon pollution costs zero and we get a lot more of it. It has a cost to society and we ought to put a cap on that and a price on it.
Monica Trauzzi: So, are U.S. investors really at a competitive disadvantage at this point when you look at other investors around the world?
Mindy Lubber: Well, U.S. investors certainly are slowing down. They're not getting the right market signals. We saw a tremendous increase in investments in clean technology over the last couple of years. This past year, and clearly it was because of the economy and because of the Congress not acting, we saw that fall off. We need to go from the $150 billion that's been invested, and that's around the world, and quadruple that and it's not going to happen in the United States until we pass the right market signals and allow that clean economy to be jump-started.
Monica Trauzzi: There are many voices in this discussion. How much of an impact can the investor community have in this debate as it progresses through the fall?
Mindy Lubber: Sure, I think for too long people put everything, public policy debates, all sorts of issues in boxes that somehow regulating climate change or dealing with global warming is something the environmentalists care about, but that's bad for business because it's about regulating the economy. I would argue the message that hopefully will come from those people that we're here with, from business leaders and financial leaders, is that addressing climate change or global warming, nationally and internationally, is as important for building a strong economy as it is for the environment. So the impact of being down here is to take away the boxes, the silos of this is something only environmentalists care about and reinforce that, acting on climate is good for the economy and it's not bad for the economy as some like to think.
Monica Trauzzi: And focusing on that business aspect that, the Chamber of Commerce has been in the news in recent weeks. It's been facing some challenges regarding its stance on climate policy. Is the chamber's stance as extreme as some have painted it to be? I mean what's your take on that whole situation that companies are stepping away from the Chamber of Commerce?
Mindy Lubber: Well, one is I think it is a very interesting phenomenon. We have not seen this happen in decades and while it's only been five or six companies, I know there are dozens of others looking at it. It's a very important step and what it's saying to the chamber is we need to democratize this institution. We cannot have an institution that presumes to represent everybody without a better process internally, vetting things, making sure people agree. And for those who stepped away, Peter Darby, CEO of PG&E, John Rowe, CEO of Exelon and others, they basically felt like the chamber was not representing them. They tried to get the chamber to represent them on climate and that they could not in good conscience be part of an institution that was sending a message that acting on global warming was a bad thing when they know down to their economic core, as well as personal core, that the need to act sooner rather than later. This year preferably as we go into international negotiations in Copenhagen, we need to be able to say the United States has taken a step forward and that having the chamber represent an opposing position was just no longer tolerable for Nike, for PG&E, for other utility companies, for Apple yesterday and more companies to follow. It's a big step for them to do that and they deserve credit for standing tall and honoring their beliefs.
Monica Trauzzi: And you mentioned Nike. They're a member of BICEP, which was started by Ceres. They've announced that they're going to leave the chamber's board of directors. Is your organization at all pressuring member companies to move away from the chamber because of their stance?
Mindy Lubber: You know, I think that each company is making this decision truly on their own. I mean they've asked us about the chamber, I've debated the chamber online. But the bottom line is each of those companies are taking this decision up to their board of directors and they're not allowing themselves to be pressured by anyone. They are acting based on their beliefs, based on their public positions, based in some ways even on their conscience. And it's a big step to step out and do this, to make themselves the exception to a rule. And they wouldn't do that based on pressure. They would do that if it's right for their enterprise and they chose themselves to do it because it was right for Nike to pull off of the board or the executive committee and for the others to pull out of the chamber.
Monica Trauzzi: And many of the chamber's member companies are also members of Ceres or USCAP. I mean is there a conflict of interest there to be part of groups with such opposing views?
Mindy Lubber: Well, that's what we're starting to see. I mean the reality is large organizations that represent diverse institutions can never get it just right where everybody agrees with everything. And I think most of the players at the chamber don't expect to have an exact position with every position that the chamber takes. But on climate, given its prominence, given how complex, given the imperative of acting, I think the companies that stepped out of the chamber said this one is too important to wink and blink and let go. That they needed to act and they did.
Monica Trauzzi: Let's switch gears for a minute. You'd like to see more transparency when it comes to climate related disclosures. Why is this such an important issue at this point and why is it such a serious thing for investors to be looking at?
Mindy Lubber: Sure, and there's some interesting news on that front, but let me start when we have asked the SEC to require better disclosure in the filings of companies on the risk they face from climate, it's because investors need that information. Investors look at largely information that comes out of the SEC when determining whether or not they want to invest in a company. If a company has risks an investor needs to know about that. Investing in a company and not knowing the full range of risks is like investing with their eyes closed. It's no way to act. Now, on top of that, requiring companies to disclose their carbon risk and I don't mean only how much carbon they emit, but what are their risks from regulatory changes, from physical changes. For insurance companies there were $80 billion in liabilities from Katrina alone. Those are risks investors want to know about when they're deciding to invest in a company, so it's crucial that that information get out there. And on top of that, when companies disclose their risks, when they're asked to look at it, to examine it, and then to put it in the public domain that's when they act on it. What gets measured gets managed better. So expecting companies to disclose the financial risks from climate change in their financial statements at the SEC is putting the onus where it belongs. They disclose other financial risks. It's taking climate off of the so-called off-balance sheet risk and putting it right on the balance sheet where a belongs and it will change the way companies act and manage their risks and it will change the way investors invest.
Monica Trauzzi: And the SEC is beginning to look at this?
Mindy Lubber: The SEC is absolutely. Elisse Walters, one of the SEC commissioners, at a speech, I think it was in Northwestern Law School in Chicago this past Friday, said the time has come for us as an agency to look at requiring better disclosure of climate risk. Now, for eight years we talked about that with the last administration and it didn't happen and so it is music to my ears to hear a commissioner out there talking about the need to act sooner rather than later.
Monica Trauzzi: OK, we'll end right there. Thank you for coming on the show.
Mindy Lubber: Thank you for having me.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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