Ceres

Information presented in this profile is for reference only. The Climate Action in Financial Institutions Initiative does not guarantee as to the exhaustiveness of this information and invites you to contact the Secretariat (contact@mainstreamingclimate.org) if you wish to propose any modifications.

By including this profile, the Initiative, its Supporting Institutions and the Secretariat do not endorse the activities described below nor the guidance and information provided in this profile.

Last updated: June 2019

Website: www.ceres.org/

Contact: info@ceres.org

Summary: Launched over 25 years ago, Ceres is a US Non-Profit Organization working with investors and companies to address financial sustainability issues in general. Ceres started with a small group of investors and now coordinates four different networks (investor, company, policy and non-profit). Ceres produces guidelines and case studies, but also has strong advocacy and capacity building components for its network members. It has a dedicated work stream addressing climate change and carbon asset risk.

What are the objectives of the initiative?

Ceres vision of its activities is the following: “With cutting-edge research and high-level engagement, we inspire the most influential investors and companies to integrate environmental, social and governance practices into core business strategies and seize the opportunities embedded in the transition to a low-carbon economy. Ceres also mobilizes these leaders to support the corporate and government policies necessary to build a sustainable future for people and the planet.”[1]

Who launched it? Who is participating?

Launched by a small group of investors in 1989, Ceres has today four different networks contributing to its work:

Why has this been put into place?

“A small group of investors founded Ceres largely in response to the Exxon Valdez oil spill that occurred on March 24, 1989. The idea was to bring environmentalists and capitalists together to forge a new sustainable business model, one that would protect the health of the planet and the long-term prosperity of its people.”[2]

What are the main work streams/areas of work?

Ceres works with investors and companies on the following climate-related issues and topics:

  • Carbon Asset Risk: “Ceres works to prevent companies from wasting investor capital by demonstrating how carbon asset risk poses an existential threat to their business models, accrues increasing levels of stranded assets, and puts trillions in capital expenditures at risk. […] Ceres brings together global investors and other market actors to engage companies in recognizing the risks and opportunities being presented by this energy transition.”[3]
  • Climate Change: “We work with investors and companies to ramp up global sustainable investments in clean energy and sustainable food and water systems. Our investor network members also advocate for robust climate disclosure in financial filings and engage directly with companies to improve sustainability performance. This work is done across key sectors affected the most by climate change, including electric power, oil and gas, transportation, insurance and agriculture.”[4]
  • Disclosure: Ceres guides “companies using a framework for corporate reporting known as the Climate Disclosure Standards Board and collaborate with the Global Investor Coalition on Climate Change (GIC) members on consistent, comparable disclosures in financial filings worldwide.”[5]
    Through Ceres Disclose What Matters investors call on companies to provide robust disclosure of material sustainability and climate risks in financial filings. “[Ceres] also encourages investors, companies and governments to support the work of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), which provides recommendations to advance climate risk disclosure worldwide.”[6]
    Governance: “Ceres’ work on corporate governance currently addresses the following: […]
    Investors:We engage investors on board sustainability oversight to keep the pressure on companies that they invest in to develop stronger governance systems. […]
    Companies: We educate sustainability executives, corporate secretaries, general counsels and others within companies on the impact of sustainability issues on corporate business and financial performance, and when and how these issues should be elevated to corporate boards. […]
    Governance Experts/Directors: We raise awareness in the governance/board director community about what sustainability means and how it fits into board oversight.”[7]
    Policy: “Ceres is the leading organizer of investor and company support for climate and clean energy policies in the U.S. By making the economic case for action, Ceres advances business leadership in support of innovative policies that will help accelerate the low-carbon future.”[8]

CERES also works on a wide range of other environmental and sustainability areas, including Human Rights, Water and Deforestation.

Projects and campaigns include:

  • Clean Trillion: encouraging investors, companies and policymakers in investing an additional $1 trillion per year globally in low-carbon energy
  • Connect the Drops: showcasing and connecting Californian companies and policymakers to advance resilient water solutions
  • Disclose What Matters: campaign on disclosure of material sustainability issues, such as climate change risks, in financial filings (primarily aimed at U.S. financial filings).
  • The Ceres Roadmap for Sustainability: 20 expectations around corporate sustainability leadership in the fields of governance, stakeholder engagement, disclosure and performance

Ceres also provides investors with tools for sustainable investments, examples include:

What are outcomes of the initiative linked with the 5 Principles?

In 1997 Ceres created the Global Reporting Initiative (GRI) that, as of April 2018, has 522 corporate supporters.

Ceres is one of the four regional initiatives who jointly launched the Global Investor Coalition on Climate Change and Ceres is also one of the seven partners who put in place the Investor Agenda.

Have intermediate or final reports / guidance been issued?

Reports are available on Ceres website for free, but users are required to register in order to access them:

  • Risk:
    • Proxy Voting Guidebook 2018: “explores the business case and rationale for various climate- and ESG-related shareholder proposals at U.S.-based companies that will be voted on during 2018 annual meetings”
    • Investor Climate Compass: Oil and Gas (2017) – “this report shows how through persistent engagement on climate change risks […] institutional investors are having a major influence on the conduct and board level decision-making of key oil and gas majors”.
    • (2016) – “Learn about the framework, how it enhances the current practice of scenario analysis, and how it can provide decision-useful insights that will help fossil fuel companies mitigate the vulnerabilities they face as energy markets transition to a low carbon future.”
    • Carbon Asset Risk: From Rhetoric to Action (2015) – “This report discusses some of the most important recent developments and provides the first attempt at quantifying the uptake of CAR [carbon asset risk] assessment and management.”
    • Climate Change and Agricultural Production: An Overview of Risks and Opportunities (2018): “Although climate change is likely to affect agriculture differently from region to region, the scientific consensus is that it will have major, generally negative impacts on food systems. Erratic weather, the effects of temperature shifts and sea level rise threaten current agricultural systems, and will continue to impact global food production unless we take action.”

 

  • Sustainability:
  • Scaling U.S. Insurers’ Clean Energy Infrastructure Investments (2019) – “To take advantage of clean energy investment opportunities, insurers should reassess their strategic assets, build/acquire the right skills and capacity, engage with relevant service providers to ensure they are better attuned to the clean energy investment landscape, and take a fresh look at a broad range of clean energy investment vehicles.”
  • Change the Conversation: Redefining How Companies Engage Investors on Sustainability (2019) – The report “highlights key trends in investors’ evolving expectations for corporate sustainability. It presents nine recommendations to guide companies toward more meaningful and effective investor engagement on ESG issues, helping them to not only meet investor expectations, but also capture competitive advantage”
  • Turning Point: Corporate Progress on the Ceres Roadmap for Sustainability (2018) – “offers valuable insight […] into how more than 600 of the largest publicly traded companies in the United States are positioned to address critical sustainability issues”
  • Lead From the Top: Building Sustainability Competence on Corporate Boards (2017) – “In a climate of unpredictability, building sustainability competence into corporate boards – where directors are skilled at assessing business risks and growth opportunities in light of evolving environmental, social and governance factors – is the way forward.”

The 21st Century Investor: Ceres Blueprint for Sustainable Investing (2016) – “This Blueprint is written for the 21st Century investor – institutional asset owners and their investment managers – who need to understand and manage the growing risks posed by climate change, resource scarcity, population growth, human and labor rights, energy demand and access to water-risks that will challenge businesses and affect investment returns in the years and decades to come.” The report also includes 10 steps toward sustainable investment practices:

10 STEPS TOWARD SUSTAINABLE INVESTMENT PRACTICES

STEP 1: Establish a Commitment to Sustainable Investment Through a Statement of Investment Beliefs

STEP 2: Establish Board Level Oversight of Sustainability Policies & Practices

STEP 3: Identify Sustainability Issues Material to the Fund

STEP 4: Evaluate Material Sustainability Risks to the Portfolio

STEP 5: Integrate Sustainability Criteria into Investment Strategies

STEP 6: Require Sustainable Investment Expertise in Manager & Consultant Procurement

STEP 7: Evaluate Manager Performance Against Sustainable Investment Expectations

STEP 8: Establish Engagement Strategies & Proxy Voting Guidelines

STEP 9: Support Policies & Market Initiatives that Promote a Sustainable Global Economy

STEP 10: Integrate Sustainable Investment Approaches Into All Asset Classes & All Strategies

  • Building Resilient Cities: From Risk Assessment to Redevelopment (2013) – “This paper presents a four-stage strategic planning framework tested and refined in workshops along with the diverse ideas and innovations identified by workshop participants. The approach is proposed for use as a second stage of climate adaptation planning, following the completion of local vulnerability and risk assessments.”

Case Studies:

Business Risks from Deforestation (2017) – “summarizes the business risks and negative financial consequences” for three companies that “source commodities from areas with deforestation”

Calendar and milestones

Associated Supporting institutions of the Climate Action in Financial Institutions Initiative:

BNP Paribas is a member of Ceres’ Investor Network* on Climate Risk and Sustainability.


[1] www.ceres.org/about-us

[2] prezi.com/wpjtore1l8ma/coalition-for-environmental-responsible-economics-ceres/

[3] www.ceres.org/our-work/carbon-asset-risk

[4] www.ceres.org/our-work/climate-change

[5] www.ceres.org/our-work/disclosure

[6] ibid

[7] www.ceres.org/our-work/governance

[8] www.ceres.org/our-work/policy

Links with the 5 Voluntary Principles for Mainstreaming Climate Action

This section aims to support discussions on the implementation of the 5 voluntary Principles for Mainstreaming Climate Action. Information provided in this section is for reference only; the Climate Action in Financial Institutions Initiative, its Supporting Institutions and the Secretariat do not endorse the activities nor the guidance and information provided in this section.

The Ceres Roadmap for Sustainability includes five key expectations on governance for sustainability, including ways of integrating sustainability agendas into the daily work of an organization. These expectations can also be adapted to specifically climate-related strategies:

  • Board oversight: Corporate boards will provide formal oversight for corporate sustainability strategy and long-term performance. Sustainability considerations will be integrated into board discussions on strategy, risk and revenue.
  • Management accountability: The CEO and company management – C-Suite executives to business unit and functional heads – will be explicitly accountable for achieving sustainability goals.
  • Executive & employment compensations: Sustainability performance results will be a core component of compensation packages and incentive plans for all executives and employees across the business. Companies will include sustainability criteria in all employee performance assessments.
  • Corporate policies and management system: Companies will embed sustainability considerations into corporate policies and risk management systems to guide day-to-day decision-making.
    Public policy: Companies will clearly state their position on relevant sustainability public policy issues. Any lobbying will be done transparently and in a manner consistent with the company’s sustainability commitments and strategies.”

Ceres provides expertise in the management of climate risks through reports, tools and advocacy actions in different areas such as carbon asset risks, water risks, and deforestation risks.

The 21st Century Investor: Ceres Blueprint for Sustainable Investing, recommends investors to “begin examining climate risks by:

  • including climate risk assessments in routine reviews of portfolio and fund strategies;
  • increasing allocations to assets that will benefit from growing demand for low carbon, efficient, clean energy solutions, effectively creating a climate hedge;
  • boosting engagement with portfolio companies to improve their policies and practices on climate risks.”

The report recommends trustees and CIOs to “ask their consultants to “stress test” traditional allocation models by running sustainability scenarios on these issues. A consultant can model factors such as a drought, a particular sea level rise prediction, the impact of civil unrest in a region, resource scarcity, energy efficiency improvements, or a new regulatory framework for climate change and assess the impact on the portfolio. These scenario overlays may reveal previously unrecognized, material risks that can then be mitigated.”

One core area of work of Ceres is to promote its Investor Network to engage with companies and policymakers on sustainability issues.

The Ceres Roadmap for Sustainability includes five key expectations related to stakeholder engagement:

  • Materiality assessment process: Companies will regularly conduct a formal materiality assessment process to determine the most relevant sustainability issues for the business. Companies will engage both internal and external stakeholders in the materiality assessment process and consider stakeholder concerns in the setting of priorities.
  • Substantive stakeholder dialogue: Companies will systematically identify a diverse group of stakeholders and regularly engage with them in a manner that is formalized, ongoing, in-depth, timely and involves all appropriate parts of the business. Companies will disclose how they are incorporating stakeholder input into corporate strategy and business decision-making.
  • Investor engagement: Companies will disclose and engage with investors on material sustainability information regarding strategy, risks, performance and commitments. Companies will communicate information on sustainability risks and opportunities for the business during annual meetings, analyst calls and other investor communications.
  • C-level engagement: Senior executives will participate in stakeholder engagement processes to inform strategy, risk management and enterprise-wide decision-making.
  • Strategic collaboration: Companies will collaborate within and across sectors and civil society to innovate, scale and open source sustainability solutions.”

The 21st Century Engagement: Investor Strategies for Incorporating ESG Considerations into Corporate Interactions provides specific and operational guidance for investors to engage with companies and governments and includes tactics and case studies.

The Climate and Sustainability Shareholder Resolutions Database “tracks shareholder resolutions filed by [Ceres’] investor network participants on sustainability-related issues that companies are facing, focusing on climate change, energy, water scarcity, and sustainability reporting. These resolutions are part of broader investor efforts encouraging companies to address the full range of environmental, social and governance issues.”

Clean Trillion campaign:

“The Ceres Clean Trillion campaign encourages investors, companies and policymakers to invest an additional $1 trillion per year globally in low-carbon energy, and ratchet down investment in high-carbon fossil fuels, to keep global temperature rise to well-below 2-degrees Celsius.”

Ceres also directly addresses the sustainability performance, linking improved sustainability performance with improved portfolio performance. The Ceres Roadmap for Sustainability includes five key expectations on companies performance:

  • Operations: Companies will invest the necessary resources to achieve environmental neutrality and to demonstrate respect for human rights in their operations. Companies will measure and improve performance related to GHG emissions, energy efficiency, facilities and buildings, water, waste, and human rights.
  • Supply chain: Companies will ensure that suppliers meet the same environmental and social standards – including disclosure of goals and performance metrics – as the company has set for its internal operations.
  • Transportation & logistics: Companies will systematically minimize their environmental impact by enhancing the efficiency of their logistics systems and minimizing associated GHG emissions. Companies will prioritize low-carbon transportation systems and modes and minimize the carbon footprint of company business travel and commuting.
  • Products & Services: Companies will design and deliver products and services aligned with sustainability goals by innovating business models, allocating R&D spending, designing for sustainability, communicating the impacts of products and services, reviewing marketing practices and advancing strategic collaborations.
  • Employees: Companies will foster a diverse, inclusive and engaged work environment that holds sustainability considerations as a core part of recruitment, training and benefits.

The Framework for 2 Degrees Scenario Analysis: A Guide for Oil and Gas Companies and Investors for Navigating the Energy Transition highlights that “Scenario analysis is a particularly effective approach to consider the business risks associated with a 2 degrees C climate accord because it allows for a multi-pronged consideration of a wide range of factors that may have an influence on the business environment under a global climate accord.”

It presents five “key components for meaningful 2 degrees scenario analysis:

  1. ESTABLISH CLEAR PARAMETERS
  • Time scale
  • Scope
  • Drivers/Influences
  1. ALIGN WITH 2 DEGREES
  • Compare CO2 levels under reference case to CO2 levels required for 2 degrees
  • Evaluate and explain abatement options chosen as compared with IEA 2 degrees or other 2 degrees reference scenarios
  • Discuss how abatement options compare with current trends and how technology or policy could impact them
  1. ASSESS THE IMPACTS
  • Quantify range of impacts each scenario has on existing classes of assets and planned capital expenditures
  • Identify key factors that contribute to risk
  1. INTEGRATE INTO CAPITAL AND STRATEGIC PLANNING
  • Test against company reference scenarios
  • Create key indicator roadmap
  • Develop strategies to increase portfolio resilience (e.g. ConocoPhillips, Total)
  • Involve broad, cross-functional teams & engage with boards
  • Monitor (quarterly) and update
  1. DISCLOSE & ENGAGE
  • Disclose methodology and results of scenario analyses
  • Identify material risks and disclose in financial statements
    Engage with investors to explain risks compared to peers & other sectors”

Ceres has a wide expertise in extra-financial reporting and launched the Global Reporting Initiative (GRI) dedicated to sustainability reporting in 1997.

The Ceres Roadmap for Sustainability also includes five key expectations on disclosure for companies. If applied by companies, investors can then use these data to account for their own climate action:

  • Standards for disclosure: Companies will disclose all relevant sustainability information using the Global Reporting Initiative (GRI) Guidelines as well as additional sector-relevant indicators.
  • Disclosure in financial filings: Companies will disclose material sustainability risks and opportunities, as well as performance data, in financial filings.
  • Scope & content: Companies will regularly disclose trended performance data and targets relating to global direct operations, subsidiaries, joint ventures, products and supply chains. Companies will demonstrate integration of sustainability into business systems and decision-making and disclosure will be balanced, covering challenges as well as positive impacts.
  • Vehicles for disclosure: Companies will release sustainability information through a range of disclosure vehicles, including sustainability reports, annual reports, financial filings, corporate websites, investor communications and social media.
  • Verification & assurance: Companies will verify key sustainability performance data to ensure valid results and will have their disclosures reviewed by an independent credible third party.”

“The Disclosure Working Group of the Ceres Investor Network on Climate Risk and Sustainability, encourages stock exchanges worldwide to set minimum requirements for sustainability reporting by all listed companies.

Ceres also encourages investors, companies and governments to support the work of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), which provides recommendations to advance climate risk disclosure worldwide.”