Attending a CERES conference is
an exercise in hope. One comes away truly believing that those who
have the power to make significant contributions toward sustainability
will actually do so. The audience is filled with environmental activists
and representatives from some of the worlds most influential
businesses and investment groups. On the table tops, position papers
from organizations such as General Motors, Nike, Conservation International
and Fleet Boston Financial outlined their commitments. CERES itself
consistently introduces exciting new initiatives or, perhaps, reports
on the successes of prior activities.
The CERES 2002 ConferenceThe Future of Wealth on Earthmet
expectations and then some. Yes, the ice cream break featuring Ben
& Jerrys new flavor, One Sweet Whirled, was
a welcome change from the usual oversized cookies, but it was the
plenary sessions that added extra flavor to this years event.
Robert Massie, CERES executive director, served up the biggest treat.
Expecting the usual recitation of his organizations plans
and achievements, Massie instead delivered a powerful, emotional
speech that obviously reflected CERES future direction as well as
his own personal passion.
The path the organization will take is grounded in its roots as
articulated by Massie. Our enduring premise, as a coalition
of investor and environmentalists, is that the key to the long-term
health and prosperity of any company and of the planet will depend
on the integration of sustainability issues into the core strategy
of a company. In studying this issue Massie said, CERES realized
that, the sustainability movement and the corporate governance
movement have been moving for many years along parallel tracks.
In the past few years, the tracks have started converging outside
the U.S., as more investors and more corporate boards have begun
to shift to the idea that there are different kinds of capitalfinancial
capital, human capital and natural capitaland the successful
management of a firm requires that these be balanced.
Whats been missing is a catalyst to bring about this convergence
in the U.S., he continued, as he announced CERES program shift
to its next big thing, the Sustainable Governance Project.
Defined by Massie as a comprehensive, long-term, coalition-driven
effort to induce the boards of directors of U.S. companies to integrate
sustainability into corporate strategy at the highest levels, the
Sustainable Governance Project is intended to inject sustainability
into the DNA of corporate governance.
Massie himself raised doubts about why businesses would consider
embracing such a concept and asked them to begin looking at the
inexorable, inconvenient, pervasive, disturbing, potentially cataclysmic
problem of climate change. Dropping his usual reticence and
confronting the audience with a hard-hitting, poignant and compelling
narrative, he convincingly sold both the problem and the project.
(See The Judgement of the Future.)
EPA Administrator Christine Todd Whitman gave her presentation to
the conference before Massies speech, putting forth the party
line as she described her agencys attempts for preventing
or reducing greenhouse gas emissions. The audiences tepid
applause reflected its response, as opposed to the prolonged standing
ovation for Massie.
Other speakers fared better, especially U.S. Senator John Kerry,
who Massie described as the quintessential citizen.
Outlining the four principles contained in his view of energy policy,
Kerry gave the audience a glimpse of his potential run for the presidency
in 2004. Do nothing that does not make political sense, he said.
Preserve the American quality of life. Acknowledge that our dependence
on fossil fuels is contingent on the choices that we make, and recognize
that in the near-term, most of our gains will come from current
Gretchen Daly, an author and ecologist from Stanford University,
closed the conference with the reminder that man is influencing
the future course of all evolution. However, getting it right,
she said, doesnt require big breakthroughs. What
is needed is clearorganizations like CERES exercising leadership,
providing forums and, mostly, offering hope.
The Judgement of the Future
following text was excerpted from a speech by Robert Massie, executive
director, CERES, to the annual CERES Conference.
A nation as powerful and privileged as ours should be characterized
by maturity commensurate with that power and privilege. A key aspect
of maturity is the ability to face the truth, even if it is unpleasant,
and then to act, without denying responsibility, without wasting time
on blame, but with the knowledge that any delay may further compound
I dont believe that anybody, particularly anyone who is gazing
at America from abroad, has been astonished by our maturity and courage
on this issue. Americans used to be known for our can-do spirit, for
our willingness to tackle huge projects and problems with a unique
combination of vision and practicality.
But now, to much of the world, Americans look more like children who
have stuck their fingers in their ears and started humming rather
than hear unpleasant truths. Sometimes we Americans look like ostriches
who prefer to stick our heads in a hole, where our vision can be confined
to a small, comforting space that will confirm our prejudices.
So lets consider, for a moment, what we have been ignoring.
We might be able to argue that if a portion of Antarctica the size
of Rhode Island explodes into a million shards and disappears, then
it is not a problem for us. We might be able to believe that if the
snows melt on Kilimanjaro, or in Glacier National Park, then it is
not a problem for us.
We might be able to argue that it doesnt matter if the weather
warms in California, if it increases wetness in winter, and dryness
in summer, thus increasing the number of fires, the speed of deforestation,
the salinity of the bays in which new marine life breeds. We might
suggest that a drop in the water table and an increase in water scarcity
will not affect Californias contributions to Americas
dinner table, even though, right now, this years bizarre winter
weather forced the price of lettuce to quadruple from $15 to $60 a
case. We might make ourselves believe that the revenues or assets
of companies that depend on long, slow growing crops like nuts or
fruits will not be affected, or that the entire California wine industry,
grown from grapes that depend on a very precise long-term climate,
are not at serious risk.
We might tell ourselves that it is not a problem if the seas rise
12 to 30 inches, even though human beings are a littoral species that
prefers to live near water or coastlines and whose coastal homes and
port cities will be reshaped or obliterated. We can easily spend the
$7.8 billion that Congress has allocated to restore the flows and
eco-system of the freshwater Everglades, even though most spots and
most creatures in the 1.5 million-acre national park are barely above
sea level and will be obliterated by salt water as the oceans rise.
The economy of Florida is based on tourism, agriculture and real estate,
yet its leaders and its investors have not yet seriously considered
the impact of climate change.
Lets move to New England. This past winter, the one that ended
three weeks ago, was a little unusual. The normal average snowfall
for the season in Boston is 40 inches. The 2001-2002 seasonal snowfall
was just above 14 inchesabout one third of normal. What does
All over New England, reservoirs above the land and the aquifers below
are decreasing at an alarming rate. One key observation well in the
town of Lee, NH, has been completely dry since June. But somehow we
may be able to convince ourselves that even if New Englands
lakes and streams, reservoirs and aquifers are depleted, the farms,
forests, ski slopes, homes, towns and other key economic parts of
this region in which 17 million Americans live will remain unaffected.
But even if we persuade ourselves that our economy will be unaffected,
there are still more subtle human sadnesses. I have three children:
Sam and John and Kate. When Sam and John were younger boys, six or
seven years ago, we used to play football snow tag in our backyard
in Somerville. But my daughter Kate is only three, and she has only
seen snow a few times in her whole life. The one time it snowed this
year during the daylight she and my wife, Anne, immediately dashed
outside and made a snowman. We took a picture of it and I am glad
we did because the little man melted the next day. We live in Boston.
Yet for Kate, in Boston, snow is something she reads about in books.
Several months ago I read a wonderful quote, and sadly I have forgotten
from whom it came. The quote said, If something exists in reality,
it must be true in theory. This is a wise adage, but it apparently
does not apply in the field of finance. We can see the world changing,
but our markets do not reflect it. We know that some element of climate
risk is embedded in every company and in every portfolio in the land,
but we do not have a tool to measure it.
Each day billions of words and numbers spew out of Wall Street that
do not capture the truth. This is not a failure of reality; it is
a failure of theoryand of theorists. We need to explore whether
we can calculate a climate beta, an underlying climate
risk coefficient for specific sectors and markets. We need to calculate
the value of firms and assets not just with the Capital Asset Pricing
Model, but also with a Climate Asset Pricing Model.
But here is where maturity is required, and where, so far, it has
been lacking. Climate is under way, whether or not we learn to measure
it, whether or not we learn to see, whether or not others stick their
fingers in their ears when we speak out.
Climate change is happening. It will affect our economy. It is endangering
the future of wealth on earth. It is a fiduciary issue, and the failure
to analyze it will, either now or later, either before the effects
are irreversible or after, either morally or legally, it will be viewed
as a breach of duty.
Later we may try to say that we did not see, that we had no idea,
that we couldnt have imagined what would happen, or else of
course we would have acted. That feeble defense has been tried in
the past by those who chose comfort over conscience. When others have
used this excuse to explain their paralysis in the face of catastrophe,
we have rightly dismissed it as unpersuasive, unworthy and cowardly.
The judgement of the future is now poised over us, dangling like a
sword, ready to fall and strike us with our own weak words.
When the world faced the threat of the Y2K problem, a problem whose
precise impact was impossible to predict or assess, the SEC became
so alarmed about the potential risk to investors that it required
every company to spell out their Y2K mitigation plans. According to
CNN in November 1999, U.S. businesses and organizations directed at
least $114 billion into fixing the Y2K problem in the two years before
the millennium. I have seen other estimates that global expenditures
on the Y2K problem exceeded $850 billion.
Our capital markets found a way to evaluate Y2K risk, and they calculated
political risk and currency risk and many other arcane forms of risk,
but they have somehow neglected to examine climate risk. This isnt
an elephant in the living room, its a herd of elephants in the
So now, as the water tables drop, as the ice melts, as state birds
across the nation relocate permanently away from the states that had
proudly claimed them, as diseases spread, as species die, as the sky
warms, as the storms grow, as the seas rise, and as the future of
all humanity and all species dims, our capital markets grind on and
on toward oblivion, spewing the delusion that everything that needs
to be known is known and that everything that needs to be considered
has been considered and that everything that needs to be done will
I want to appeal especially to everyone here who works for a company.
Some of you are already exercising great leadership and I thank you.
I know there are others who feel stymied by the indifference of your
senior management or corporate boards. Help us to understand what
will open their eyes; what will move them from timidity to boldness.
The Sustainable Governance Project is a device through which the CERES
coalition will raise this question of climate risk politely, persistently,
pervasively, permanently. We need the advice, the assistance, the
support, the maturity, of everyone in this room, and everyone you
know, and everyone they know.
Our networks are large, and the number of real decision-makers is
small, and we need to find a way to communicate the concerns of the
one to the other. Our power is immense if we have the will and the
wisdom to use it. And use it we must, or God help us from the judgment
of the future when upon us it falls.