A CFO’s take on climate and risk management

July 13, 2020 by  
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A CFO’s take on climate and risk management Vincent Manier Mon, 07/13/2020 – 01:00 Just a couple of months into 2020, the world was amid significant discussion about the core purpose of businesses, led by BlackRock CEO Larry Fink calling for corporate America to take control of its carbon footprint and major companies, including Microsoft and Delta , making ambitious zero-carbon pledges. When COVID-19 arrived, we saw the impact that global crises have overnight, teaching the corporate sphere valuable lessons about risk mitigation. Economic estimates predict that the pandemic will decrease global GDP by 3 percent in 2020, and at our current pace, climate change is estimated to decrease the global GDP by anywhere from 2.5 percent to 7.5 percent by 2050 . While climate risk remains an often overlooked or undervalued factor in risk management programs, there is an urgent need to integrate resiliency into core business strategy if businesses want to continue to thrive — or even remain operational. There is an urgent need to integrate resiliency into core business strategy if businesses want to continue to thrive — or even remain operational. The current COVID-19 pandemic has emphasized the importance of prioritizing resilience by exposing the fragility of global supply chains and dysfunctional systems across businesses and forcing them to change the way they plan and operate to factor in large-scale crises. Hospitals, for example, felt the disastrous impact of vulnerable supply chains, and needed to plan for alternative sources of personal protective equipment to keep their medical workers and staff safe. These learnings must be applied to similar risk brought about by climate change — businesses need to prepare for the impact of devastating weather events on supply chains and infrastructure they rely on to remain safe and operational. As key members of the financial team, risk managers need to grasp the implications of sustainability across the organization, from strategic risks posed by new regulations to operational risks posed by extreme weather and financial risks with regards to taxes and insurance. As we continue to fight climate change, understanding the strategic, operational and financial risks — and the tools available to assess and plan for them — will help finance teams take a more forward-facing approach to risk management and avoid repeating past mistakes. Strategic risk factors Four key risk factors are associated with strategic risk and sustainability: economic changes; corporate responsibility; regulatory risk; and reputational risk. From an economic standpoint, there have been major shifts brought about by decarbonization and diversifying portfolios — consider the rapid decline of the coal industry, for example. In addition, companies are being held more accountable for their impact on the environment, with pressure coming from all sides, including customers, investors, competitors and regulators. Increased regulation and legal requirements around resource management and carbon reduction, as well as required carbon reporting, can result in major fines if not complied with. Finally, reputational risk, while hard to quantify, can be enormous, particularly in today’s political climate and as both internal and external stakeholders become more educated on the action against climate change. Operational risk factors Sustainability also can affect how businesses approach operations, such as supply-chain optimization, procurement strategies, data privacy and security. For instance, the finance team can make more informed decisions around power purchase agreements, onsite and offsite renewable energy, decentralization and microgrids, energy independence and cost savings opportunities when factoring climate risk into the overall procurement strategy. There are also more direct operational risks to consider as a result of climate change in the form of extreme weather events, which continue to increase in both frequency and intensity. Businesses must account for the possibility of outages, damages and closures, all of which can threaten the ability to protect employees, assets and data centers (which can pose new risks in terms of data privacy and leaks) and, ultimately, to keep the business operational. Financial risk factors Climate change poses significant financial risks to an organization as sustainability policies and corporate initiatives can affect taxes, insurance, resource management, energy sourcing, investor support and even intangible assets such as goodwill — for instance, the impalpable value that customers and investors place on a company’s ability to reduce its footprint. From changes in insurance premiums and coverage to identifying financial benefits of electrification, there are almost countless financial risks and opportunities for the financial team to assess. Sustainability planning also opens the door to integrating new technologies to save money, such as alternative energy vehicles, which bring financial benefits all their own. Integrating climate risk strategy Integrating climate risk into new or existing risk management programs can seem daunting, but the financial team can leverage strategic assessments to make the process simpler. For instance, vulnerability assessments allow businesses to understand where climate change is most likely to affect them. Scenario assessments can provide a forward-looking view of the potential impact, so finance teams can plan ahead to mitigate future developments. The world’s current state is illuminating the need for resilience to global events we may not be able to foresee or control. With climate change being the next undeniable threat, it’s on the shoulders of the financial team to ensure that companies are adequately prepared for different climate events to improve their resilience and mitigate the associated risks. The strategic planning used now to prepare for these issues may encourage innovation and new methods of operating that not only benefit the bottom line but also prepare a business for when unexpected events do occur. This also offers opportunity to strategically prepare and recover from events in a way that helps reduce climate change and improve the environment on a global scale. Pull Quote There is an urgent need to integrate resiliency into core business strategy if businesses want to continue to thrive — or even remain operational. Topics Risk & Resilience Climate Change Finance & Investing Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off Shutterstock

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A CFO’s take on climate and risk management

What role does ESG play in the ‘new normal’?

July 6, 2020 by  
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What role does ESG play in the ‘new normal’? Janine Guillot Mon, 07/06/2020 – 01:25 Facing existential crisis, it’s only natural that our perspective will change — for better and for worse. In recent weeks and months, as many of us have “sheltered in place” in the face of a global pandemic, each of us has come to grips with a valuable reminder of what’s truly important: family, friends and colleagues; security and safety; food and water; healthcare. By comparison, everything else seems small and suddenly insignificant. For some of us, that includes our work. When people are sick, suffering and dying — with little certainty about when or how it will end — how can we be expected to focus on a project deadline, a business meeting or a PowerPoint presentation? Recently, I was asked to participate in a webinar discussion about environmental, social and governance (ESG) investing in the wake of COVID-19, and I had to ask myself, “Is the work we’re doing at SASB completely irrelevant or more relevant than ever?”  The most urgent and important work being done today is that of our healthcare workers, grocery employees, delivery people and others on the front lines of meeting society’s most basic and most critical needs. We shouldn’t let a day pass without thanking them for their service, nor without asking ourselves how we can better support them as they rise to meet the scale of challenge before us. And soon, we must start giving serious thought to what we can do to ensure they’re never put in such a desperate position again. Respond now, adapt as soon as possible While today’s triage efforts are paramount, society is clearly starting to think about what’s next. This is an opportunity for all of us — companies, investors, government, civil society — to think critically about what our role might be in creating a more resilient future.  Although the global COVID-19 outbreak is first and foremost an existential public health threat, it also likely represents the dawn of an economic “new world order” and a reshaping of the global economy. Without question, it’s too soon to draw any conclusions about the lessons we’ve learned from this experience, but it’s nevertheless clear that businesses, investors and our entire system of free enterprise will need to adapt to a new normal in the coming post-coronavirus era.  Transparency leads to accountability, accountability drives innovation and innovation is key to resilience. In recent years, the rise of ESG, responsible investing, corporate sustainability — different people use different terms — has focused on evolving “business as usual” by recognizing that effectively managing environmental and social issues is key to the long-term sustainability of both business and society. The COVID-19 crisis is likely to accelerate this trend. The key questions that have arisen from the crisis are essentially ESG questions, such as: Will rising biodiversity loss and the changing climate influence the frequency and intensity of pandemics? How can companies adapt to ensure business continuity in such an uncertain environment? How can we ensure more resilient supply chains for essential goods, such as food and medicine? What can businesses in B2C industries do to ensure the health and safety of their employees and customers? How can healthcare providers better ensure access to critical tests and treatments at an affordable price? How might a long-term period of “social distancing” influence the adoption of artificial intelligence and robotics, and how will that affect workers whose jobs can’t be done remotely — such as manufacturing, waste management and deliveries? How can traditional and ecommerce retailers ensure fair pricing and reduce the risk of supply hoarding or price gouging? How can a wide range of industries — across the transportation, technology, hospitality and infrastructure sectors and beyond — effectively adapt in the wake of an anticipated rise in telecommuting and teleconferencing? Will the COVID-19 crisis permanently change consumer behavior regarding shopping, travel and entertainment, with significant implications for the retail and hospitality sectors?  Once the worst of the current crisis is behind us, it’s crucial that we don’t weaken our resolve to ensure that individuals, businesses, investors, economies — and thus society at large — can become more resilient in the face of 21st-century challenges. An opportunity to adapt In the coming months, as the forces unleashed by the COVID-19 crisis continue to reshape the economic landscape, they will bring long-held assumptions under scrutiny and potentially render entire business models irrelevant. They will bring more questions, but also — if we’re receptive to them — more answers. At SASB, we encourage long-term thinking in capital markets, and while that may not help solve today’s crisis, we believe it can contribute to preventing — or at least tempering — tomorrow’s.  We believe transparency and disclosure on business-critical ESG issues will improve how companies and investors measure and manage so-called non-financial — but nevertheless critical — resources such as natural, social and human capital . Further, it will help corporate directors and managers, along with investors, understand how effective management of those resources is critical to the long-term sustainability of a business. Emerging from this crisis, we can shape a future in which the interests of business, investors and society are in closer alignment.   The best answer to my question about the relevance of our work came during a recent “industry deep dive” webinar. Our restaurant industry analyst was discussing the connection between worker health and foodborne illnesses — a business-critical issue in the restaurant industry — and the metrics that can help drive effective management of such risks, including worker training and food-handling protocols.  I immediately thought about the increasingly clear connection between lack of paid sick leave and the spread of illness, and it became clear: This crisis will provide important new insights into non-traditional performance metrics that will help drive a structural shift in how both companies and investors think about delivering long-term value to both shareholders and society. To return to my original question — is ESG disclosure irrelevant or more relevant than ever — I believe the communication piece is key. Transparency leads to accountability, accountability drives innovation and innovation is key to resilience. When investors readily can identify and direct financial capital to the forward-looking companies that are evolving their business models to thrive in the face of future risks, markets will be more stable, more efficient and better prepared to absorb unexpected shocks. Today, we’re being asked to choose between lives and livelihoods. Emerging from this crisis, we can shape a future in which the interests of business, investors and society are in closer alignment. When economic and human prosperity are mutually supportive, we won’t have to sacrifice one for the other.  Pull Quote Transparency leads to accountability, accountability drives innovation and innovation is key to resilience. Emerging from this crisis, we can shape a future in which the interests of business, investors and society are in closer alignment. Topics Finance & Investing Corporate Strategy ESG Featured in featured block (1 article with image touted on the front page or elsewhere) Off Duration 0 Sponsored Article Off

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What role does ESG play in the ‘new normal’?

Funding climate tech and entrepreneurs of color should go hand in hand

June 11, 2020 by  
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Funding climate tech and entrepreneurs of color should go hand in hand Heather Clancy Thu, 06/11/2020 – 01:00 Not-so-news flash: The venture capital community has an abysmal track record when it comes to funding entrepreneurs of color.  Here’s the backstory in numbers. According to the nonprofit investor network BLCK VC, just 1 percent of venture-funded startup founders are black (that data comes from the Harvard Business School). Just as shocking, although maybe not surprising given the tech industry’s troubled past on diversity writ large, 80 percent of VC firms don’t have a single black investor on their staff.  Over the past week, big-name firms SoftBank and Andreessen Horowitz took baby steps toward addressing this, but far more needs to be done — especially when it comes to finding and funding climate tech. The specifics: SoftBank has created a separate $100 million fund specifically dedicated to people of color: Cool, but that amount is minuscule alongside the $100 billion in the SoftBank Vision Fund.  The new Andreessen Horowitz effort is a donor-advised fund launched with $2.2 million (and growing) from the firm’s partners with a focus on early-stage entrepreneurs “who did not have access to the fast track in life but who have great potential.”  Let’s cut to the chase. These are well-intentioned gestures, but they don’t even begin to address the bias that pervades the VC system, at least the one that exists in the United States. “Black entrepreneurs don’t need a separate water fountain,” observed Monique Woodard, a two-time entrepreneur and former partner at 500 Startups who backs early-stage investors, during a BLCK VC webcast last week that was livestreamed to more than 3,000 people. (She wasn’t specifically addressing the two funds.) “You have to fix the systemic issues in your funds that keep black founders out and keep you from delivering better returns.” What’s wrong with “the system”? Where do I begin? One black venture capitalist on the webcast, Drive Capital partner Van Jones, likened getting involved in the VC community to a track race in which you’ve been seeded in lane eight and handicapped with a weight vest and cement boots. “There is no reason we should be having the conversation today that we had in the 1960s,” he said during his remarks.  Elise Smith, CEO of Praxis Labs, a startup that develops virtual reality software for diversity and inclusion training, tells of putting on “armor” to engage with the predominantly white ecosystem supporting entrepreneurs — where her experience has been questioned repeatedly and her mission described as niche or as a passing fad.  Smith says one of the biggest issues faced by black founders: the inability of many investors to recognize problems faced by communities of color. “What happens when the problem you want to solve isn’t one that is faced by the people who make decisions about what is funded?” Or, as Garry Cooper, co-founder and CEO of circular economy startup Rheaply. puts it: “I have to overachieve to achieve.” He adds: “You are running a race twice as hard as your white counterparts.” He knows firsthand. Rheaply, which makes software that helps organizations share underused assets, raised $2.5 million in seed funding disclosed in March from a group led by Hyde Park Angels. Cooper started speaking with potential investors more than a year ago and was struck by how difficult it was for him even to score an introduction. While he has praise for his “committed” funding partners, Cooper is the only black founder represented in his lead investor’s portfolio. “It’s shameful that I know all the black VC founders in Chicago,” he said.   Along with some of his allies, Cooper is sketching out what he describes as a “pledge” intended to help expose this issue more visibly. The idea is to encourage hot startups — regardless of the race or gender of the founders — not to seek funding from firms that don’t represent the black community on their team of investors or within their portfolio. Stay tuned for more details as they are finalized, but Cooper says the response to this idea so far has been gratifying. As a climate tech startup founder, Cooper agreed with my personal conviction that any VC firm funding solutions to address climate-related technology solutions must pay particular attention to the issues of equity and inclusion. And yet, when I’ve asked well-known VCs about their strategy for this, none has offered specific strategies for recognizing the needs of people of color in the ideas they consider. I must admit: I never have asked any of them specifically about their strategies for funding entrepreneurs of color. But this is something I’m going to change. “The problems are so enormous, we need every brilliant committed mind thinking about this,” Cooper said.  That sentiment is echoed by Ramez Naam, futurist and board member with the E8 angel investor network, which recently launched the Decarbon-8 fund dedicated to supporting climate tech. Naam said investors funding climate tech startups must recognize the intersection between the climate crisis and the crisis of racial justice. That’s why Decarbon-8 will be intentional about seeking entrepreneurs of color. “We think that means it also makes sense to find entrepreneurs and teams who are minorities that are in the groups that are most impacted themselves. Because if we are going to help some people build companies in this, and they’re going to profit, as the entrepreneurs should, we’d like some of that to go back into those people, in those communities.”  Truth. This article first appeared in GreenBiz’s weekly newsletter, VERGE Weekly, running Wednesdays. Subscribe here . Follow me on Twitter: @greentechlady. Topics Finance & Investing Climate Tech Environmental Justice Diversity Featured Column Practical Magic Featured in featured block (1 article with image touted on the front page or elsewhere) On Duration 0 Sponsored Article Off Rheaply founder and CEO Garry Cooper.

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Funding climate tech and entrepreneurs of color should go hand in hand

Funding climate tech and entrepreneurs of color should go hand in hand

June 11, 2020 by  
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Funding climate tech and entrepreneurs of color should go hand in hand Heather Clancy Thu, 06/11/2020 – 01:00 Not-so-news flash: The venture capital community has an abysmal track record when it comes to funding entrepreneurs of color.  Here’s the backstory in numbers. According to the nonprofit investor network BLCK VC, just 1 percent of venture-funded startup founders are black (that data comes from the Harvard Business School). Just as shocking, although maybe not surprising given the tech industry’s troubled past on diversity writ large, 80 percent of VC firms don’t have a single black investor on their staff.  Over the past week, big-name firms SoftBank and Andreessen Horowitz took baby steps toward addressing this, but far more needs to be done — especially when it comes to finding and funding climate tech. The specifics: SoftBank has created a separate $100 million fund specifically dedicated to people of color: Cool, but that amount is minuscule alongside the $100 billion in the SoftBank Vision Fund.  The new Andreessen Horowitz effort is a donor-advised fund launched with $2.2 million (and growing) from the firm’s partners with a focus on early-stage entrepreneurs “who did not have access to the fast track in life but who have great potential.”  Let’s cut to the chase. These are well-intentioned gestures, but they don’t even begin to address the bias that pervades the VC system, at least the one that exists in the United States. “Black entrepreneurs don’t need a separate water fountain,” observed Monique Woodard, a two-time entrepreneur and former partner at 500 Startups who backs early-stage investors, during a BLCK VC webcast last week that was livestreamed to more than 3,000 people. (She wasn’t specifically addressing the two funds.) “You have to fix the systemic issues in your funds that keep black founders out and keep you from delivering better returns.” What’s wrong with “the system”? Where do I begin? One black venture capitalist on the webcast, Drive Capital partner Van Jones, likened getting involved in the VC community to a track race in which you’ve been seeded in lane eight and handicapped with a weight vest and cement boots. “There is no reason we should be having the conversation today that we had in the 1960s,” he said during his remarks.  Elise Smith, CEO of Praxis Labs, a startup that develops virtual reality software for diversity and inclusion training, tells of putting on “armor” to engage with the predominantly white ecosystem supporting entrepreneurs — where her experience has been questioned repeatedly and her mission described as niche or as a passing fad.  Smith says one of the biggest issues faced by black founders: the inability of many investors to recognize problems faced by communities of color. “What happens when the problem you want to solve isn’t one that is faced by the people who make decisions about what is funded?” Or, as Garry Cooper, co-founder and CEO of circular economy startup Rheaply. puts it: “I have to overachieve to achieve.” He adds: “You are running a race twice as hard as your white counterparts.” He knows firsthand. Rheaply, which makes software that helps organizations share underused assets, raised $2.5 million in seed funding disclosed in March from a group led by Hyde Park Angels. Cooper started speaking with potential investors more than a year ago and was struck by how difficult it was for him even to score an introduction. While he has praise for his “committed” funding partners, Cooper is the only black founder represented in his lead investor’s portfolio. “It’s shameful that I know all the black VC founders in Chicago,” he said.   Along with some of his allies, Cooper is sketching out what he describes as a “pledge” intended to help expose this issue more visibly. The idea is to encourage hot startups — regardless of the race or gender of the founders — not to seek funding from firms that don’t represent the black community on their team of investors or within their portfolio. Stay tuned for more details as they are finalized, but Cooper says the response to this idea so far has been gratifying. As a climate tech startup founder, Cooper agreed with my personal conviction that any VC firm funding solutions to address climate-related technology solutions must pay particular attention to the issues of equity and inclusion. And yet, when I’ve asked well-known VCs about their strategy for this, none has offered specific strategies for recognizing the needs of people of color in the ideas they consider. I must admit: I never have asked any of them specifically about their strategies for funding entrepreneurs of color. But this is something I’m going to change. “The problems are so enormous, we need every brilliant committed mind thinking about this,” Cooper said.  That sentiment is echoed by Ramez Naam, futurist and board member with the E8 angel investor network, which recently launched the Decarbon-8 fund dedicated to supporting climate tech. Naam said investors funding climate tech startups must recognize the intersection between the climate crisis and the crisis of racial justice. That’s why Decarbon-8 will be intentional about seeking entrepreneurs of color. “We think that means it also makes sense to find entrepreneurs and teams who are minorities that are in the groups that are most impacted themselves. Because if we are going to help some people build companies in this, and they’re going to profit, as the entrepreneurs should, we’d like some of that to go back into those people, in those communities.”  Truth. This article first appeared in GreenBiz’s weekly newsletter, VERGE Weekly, running Wednesdays. Subscribe here . Follow me on Twitter: @greentechlady. Topics Finance & Investing Climate Tech Environmental Justice Diversity Featured Column Practical Magic Featured in featured block (1 article with image touted on the front page or elsewhere) On Duration 0 Sponsored Article Off Rheaply founder and CEO Garry Cooper.

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Funding climate tech and entrepreneurs of color should go hand in hand

A clarion call for inventors and investors

March 28, 2020 by  
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Geoengineering and environmental technologies are the vaccines author Thomas Kostigen believes we need to cure the planet’s ills.

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A clarion call for inventors and investors

How to make ending factory farming irresistible, delicious and lucrative

February 15, 2020 by  
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Animal activists have made huge strides over the past two decades. But it hasn’t been enough to tip the scales of justice.

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How to make ending factory farming irresistible, delicious and lucrative

UPS invests in electric vehicle pioneer Arrival, as delivery giant places order for 10,000 vans

February 6, 2020 by  
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Arrival has emerged as a major player in the fast expanding commercial EV fleet market

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UPS invests in electric vehicle pioneer Arrival, as delivery giant places order for 10,000 vans

How can large asset owners make the most of nontraditional risks?

January 24, 2020 by  
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The new world of risk includes the physical and economic impact of climate change and the unknown path of future technology.

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How can large asset owners make the most of nontraditional risks?

BlackRock and Ellen MacArthur Foundation launch circular economy fund

October 14, 2019 by  
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The asset manager plans to explore how investment flows can drive the circular economy.

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BlackRock and Ellen MacArthur Foundation launch circular economy fund

Exploring employee activism: Why this stakeholder group can no longer be ignored

May 27, 2019 by  
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Don’t underestimate the power of your workforce as a vocal advocate for transparency and change, with a huge impact on strategy and reputation.

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Exploring employee activism: Why this stakeholder group can no longer be ignored

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