The environmental externalities of tobacco manufacturing: A review of tobacco industry reporting.

Growing research and public awareness of the environmental impacts of tobacco present an opportunity for environmental science and public health to work together. Various United Nations agencies share interests in mitigating the environmental costs of tobacco. Since 2000, transnational tobacco industry consolidation has accelerated, spotlighting the specific companies responsible for the environmental and human harms along the tobacco production chain. Simultaneously, corporate social responsibility norms have led the industry to disclose statistics on the environmental harms their business causes. Yet, independent and consistent reporting remain hurdles to accurately assessing tobacco's environmental impact. This article is the first to analyze publicly available industry data on tobacco manufacturing pollution. Tobacco's significant environmental impact suggests this industry should be included in environmental analyses as a driver of environmental degradation influencing climate change. Countries aiming to meet UN Sustainable Development Goals must act to reduce environmental harms caused by the tobacco industry

Divestment and Climate Change

In January of 2016, a number of Laurier faculty signed a letter (hereafter “The Letter”) urging the University to divest from fossil fuel companies in all endowment funds and the employee pension.1 This research note addresses a number of issues related to the divestment strategy—in particular, the stranded asset thesis, financial strategy alternatives, implementation challenges and the financial effects of divestment strategies. This note does not consider alternative strategies for decarbonizing the economy. The Letter itself does not explain why divestment is superior to alternatives like promoting research into clean energy generation, renewable energy sources, climate science, and environmental economics. The Letter articulates two goals. The first part of The Letter argues that, “Sooner or later, the world is going to get serious about regulating carbon emissions and when it does assets will likely be stranded.” This argument supports a risk management goal: that portfolio managers should hedge the risk of stranded assets. The second goal, articulated later in The Letter, is more revolutionary. In particular, that “the present generation…have a duty to help decarbonize the global economy as rapidly as possible.” Establishing the goal is important because the goal informs the optimal financial strategy. If the goal is to hedge stranded asset risk, then the best risk management strategies are: 1) diversification; or 2) portfolio reweighting. If the goal is to decarbonize the economy, then diversification and reweighting will have little effect. The financial strategy with the most potential to influence corporate behavior is full divestment. The remainder of this note is organized as follows. The second section defines the stranded asset thesis and contrasts it to another thesis. The third section defines two alternative financial strategies: divestment and reweighting. The fourth section discusses the challenge of using GHG emissions data to implement divestment or reweighting. The fifth section presents the financial theory of divestment and empirical evidence on the impact of divestment on risk and return. The sixth section concludes

Accounting for decarbonisation and reducing capital at risk in the S&P500

This document is the Accepted Manuscript version of the following article: Colin Haslam, Nick Tsitsianis, Glen Lehman, Tord Andersson, and John Malamatenios, ‘Accounting for decarbonisation and reducing capital at risk in the S&P500’, Accounting Forum, Vol. 42 91): 119-129, March 2018. Under embargo until 7 August 2019. The final, definitive version is available online at doi: https://doi.org/10.1016/j.accfor.2018.01.004.This article accounts for carbon emissions in the S&P 500 and explores the extent to which capital is at risk from decarbonising value chains. At a global level it is proving difficult to decouple carbon emissions from GDP growth. Top-down legal and regulatory arrangements envisaged by the Kyoto Protocol are practically redundant given inconsistent political commitment to mitigating global climate change and promoting sustainability. The United Nations Environment Programme (UNEP) and European Commission (EC) are promoting the role of financial markets and financial institutions as drivers of behavioural change mobilising capital allocations to decarbonise corporate activity.Peer reviewe

Global pricing of carbon-transition risk

The energy transition away from fossil fuels exposes companies to carbon-transition risk. Estimating the market-based premium associated with carbon-transition risk in a cross section of 14,400 firms in 77 countries, we find higher stock returns associated with higher levels and growth rates of carbon emissions in all sectors and most countries. Carbon premia related to emissions growth are greater for firms located in countries with lower economic development, larger energy sectors, and less inclusive political systems. Premia related to emission levels are higher in countries with stricter domestic climate policies. The latter have increased with investor awareness about climate change risk

Organizational system thinking as a cognitive framework to meet climate targets

System thinking is a crucial cognitive framework to enable individual pro-environmental behavioral changes. Indeed, a large body of literature has shown a significant and positive association between individuals’ system thinking capacities and perceptions of the threat posed by climate change. However, individual behavioral changes play a limited role in addressing climate change compared to large organizations involved in a significantly larger share of economic activities. Do organizations exhibit system thinking capacities? Here, we conjecture that system thinking is a cognitive framework observable at an aggregated group level and, therefore, organizations, not just individuals, can exhibit characteristic levels of system thinking. We conceptualize a definition of organizational system thinking and develop an empirical method to estimate it using a large body of textual data from business organizations. Then, we show that system thinking organizations are more likely to lower emissions and align them with the pathways required to meet the climate targets set by the Paris Agreement. Finally, we discussed the theoretical and policy implication of our study. Overall, our results suggest that system thinking is a relevant organization-level cognitive framework that can help organizations align their emissions with global climate targets

Turning Nature into an Asset: Corporate Rent-seeking Strategies

Since the turn of the 21st century, financial concepts have become prevalent in managing natural resources. For example, UN institutions have increasingly promoted market-type instruments such as carbon credits, biodiversity offsets, payment for ecosystem services (PES), etc. Such instruments involve financial transactions, meant to reduce or compensate for environmental harm. Beyond financial transactions, the metaphor of ‘natural capital asset’ has been used to highlight the source of ecosystem services on which all economic activities depend. Together they face threats of resource degradation, resulting from the economic ‘invisibility of nature’ (UNEP 2011: 16; TEEB 2008). To render these assets more visible, natural capital accounting (NCA) has been elaborated for three different contexts: nature conservation policy, tradeable permits, and business strategies. In the latter context, a multi-stakeholder coalition has been devising methods for companies to assess their dependence on ‘natural capital assets’, as a basis for future corporate strategies (e.g. NCC, 2016, 2018). This chapter investigates this process and asks: How does corporate NCA turn Nature into an asset? With what drivers, roles and stakes? The chapter has the following structure: it first outlines theories of assetisation and their valuation, especially Nature; then agendas for reifying Nature as an asset and the ‘global justice’ critiques of this agenda; then a business protocol to operationalise natural capital accounting (NCA), with specific companies which have done so; then business strategies for stewarding natural capital as ‘shared assets’. It concludes by answering the above questions

Organizational system thinking as a cognitive framework to meet climate targets

System thinking is a crucial cognitive framework to enable individual pro-environmental behavioral changes. Indeed, a large body of literature has shown a significant and positive association between individuals' system thinking capacities and perceptions of the threat posed by climate change. However, individual behavioral changes play a limited role in addressing climate change compared to large organizations involved in a significantly larger share of economic activities. Do organizations exhibit system thinking capacities? Here, we conjecture that system thinking is a cognitive framework observable at an aggregated group level and, therefore, organizations, not just individuals, can exhibit characteristic levels of system thinking. We conceptualize a definition of organizational system thinking and develop an empirical method to estimate it using a large body of textual data from business organizations. Then, we show that system thinking organizations are more likely to lower emissions and align them with the pathways required to meet the climate targets set by the Paris Agreement. Finally, we discussed the theoretical and policy implication of our study. Overall, our results suggest that system thinking is a relevant organization-level cognitive framework that can help organizations align their emissions with global climate targets

A critical evaluation of social impact assessment methodologies and a call to measure economic and social impact holistically through the external rate of return platform

Companies, investors, international organisations and non-governmental organisations have designed frameworks and tools for measuring the social impact of business. In this report we evaluate the landscape of existing social impact assessment methods. We first delineate the characteristics, context and development of leading methodologies. We then critically evaluate the strengths and weaknesses of todayʼs leading social impact assessment methodologies. We identify the strengths of existing approaches to be their increasing usability, inclusiveness and ability to demonstrate – and enhance – value; weaknesses are their resource-intensive nature, subjectivity, narrow focus on social outcomes, insufficient transparency, and inaccessibility. In light of the strengths and weaknesses of existing methods, we close the report with a call for a new platform. Building upon the advances of existing methods, we propose the creation of a platform wherein companies, investors and third-parties can comprehensively and transparently report their activities across a range of parameters: (i) Company; (ii) Suppliers; (iii) Customers; (iv) Society; and (v) Environment. Through the radical transparency of the platform, which we call the “External Rate of Return” (ERR) a wide range of users will be able to measure and compare the economic and social impact of all types of business ventures in a holistic and consistent manner. Furthermore, through the ERR platform companies and the public at large can engage in on-going dialogues about the overall impact of business. We close our paper with a call for action as follows: we ask readers of the report to contact us to suggest indicators and metrics to be included in such a comprehensive impact assessment platform. Also, contact us if you would like to help build the platform