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Wilson Sonsini  wrote an excellent article offering guidance on the intersection of ESG and antitrust laws. This comes in response to letters  from 22 U.S. state attorneys general to investors and consultants, including Responsible Alpha, against supporting the shift to a low-carbon economy, as well as subpoenas from the U.S. House Judiciary Committee to As You Sow and the Glasgow Financial Alliance for Net Zero , alleging potential violations of U.S. antitrust laws in their net-zero efforts. In summary, these allegations of antitrust violations are overstated, superfluous, and inaccurate. The Details Antitrust laws prohibit competitors from using agreements to limit competition. Both horizontal agreements – e.g. across competitors – or vertical agreements – e.g., across supply chains – whether written or informal regarding pricing and limiting competition, violate antitrust laws. In other words, there must be an agreement. But what happens when competitors voluntarily react similarly due to changing market demand, business innovation, or regulatory drivers? Does this constitute an antitrust violation? For example, when companies globally launched e-business platforms online 20 years ago in lieu of in-person retail, did this violate antitrust laws because outdated commercial real estate shopping centers saw declines in foot traffic and retail spend? Of course not. This was a natural evolution in response to changing consumer preferences and technological advancements. Similarly, responding to climate change unequivocal ly  100 percent caused by human industrial activity and identified as an "existential threat to the global financial system and economy" by the U.S. Department of Treasury , is not an antitrust violation. In fact, it's viewed as “a historic economic opportunity for companies, industries, and countries.” Responding to climate change is material, states  the U.S. Securities and Exchange Commission. But in fact, in 2023 alone, the U.S. had $92.8 billion  in damages from 28 different billion-dollar weather events that were impacted by climate change and killed 492 people. But are ESG policies by investors group boycotts? The Supreme Court has conclusively ruled on this manner. As Wilson Sonsini  wrote: “In NAACP v. Claiborne Hardware Co., the Supreme Court upheld the NAACP’s right to boycott white-owned businesses resisting integration, because the purpose of the boycott “was not to destroy legitimate competition” but to “vindicate rights of equality and freedom that lie at the heart of the Fourteenth Amendment itself.” As was conclusively ruled, we cannot be forced to invest in companies with forced and slave labor in their supply chains because of the misinterpretation of antitrust laws, we also cannot be forced to invest in companies polluting the planet with their excess greenhouse gas emissions, harming our families and our health . While shareholders may compete when buying and selling shares to obtain the best price, voluntary ESG initiatives are completely different and orthogonal to shareholders working with management. Fundamentally, shareholders are owners of the companies they invest in and as such, they can raise concerns and opportunities with the management of the company they own alongside other owners. The simple fact of communicating amongst competing firms, across supply chains, or even within voluntary standard setting organizations such as the Science Basted Targets initiative (SBTi), is not an antitrust violation. Just like when, for example, Ford sets requirements for its suppliers or when the car industry chooses to use automatic emergency braking (AEB) tech, it's not breaking antitrust laws. This is no different to companies freely committing to climate goals within their operations and supply chains. Wilson Sonsini  have listed simple recommendations to mitigate concerns when voluntarily engaging with institutions on ESG risks, including climate change. Summary ESG integration, ESG engagement, and encouraging companies to transparently disclose non-financial information in almost all cases simply does not violate antitrust laws. Engaging with companies you own is common sense in the same way as a homeowner manages their home. No one should be forced to invest in companies with forced and slave labor in their supply chains and no one should be forced to invest in companies causing the climate crisis (…which, news flash, costs the U.S. economy $150 billion  annually). As Ben Franklin famously stated “An Ounce of Prevention Is Worth a Pound of Cure.” Mitigating climate change today saves us money and lives tomorrow, benefiting investors, shareholders, and the communities we live in.

John Trumbull, General George Washington Resigning His Commission , 1824. As U.S. states continue to fight against climate change action focusing on limiting shareholder rights, we are reminded that what is old is new again as shareholder suffragism fights in the U.S. are over 200 years old.   Climate risk is here, it is real, and it is causing major economic damage. It is considered the number one global risk  according to the World Economic Forum. We have prudent science that the climate crisis is ‘unequivocally’ caused by human activities, stated the world’s climate scientists in their recent IPCC update. And in 2023, in the U.S. alone, there were 28 separate  billion-dollar disasters made worse because of climate change. With climate litigation cases reducing the value  of companies by 0.41% on average and an unfavorable court decision by 1.5%, U.S. states are threatening and suing companies such as Responsible Alpha  and BlackRock to stop our fight against climate change.   Responsible Alpha may be small, but we are mighty and we are not backing down.   While The Conference Board reports that “climate-related shareholder proposals continue to dominate environmental proposals, but support has declined dramatically, from 35% in 2022 to 21% in 2023”, they also report that “49% of surveyed CEOs globally say the transition to renewable energy will be significantly positive for their organizations.” In fact, 101 climate-related and 17 climate-lobbying related proposals were filed in 2023.   Bloomberg data shows that shareholder ESG proxy resolutions, even when not adopted, move the needle, based on Bloomberg analysis of ESG scores for 888 companies in the Russell 3000 post-proxy votes.   And proxy voting is a keyway for shareholders to influence corporations to adopt stronger climate mitigation and adaptation policies.   The proxy voting process is a mechanism core to standard corporate governance by which shareholders monitor corporate managers. This process enables shareholders who own the company to hire / replace corporate directors and ask the company they own to address specific corporate policies, e.g., not addressing climate risk.   Proxy voting was strengthened in the U.S. 90 years ago in the 1934 Securities Act that the U.S. Congress passed to address issues that led to the Stock Market Crash of 1929 which precipitated the Great Depression.   Proxy voting was again updated in 2003 to require mutual funds to transparently disclose their proxy voting after the U.S. corporate scandals of 2001-2002, including the implosion of the energy / coal trader Enron.   The current official term for the proxy document is Form DEF 14A. The DEF stands for “definitive” as is required under Section 14(a) of the Securities Exchange Act of 1934. It is logical why proxy forms are called “DEF 14A”.   This is why shareholder voting rights have been core features for both the U.S. public and modern public companies since the early 1930s.   Yet the history of shareholder suffragism predates the 1934 Securities Act by 100 years. From 1825 to 1835, more than 38% of a sample of 1,200 U.S. corporate charters allowed for one vote one share.   In fact, at this time, it was common to have prudent mean voting rules where shareholders with outsized holdings would vote on a less than one vote one share mechanism. For example, in the state of Virginia  in 1837,   “Stockholders shall be entitled to one vote for every share owned by them respectively, up to the number of fifteen inclusive, and to one additional vote for every five shares from fifteen to one hundred, and to one additional vote for every twenty shares over and above one hundred.”   Concerns to protect minority shareholders continued to be at the forefront where from 1870 to 1900 many states allowed cumulative voting rights, which supported small shareholders the ability to gain access to more information.   Even in the retrograde 1950s, “ shareholder democracy ” led by Lewis Gilbert and his famous moniker at the time as “Minority Shareholder #1” was presenting fair and open proxy voting as a cornerstone of U.S. democracy.   In essence, plutocrats and plebians were granted the same rights two hundred years ago, with obvious glaring historical exceptions regarding race, gender, ethnicity, and property ownership. By 2021, nearly half of American households owned a mutual fund where their intentions could be addressed using proxy voting.    In the face of mounting challenges and legal threats, Responsible Alpha stands firm in our commitment to combat climate change through shareholder activism. As the echoes of shareholder suffragism reverberate through history, our small but resilient consultancy remains unyielding. Climate litigation may cast a shadow, but Responsible Alpha is undeterred, embracing the power of proxy voting to push corporations toward robust climate policies. In our pursuit of sustainability, we echo the legacy of shareholder democracy from two hundred years ago, bridging the past and present to assert that every shareholder, regardless of their holdings, plays a crucial role in shaping a sustainable future.

Image: Don Quixote and his sidekick Sancho Panza, 1955, Pablo Picasso. Featured in the August 18–24 issue, Les Lettres Françaises , celebrating the 350th publication anniversary of Don Quixote by Miguel de Cervantes . BlackRock finds itself in Tennessee's legal crosshairs for the audacious act of combatting climate risk through ESG metrics. The State of Tennessee Attorney General sued BlackRock Tuesday because the company is working to address climate risk using ESG metrics. The State of Tennessee wrote that “BlackRock's engagement as a shareholder and key voting actions likewise have centered on climate-change considerations, with "climate and natural capital" constituting BlackRock's number one shareholder engagement factor in 2020-202I.”   The climate crisis  is unequivocally caused by human activities, according to the world’s climate scientists in their recent IPCC update. Even the World Economic Forum calls climate risk the global economy’s number one long-term global risk . Tennessee, the climate crisis is not a distant concept—it's a tangible threat causing significant economic damage right in your backyard, more than $1.75 billion  dollars alone in 202. According to the U.S. Climate Vulnerability Index , your state ranks 9th out of 50 in vulnerability and is among the top five states for climate-related deaths. Image: Tennessee, U.S. Climate Vulnerability Index , accessed December 21, 2023.   BlackRock is acting prudently to meet the needs of individuals in Tennessee. In May 2022, that it was "initially" or "currently" committing 77 percent of total AUM (or $7.3 trillion dollars) to be managed in line with net zero by 2030. Perhaps, instead of chasing imaginary enemies, a gesture of appreciation is due.   A  suggestion for the State of Tennessee: stop arguing with the immutable laws of chemistry. Chemistry undeniably demonstrates that our climate is heating up. This global warming is due to excess greenhouse gases released into our atmosphere primarily by the fossil fuel industry and the products we consume each day. We literally can track excess fossil fuel emissions  in the atmosphere using the immutable laws of chemistry with C14 isotopes. Rather than contesting scientific truths, consider focusing on aiding your community in adapting to the inevitable changes. As we sit waiting for Tennessee to sue us  next, to Tennessee: stop chasing the imaginary enemy that is improved data transparency for decision-making using ESG and other types of metric. Stop attacking imaginary enemies, instead embrace the improved data transparency, provided by ESG and other tools, that helps us tackle climate change together supporting our communities we live in. Climate change is the genuine adversary, affecting two-thirds of your populace with genuine concern . It's time to redirect energy towards addressing this critical issue for the well-being of your people, economy, and future prosperity.

Image: Yale Climate Connections. As 2023 is likely the hottest year  in the past 125,000 years and with the annual United Nations sponsored climate summit concluding this week failing to arrive at a legally binding path to significant carbon emission reductions or to the phaseout of fossil fuels responsible for the climate crisis, enter the litigation attorneys, reported Mongabay. The results of this 28 th  COP held in Dubai, largely influenced by fossil fuel interests, has set a voluntary pledge for the “transitioning away from fossil fuels” leaving a litany of loopholes  for large emitters such as the U.S., China, and India. As our Earth, our only home, and the only place we live, thrive, and have our families, remains on a path for catastrophic global warming, litigation attorneys are entering the fray forcing fossil fuel interests to be regulated by governments under existing laws. There are now more than 2,500 climate-related lawsuits slowly percolating through various courts globally according to the Columbia University's Sabin Center for Climate Change Law . Some focus on addressing physical risks – seeking compensation for those harmed by climate change – while others focus on transition risk – pushing companies to transition to a low–carbon, sustainable, and equitable future.  According to the Grantham Research Institute on Climate and the Environment , more than 50 percent of climate cases have had a direct judicial outcome that benefits climate action. In 2021 and 2022, 27 and 26 climate greenwashing cases were filed against global corporations. High-emitting industries are often targeted throughout different stages in the emissions that drive climate change. This litigation process is slow and tedious and does not revel in sound bites from global business extravaganzas such as COP 28 in Dubai. Litigation also may not move quick enough to prevent increasing dire sea-level rise.  Remember while climate politics are new, climate science is not .  We have had generations of analysis to get this point, and now we have voluntary commitments at best. Generations ago 1824: Joseph Fourier posited that the Earth’s atmosphere could trap heat. 1856: Eunice Newton Foote discovered that carbon dioxide and water trapped more heat than other gasses. 1896: Svante Arrhenius described the greenhouse gas effect. 1938: Guy Callender further explained the greenhouse gas effect. He would continue to argue into the 1960s that industrial gasses were warming the planet.  1979: 1 st  World Climate Conference recognizes that climate change is 100% happening, with some uncertainty whether 100% driven by industry. 1988: “The greenhouse effect has been detected, and it is changing our climate now,” James Hansen, Director, Goddard Institute for Space Studies, NASA, presenting to the U.S. Senate Energy committee. 1989: The IPCC was established by the UN to provide a scientific view of climate change and its political and economic impacts. 1990: First Assessment Report of the Intergovernmental Panel on Climate Change (IPCC). 1992: Rio Earth Summit leads to the creation of the United Nations Framework Convention on Climate Change. 1995: Second Assessment Report of the Intergovernmental Panel on Climate Change (IPCC). 1997: Kyoto Protocol was adopted, and the U.S. shortly signed the agreement. 2000: First National Climate Assessment, entitled Climate Change Impacts on the United States: The Potential Consequences of Climate Variability and Change. 2001: President Bush removes the U.S. from the Kyoto Protocol. 2006: Former Vice President Al Gore debuted the film An Inconvenient Truth .  2007: Gore won the Nobel Peace Prize for his work on behalf of climate change. While recent court wins have pushed some sectors and companies to actively transition to a low-carbon, sustainable, and equitable future, legal processes will take years to create positive impacts for our planet and our communities. We need all businesses to proactively transition to a better future, we cannot wait for court cases or for companies to be forced to make changes.

Building upon the centuries-old history of climate science linking to ongoing efforts to respect this planetary boundary , the U.S. launched its Fifth National Climate Assessment calling for an equitable transition. This landmark report highlights the impact of racial and socioeconomic inequalities on climate risk to regional communities as Responsible Alpha has described in our dashboards (below). Highest Direct Emission Industries by Congressional Districts The U.S. National Climate Assessments are congressionally mandated reports that summarize the “effects of global change on the natural environment, agriculture, energy production and use, land and water resources, transportation, human health and welfare, human social systems, and biological diversity” for the succeeding 25 to 100 years. The report started with the usual grim economic impacts of climate change. Economic losses from climate change had already started to mount, with the U.S. South and Southeast taking the heaviest economic hits. According to the National Oceanic and Atmospheric Administration : The average number of inflation-adjusted $1 billion loss events per year skyrocketed from 3.3 in the 1980s, to 13.1 in the 2010s. The 2020s started out no better with 20.0 events per year between 2020 and 2022. Texas suffered $375 billion in damages. Florida suffered a $113 billion loss from Hurricane Ian alone (Figure 1.7 below). The 5th National Climate Assessment does not forecast pathways for the U.S. to meet its international climate commitments including the Paris Agreement. The report stated that under the most ambitious plausible climate scenario incorporating economic and behavioral variables - called shared socioeconomic pathways (SSPs) by climate experts, the United States would not reach net zero, until the mid-2050s. Net Zero does not require a halt to all emissions, but does require the earth’s ability to absorb carbon to cancel out emissions. The National Climate Assessment Figure 1.4 below gives the most plausible emissions pathways: The failure to stay within planetary boundaries presents an acute challenge to racially and economically marginalized communities regardless of politics-from small towns to mining and agriculture and fishing communities throughout the U.S. Climate impacts Black residents facing higher flood risk and poorer residents living in hotter parts of U.S. cities. Additionally, drier communities faced a vicious cycle wherein hotter summers meant more irrigation, exacerbating pre-existing water shortages. As Responsible Alpha’s dashboard of GHG emissions by congressional districts shows, 75 percent of carbon emissions came from Republican-led districts as of 2020. This disparate emissions rate means Republican representatives, whatever they think of the politics of specific climate regulations, are best positioned to get creative about bipartisan legislative solutions to the crisis. Given these challenges, many local, state, and national governments, across party lines, are working together with all stakeholders to meet the climate challenge. Even skeptical stakeholders are embracing the new climate economy, for example, licensing a $1 billion dollar solar energy project which is projected to create 1000+ jobs in places like Inola, Oklahoma. Others are building green steel alloys, wind turbines, and efficient building materials in former fossil fuel communities in Colorado, Pennsylvania, Texas, and West Virginia. From the view of 2050, the Federal Reserve and related finance-related government agencies began to meet the challenge by requiring financial institutions to include climate risk into their financial assessments. Better data and scenario analysis allowed these agencies to extend these requirements to smaller community banks most likely to suffer material credit, operational fire, flooding, and wind risks. States like Vermont made modest adjustments to their agricultural practices which yielded 5-6 percent more carbon captured than otherwise. The report spurred adequate climate financing for First Nations like the Hopi. They in turn led the way in teaching some U.S. farmers to grow crops on only 6 to 10 inches of precipitation. Yes, governments supported traditional adaptation solutions such as predicting the change in species distribution to improve harvest efficiency. They also embraced a systemic approach, such as targeting finance for climate adaptation in climate-sensitive industries like fishing to the most socioeconomically vulnerable . The U.S. Fifth National Climate Assessment was alarming in all of the right ways. The assessment presents a comprehensive climate x-ray of the world’s leading cumulative carbon emitter with clear links to an equitable transition.

Source: NASA . Human driven climate change is the first and often discussed planetary boundary , that is the system that maintains the stability of our Earth we rely upon for our livelihood. By 2023, ecosystem services generated $44 trillion of value per year. Ecosystem services such as pollination generated more value than even well-known industries such as medical devices. Such services relied on the relatively stable climate the Earth has experienced since the middle of the Holocene period . We are now in the Anthropocene , a new geological period that recognizes that humans have had measurable geological impact in our short time on this planet (the Bionic Planet podcast delves into the Anthropocene’s effects on investments). That year, humans recognized that they were putting said stability at risk as seen by the rapid increase in global temperatures in the last decades, including a brief flirtation with a 2 degree increase in the last half of 2023. Much of the public until that point had associated the focus on climate change with late 20th and early 21st Century political events such as the 1988 James Hansen Congressional testimony or former Vice President Al Gore’s 2007 Nobel Prize win jointly with the International Panel on Climate Change. The politics behind climate change was relatively new, but the science behind it traced to the 19th Century. Joseph Fourier (1824) first posited that the Earth’s atmosphere could trap heat. This is called the energy budget, which we now know is 340 W / m2 of which 30% is reflected leaving 238 W / m2 to be absorbed by our Earth’s ecosystems. Radiative forcing , the difference of incoming energy and energy reflected back into space, increased 45 percent between 1990 and 2019 with 36 percent of that increase attributed to carbon dioxide. Eunice Newton Foote first discovered that carbon dioxide and water vapor trapped more heat than other gasses (a theory presented later by John Tyndall in 1861). Later scientists such as Swedish chemist Svante Arrhenius (1896) and British engineer Guy Callendar (1938) applied the findings on the heat-trapping properties of greenhouse gasses to recognize that the entire atmosphere warms with the increase in greenhouse gasses. These discoveries are now validated with long-term indicators such as ice core bubbles and tree ring sizes. More recently, heated political debates have centered on the exact human contribution to climate change and the extent it harms the planet. Models projecting the effects of climate change emerged in the mid-twentieth century from weather forecast models and grew steadily more complex and accurate in recent years. A change in model accuracy led to a steady decrease of the temperature scientists warned is necessary to avoid discontinuities, or “tipping points” , which would trigger the worst effects of climate change from 4 degrees Celsius in 2001 to 1.5 degrees Celsius in 2021. A minority of scientists, sometimes with funding from the fossil fuel industry, argued climate change is caused by natural processes such as tectonic shifts or variations in solar radiation . But the steady annual increase in carbon dioxide suggests that humans are certainly the drivers for warming the planet and are likely responsible for all observed warming. The boundary in Katherine Richardson’s September 2023 paper rested on an even more specific metric: a concentration of 350 parts per million (ppm) carbon in the atmosphere. Hansen first popularized the metric in the mid 2000s arguing that humans had lived most of the species’ existence at that threshold. Scientists mostly agree that we have already passed the point of complete climate stability, but point out that lowering our emissions would eventually allow carbon to slowly drain out of the atmosphere and avoid the worst climate change effects. By 2050, we will have combined carbon removal projects at scale, incorporated nature-based solutions such as regenerative farming, and successfully adapted our infrastructure to the inevitable effects of residual carbon. We will explore some of these options in our next posts.

The Earth’s mean temperatures for November 17th were 2.06 degrees Celsius higher than the pre-industrial average, according to data from the European Union’s Copernicus Climate Change Service (C3S). There are no lifeboats on our sinking ship, Planet Earth. Yet solutions exist. Lead, do not follow. Act, do not lecture. Help, do not fake.. Give, do not take. We need to pick up a shovel, get our hands dirty, and start constructing the world we want to live where we have arrested the looming catastrophic threat of climate change and its impact on our economy, society, and legacy.

Last week, in “Launching Responsible Alpha’s Planetary Boundaries Series” , we alerted business leaders and financial services professionals to the ongoing destabilization of the environmental thresholds which keeps our planet running normally. As of 2023, we have breached six of the nine interconnected planetary thresholds which stabilize Earth’s environment and are approaching the maximum boundaries on the remaining three. But how are these boundaries connected to economics? What measurements might we have to change to restabilize the Earth’s ecosystems? Consider some topline numbers. Biodiversity and ecosystem collapse is the 4th biggest global risk in the next 10 years according to World Economic Forum's Global Risks Report 2023 . Ecosystem services generate a staggering $44 trillion of value per year according to a May 2023 Kepler Cheuvreux report. The potential collapse should get us to reflect more deeply on how nature underpins our economy. To prevent the staggering loss of wealth above, business leaders need to understand what wealth was in the 2020s and how it will change by 2050. Climate and natural capital , “renewable and non-renewable natural resources on earth” that provide benefits to the human economy, are tightly woven together. Preventing catastrophic effects from human-driven climate change cannot happen without focused attention on the services nature provides in that effort. Natural capital is also not simply one more solution to the climate crisis. Rather, it gives us insight into a vast and interconnected system of planetary stabilizers, boundaries, of which atmospheric greenhouse gas concentrations are only one (albeit important) part. Climate mitigation long commanded the most economic attention to the implicit exclusion of natural capital. Nevertheless, natural capital is a crucial piece of the planetary system. The lag in recognizing natural capital and the ecological services that flow from them reflected on the one hand a discomfort among environmentalists to quantify nature. On the other hand, economists have often treated environmental degradation as an economic externality or market failure for society or government to address, not private business. Given that companies are set to lose tremendous amounts of wealth if current growth models continue, some have argued that we need to rethink how we measure economic prosperity. That starts with defining wealth. Simon Kuznet, one of the architects of the growth measure (usually measured in GDP) held production in such high esteem that he claimed that industrialization and the switch to a service society would be the primary driver of greater per-capita income and social equality in the long run (even if society had to suffer inequality in the short and medium term). Similarly, Grossman and Krueger (1991) proposed that the highest income countries would see fewer Sulfur dioxide (SO2) emissions than medium-income countries. Later economists took this “environmental Kuznet curve” as proof a country could grow its way out of an environmental crisis. Economists even in the late 2010s saw wealth as synonymous with production even as they challenged old assumptions about inequality. As Thomas Picketty explained in his Capital in the 21st Century that “it is very hard to gauge the value of ‘virgin’ land (as humans found it centuries or millennia ago) apart from improvements due to human intervention, such as drainage, irrigation, fertilization, and so on.” While he acknowledges natural wealth (e.g. “‘virgin’ lands” Picketty’s definition) as a type of wealth, he defines “national wealth” for the purpose of tracing historic inequality as “everything owned by the residents and governments of a given country at a given point in time, provided it can be traded on some market.” Picketty’s scare quotes around “virgin” acknowledged his own discomfort with a binary way of thinking (e.g. nature on one hand and development on the other). For as long as we have had systems of exchange, people have formed and been formed by nature. Ultimately, Picketty settled on human production as the essence of wealth even as he argued that the path to reducing inequality was less straightforward than previously thought. Some, like Jason Hickel drew on the scarcity principle and fears of overconsumption to turn calls to rethink growth measures into calls to halt growth-linked social services altogether and replace it with massive state intervention. But pulling away from growth-centered wealth generation too abruptly would put many emerging economies’ social services - tied to national champions such as state oil companies - at risk. Not every economist saw economics through production and scarcity alone. Kate Raworth’s 2017 Doughnut Economics argued that Adam Smith supported societies that generated wealth both for individual accumulation and societal benefit. In her reading, only John Stuart Mill’s rise began the shift to seeing wealth in mostly numerical terms. Raworth drew on 20th Century economists and philosophers like John Ruskin , Manfred Max-Neef , and Amartya Sen to reject growth as the main measurement of wealth and equate social exploitation with poverty. Raworth incorporated holistic economics and the need to operate within the specific planetary boundaries mentioned above. In her model, these boundaries were a ceiling which, if breached, would cause chaos. By 2050, the world will have responsibly moved away from GDP as the primary measure of economic health and found new ways of measuring wealth and growth itself. It will have restored a moral purpose to economics ( without neglecting business profits). It will have heeded the words of Robert F. Kennedy in 1968. He decried one growth measure, the Gross National Product, as including “air pollution and cigarette advertising, and ambulances to clear our highways of carnage” while excluding “the health of our children, the quality of their education or the joy of their play.” It will have expanded on the Sustainable Development Goals (SDGs) and looked more (but not exclusively) to indexes like the United Nations’ World Happiness Report . Without discounting the just right to development, the world started paying more attention to health and wellbeing when calculating wealth and taking growth indicators with ever bigger grains of salt.

How dependent are our U.S. exports on pollinators? Have you noticed that there are fewer insects on your windshield as you drive around in summer? The worldwide catastrophic decline in insects around the world has been worrying scientists for decades now. Many insects, especially bees, are essential for pollination. And the growing collapse of pollinators is part and parcel of the planetary boundaries’ crisis we are in. We have irrevocably changed our planet as we are now in the geologic age called the Anthropocene. We can now date our Earth geologically by how material changes we have made to our now engineered planet. We see this bionic planet in the scientific data we now observe. For example, on the heels of record global average temperatures, a September study in Science Advances has raised additional alarm bells about the planet’s stability. It claims we have breached six of the nine interconnected planetary boundaries the planet needs to maintain a stable climate. We are also very close to blowing through all of them. And pollination risk is a function of multiple planetary boundaries: freshwater change, climate change, biosphere integrity, land system change, and biogeochemical flows. Pollination is an essential process in the reproduction of many plants, by which pollen is transferred from one plant to another allowing them to produce fruits and vegetables. Some plants are incapable of producing any fruit whatsoever in the absence of pollination and in many cases pollination is entirely mediated by insects. This means: no insects, no pollinator dependent fruits. Pollination is the transfer of pollen between flowers, resulting in seeds, flowers, fruits, or vegetables. Pollination can be started via wind, insects, animals, or even water. Over 80% of flowering plants and 75% of all staple crops are pollinated. Over 60% to 70% of all plants rely on insect pollination and of these insects, bees are key. Not all plants are equally dependent on pollination, but some cannot do without. At the CFA meeting in Boston, we presented the results of our analysis of the crops that would almost completely disappear in the absence of insects: fruits, nuts and cocoa products (yes, that means no chocolate!). These pollinator dependent products were worth $202 billion in exports in 2021 alone, making up 0.7% of the world’s total GDP and representing more than the total GDP of 154 of the 209 nations reported by the IMF. The top 10 nations by export made up 46% of the total value of such exports with the USA leading the way at $16.2 billion, significantly more than the country makes from exporting aircraft parts. Our analysis also revealed that the value of pollinator dependent exports is not just an economic problem but also one of equity. Whilst most countries in the top 10 rely on these exports for <2% of their GDP, Ivory Coast stands to lose ~10% of its total GDP from a collapse in insect pollinators. Our results show that accounting for natural capital and protecting insect species is not just a moral and ethical imperative but also a business savvy decision for all nations around the world. ------------------- We at Responsible Alpha are starting a blog series focused exclusively on researching and compiling the latest market trends, frameworks, and initiatives on the intersection between economics, society, and planetary boundaries . This blog series starts with the premise that it is 2050 and we have successfully transitioned to a low-carbon, sustainable, and equitable future. Therefore, we can discuss what is the nature of wealth and the business principles, processes, and ethics that helped us arrive at this successful transition.

We at Responsible Alpha are starting a blog series focused exclusively on researching and compiling the latest market trends, frameworks, and initiatives on the intersection between economics, society, and planetary boundaries. This blog series starts with the premise that it is 2050 and we have successfully transitioned to a low-carbon, sustainable, and equitable future. Therefore, we can discuss what is the nature of wealth and the business principles, processes, and ethics that helped us arrive at this successful transition. This matters because we have irrevocably changed our planet as we are now in the geologic age called the Anthropocene. We can now date our Earth geologically by how material changes we have made to our now engineered planet. We see this bionic planet in the scientific data we now observe. For example, on the heels of record global average temperatures, a September study in Science Advances has raised additional alarm bells about the planet’s stability. It claims we have breached six of the nine interconnected planetary boundaries the planet needs to maintain a stable climate. We are also very close to blowing through all of them. The boundaries are climate change, change in biosphere integrity, stratospheric ozone depletion, ocean acidification, biogeochemical flows, land system change, fresh water change, atmospheric aerosol loading, and novel entities. Breaching one boundary potentially makes the others easier to breach. The climate change barrier has been the biggest domino to fall and has helped drive many of the other boundary breaches. This reality alone may help explain the popularity of “climate doomers” , those who say we have already passed the point of no return. In short, things are bad, technology alone will not save us, but the article gives reason to hope. We can step back inside the boundaries if we lean more into natural resources than technological fixes.If we commit to getting forests back to, say, 1990s levels, we will have made substantial progress not through a technological Houdini act , but through a combination of human innovation and stewardship of the natural resources the planet already has. These are the types of dilemmas we will tackle in this new blog series. It will imagine a 2050 world in which we actually meet the goals of the Paris Agreement and stay within planetary boundaries. To start off, a post for each boundary will explore how we used practical solutions to step back inside each boundary and thus from the brink of climate disaster. In doing so, we will draw on the latest market trends, the most recent frameworks, and the most innovative initiatives. Let us start this journey like we must end it: Together.

Transforming the financial sector into a driver of positive change to promote nature-based solutions is one of the greatest challenges of our time. Academia stands to play a key role in what has been termed an all-of-society approach. However, scientists are often woefully unprepared to meet the demands and expectations of a sector they typically have very limited interactions with. Using academic knowledge to direct investment and produce tangible natural solutions is urgent to meet the goals of the Paris & Kunming-Montreal agreements for climate and biodiversity. ESG integration firms, such as Responsible Alpha, can help bridge this divide by leveraging our expertise in the finance and academic sectors. Here are some key talking points for academics wanting to engage effectively with finance to keep in mind: Definitions: Private sector (and others) will not have the same definitions for the words used in the public sector (e.g., risk, impact). I once heard two people discuss climate and ESG for an hour. They thought they agreed, yet they had different definitions: One included natural gas in their solution, one did not. There must be very clear definitions when communicating with the private sector. Know your audience: Just like different sectors use their own definitions, each sector is looking for what they want to hear. The priorities of the public sector (often tied to election cycles) are different from the private sector. You must have a clear understanding of what your audience is looking for and what they will respond to. Start Where is Easiest: The need is in the tropics yet (it may be easier) to ground truth processes for ecological data integration ("from scientist to Wall Street") in specific North American and EU geographies where there exists clear legal due diligence and pathways for recourse. In other words, show that it works in the easiest place first. Misunderstanding the Change Agent: Do you really understand your change agent/counterpart and is this the appropriate division to talk to? Approved Vendor: can the desired recipient receive the data due to due diligence, legal, and other risks? Misunderstanding Careers: Just like private sector institutions assume "environmentalist" and "ecologist" are the same before understanding that there exist botanists, geneticists, etc. The parallel in the public sector is assuming all (e.g., capital markets) market functions are the same. Does your private sector counterpart have the ability to institute change? False Parallels: Climate change has metrics such as Scope 1, 2, 3 (and its derivations) yet biodiversity risks are much more complex. Climate is global, biodiversity is local, just to begin with. Data Governance: Is data governance consistent throughout the supply chain with metrics, confidence interval, and reporting periods the same? Data Replicability: Is your data replicable? Markets Like Routine, Not New: Saying "I have this new unique tool" will isolate you and make you a wall flower. Adapting to the world of finance can be a challenging endeavor and keeping all these points in mind is not easy. Partnering with us is your shortcut to engaging with the financial sector. We speak both languages and are committed to accelerating the transition to a nature positive world. Let us support you in your mission and together we can create a tangible impact for people and planet.

Bonds related to environmental and sustainability projects have recaptured the headlines. Netherlands raised $5 billion in green bond funds for flood management this week. The European Union has released new voluntary standards for companies to classify as European Union Green Bonds. India’s Bharat Petroleum is poised to issue $2.19 billion in green bonds while Morocco’s Bank Al-Maghrib just bought $200 million Euros in World Bank Sustainability Bonds. Morgan Stanley has repeatedly noted the increasing importance of financing public projects that adapt to physical climate risks while also mitigating the associated financial risks facing private investors. Climate-change bonds are only one category of $1 trillion in bonds financing projects that undergird the sustainability transition. But what are sustainable, green, and blue bonds? What characteristics do each have and what are the major differences between them? Green bonds often function as a type of Use of Purpose Bond (UoP) in which proceeds must be tracked and allocated to specific spending, and allocations must be publicly reported (typically on an annual basis). They can be targeted to specific or multiple assets as long as they advance an environmental objective. Social bonds fund specific projects for socially disadvantaged groups in areas like healthcare and education. Sustainability bonds allow for the financing of both green and social projects. Other types of financing such as sustainability-linked bonds , do not tie to a specific project. Instead they are eligible for any project, even those involving fossil fuels, that promises to meet a set of Sustainable Key Performance Indicators ( KPIs or SPIs ). Projects do not need to comply with standards at the time of funding, but rather, must promise to meet said standards within a specified time period. This approach allows a gradual incentive for companies which still have unsustainable elements embedded in their operations or supply chains. This mechanism works best when the targets are ambitious and the tracking robust. Organizations such as the Climate Bonds Initiative and the International Capital Market Association (ICMA) offer useful frameworks for developing green bond requirements and sustainability-linked KPIs. Some regional organizations have even adopted bodies of acceptable sustainable activities such as the European Taxonomy , but some critics claim categorizing the broad scope of ESG activities an impossible task. Responsible Alpha’s team of international sustainability experts stand ready to help you develop rigorous metrics designed for the needs of your own organization and projects. Let’s tackle the green transition together.