James Salo

In order to contribute to the development of greenhouse gas (GHG) accounting for investments, Trucost and Threshold Group have developed, to the best of our knowledge, a first-of-its-kind methodology to assess the carbon risk exposures of underlying assets in derivative investments. The approach can be applied to derivatives of listed equities, corporate bonds and indexes that consist of listed equities or corporate bonds.

In order for companies like Apple, Nike, or Walmart to manage the environmental impacts embedded within their supply chains, they need to be able to measure them. Standards for measuring and reporting supply-chain environmental performance are still new. One of the most widely used, the Greenhouse Gas Protocol’s Corporate Value Chain Accounting and Reporting Standard, was published only in September 2011, and took more than 2,300 experts from 55 countries more than two years to develop with the… Show more

In order for companies like Apple, Nike, or Walmart to manage the environmental impacts embedded within their supply chains, they need to be able to measure them. Standards for measuring and reporting supply-chain environmental performance are still new. One of the most widely used, the Greenhouse Gas Protocol’s Corporate Value Chain Accounting and Reporting Standard, was published only in September 2011, and took more than 2,300 experts from 55 countries more than two years to develop with the World Resource Institute and World Business Council for Sustainable Development.

The use of these standards to focus and report on the environmental performance of supply chains is happening in a small but growing number of companies. Last year 54 companies were involved in Carbon Disclosure Project’s (CDP) supply-chain initiative accounting for supply-chain environmental impacts. We are seeing increased progress in this area. In this year’s Newsweek Green Rankings, 168 of the 838 companies—20 percent—disclosed some supply-chain emissions data. The most commonly reported, by 129 companies, were emissions for employee travel on airlines. But only 36 companies (4 percent) disclosed information on outsourced services they purchase from other companies, and just 6 companies (1 percent) disclosed the environmental impacts associated with their investments; only one of these was a financial institution (Citigroup, which disclosed the emissions associated with a thermal power plant project that it financed. Show less

Evolutions in Sustainable Investing: Strategies, Funds and Thought Leadership (Wiley Finance, 2011) [Kindle Edition October 14, 2011; Hardcopy edition 27 December 2011] is edited by Cary Krosinsky, Nick Robins, and Stephen Viederman. Other authors include Paul Hawken, Dan Esty, Roger Urwin, David Lubin, Rory Sullivan, James Salo, Simon Powell, Curtis Ravenel, J. Jason Mitchell, Mark Trevitt, Lucy Carmody, Matthew Kiernan, Lloyd Kurtz, and more.

The book gives real-world guidance for… Show more

Evolutions in Sustainable Investing: Strategies, Funds and Thought Leadership (Wiley Finance, 2011) [Kindle Edition October 14, 2011; Hardcopy edition 27 December 2011] is edited by Cary Krosinsky, Nick Robins, and Stephen Viederman. Other authors include Paul Hawken, Dan Esty, Roger Urwin, David Lubin, Rory Sullivan, James Salo, Simon Powell, Curtis Ravenel, J. Jason Mitchell, Mark Trevitt, Lucy Carmody, Matthew Kiernan, Lloyd Kurtz, and more.

The book gives real-world guidance for investment professionals on delivering attractive risk-adjusted and opportunity-directed returns across asset classes and regions. Filled with interviews with leading practitioners, this book weaves a narrated web around best sustainable investment practices, guiding readers specifically on investing their assets and with specific sustainability trends in mind, such as increasing constraints on global resources. The substantial 512 pages and footnotes gives the to the reader a clear road map to success by some of the most respected names in the field; includes interviews with leading practitioners, and clearly explains how to get sustainable investing done.

This book is essential for any investor limited by old strategies that disregard a changing world of diminishing resources, an increasing global population as well as the market advantage now being experienced by the most efficient, innovative global companies. It builds on the success of Sustainable Investing: The Art of Long Term Performance (Environmental Markets Insights Series) [Hardcover, Routledge; First Edition edition (November 29, 2008)] by Cary Krosinsky and Nick Robins. Show less

Portfolio investment managers and institutional investor clients are becoming more sensitive to the investment risks and opportunities that corporate governance and corporate environmental performance pose because of the growth in understanding of their potential financial repercussions. However, while both corporate governance and corporate environmental performance are increasingly examined within the financial marketplace, there is very limited empirical research that examines them together.… Show more

Portfolio investment managers and institutional investor clients are becoming more sensitive to the investment risks and opportunities that corporate governance and corporate environmental performance pose because of the growth in understanding of their potential financial repercussions. However, while both corporate governance and corporate environmental performance are increasingly examined within the financial marketplace, there is very limited empirical research that examines them together. In this paper, an empirical analysis utilizing proprietary quantitative data from two non-financial rating agencies is conducted in order to develop an understanding of the relationship between these two types of corporate performance, their causes, and their consequences. The findings of this paper do not suggest that there is a direct correlation between corporate governance and environmental performance. However, it is established that each has been improving over time, and that a convergence in standards is occurring between poor and strong performing firms. Perhaps the most salient finding of this research is that both the corporate governance and corporate environmental performance share a common predictor - disclosure. The discovery of a significant relationship between disclosure and performance is very important as it suggests that when a firm discloses non-financial performance information, actors within the firm become increasingly concerned with managing those revealed areas. Therefore, global standards of corporate governance and environmental performance are likely to be improved by of the recent explosion in demand for disclosure by institutional investors in these areas. Show less

Held in abeyance by the Cold War and the preeminence of the nation-state over the past fifty years, the legitimacy of the corporation is once again in dispute. New kinds of private agencies and social actors have emerged to raise questions and, in some cases, intervene directly in the governance of major corporations. Often, corporate engagement is out of the public view—being a conversation amongst financial elites about common interests. In other cases, however, shareholder activism is a… Show more

Held in abeyance by the Cold War and the preeminence of the nation-state over the past fifty years, the legitimacy of the corporation is once again in dispute. New kinds of private agencies and social actors have emerged to raise questions and, in some cases, intervene directly in the governance of major corporations. Often, corporate engagement is out of the public view—being a conversation amongst financial elites about common interests. In other cases, however, shareholder activism is a public affair played out in the full glare of the media at annual general meetings. In this paper social activists’ corporate engagement strategies are evaluated utilizing three proprietary databases which enable analysis of the patterns of activists’ shareholder resolutions with respect to the financial structure and environmental performance of target corporations. An analytical framework is introduced, referencing two models of the firm, the nature of corporate assets (tangible and intangible), and public expectations of corporate performance. Utilizing Interfaith Center for Corporate Responsibility data on social activists’ shareholder resolutions it is shown that these types of resolutions can be differentiated according to the nature and volume of activists’ resolutions and the motive forces driving intervention. It is also shown that, for all the differences between institutional investors and social activists, they may share the same approach to realizing shareholder value depending on the nature of the corporation. Show less

Corporations are increasingly dependant on intangible assets, such as brand image and corporate reputation, in order to remain competitive in the global marketplace. A firm's brand image and corporate reputation can be severely damaged by negative "signals" released to the financial market as a result of poor performance or failings of corporate governance and environmental management. In some firms, management's focus on developing and protecting these intangible assets has grown so important… Show more

Corporations are increasingly dependant on intangible assets, such as brand image and corporate reputation, in order to remain competitive in the global marketplace. A firm's brand image and corporate reputation can be severely damaged by negative "signals" released to the financial market as a result of poor performance or failings of corporate governance and environmental management. In some firms, management's focus on developing and protecting these intangible assets has grown so important that it has led to the creation of a "new paradigm" of firm management. These "new paradigm" managers are more likely to proactively manage risks to corporate reputation or brand image than the traditional "classical model" of firm management. Three proprietary corporate performance databases are utilized to quantitatively determine if there are differences in the risk management practices of firms with high relative amounts of intangibles as a part of overall firm value, as opposed to firms with low dependence on intangibles. To allow this analysis, a unique quantitative indicator was developed to calibrate the importance of intangible assets in a comprehensive way for each corporation. The results suggest that "new paradigm" firms tend to manage corporate governance and environmental risks more aggressively then their "classical model" peers. In addition, it is found that a firm's industry is more important than its home-nation in predicting the level of intangible assets for firm value and growth of investment in intangibles over time. These are key findings as they imply that the pressures driving risk management are not bound by geographic or legal boundaries such that market pressures can promote higher global standards without a global governance system. Show less

Over the last 150 years, large private corporations have developed an extremely powerful role within society. In order to avoid an irreversible environmental crisis, it is essential that these corporations improve their environmental performance standards and lower their impacts. This thesis aims to develop an understanding of what forces cause some corporations to go well “beyond compliance” with legal standards of environmental performance and to exceed the environmental standards of their… Show more

Over the last 150 years, large private corporations have developed an extremely powerful role within society. In order to avoid an irreversible environmental crisis, it is essential that these corporations improve their environmental performance standards and lower their impacts. This thesis aims to develop an understanding of what forces cause some corporations to go well “beyond compliance” with legal standards of environmental performance and to exceed the environmental standards of their competitors from around the globe. This research empirically examines this question by investigating the environmental performance of firms headquartered throughout Europe and the United States. The firms that this research examines are all listed on financial indexes, including the FTSE Eurotop 300. They are international in their size and scope. Therefore, the conclusions of this research will be relevant to corporate environmental performance of large firms in general.

This thesis argues that recently developing trends and emerging actors within the financial marketplace are promoting global corporate environmental performance standards. My aim is to determine how influential each particular market actor is in promoting corporate environmental performance standards, and how this is likely to change and develop in the future. The trends I examine include the growth of interest in corporate environmental performance within the investment community, the creation of agencies that produce and sell “non-financial” corporate performance ratings, the increased scrutiny of corporate governance standards, the growth of corporate investment in intangible assets, and the expansion in use of shareholder resolutions to engage underperforming firms. Show less

There has been an emergence and exceptional growth in the number of agencies that rate firms based on their corporate governance, social, and environmental performance standards. The growing presence of these non-financial rating services presents a new opportunity for institutional investors to promote global standards beyond regulatory compliance via corporate engagement. Corporate engagement is the use of ownership position to influence change in management’s decision-making strategy for a… Show more

There has been an emergence and exceptional growth in the number of agencies that rate firms based on their corporate governance, social, and environmental performance standards. The growing presence of these non-financial rating services presents a new opportunity for institutional investors to promote global standards beyond regulatory compliance via corporate engagement. Corporate engagement is the use of ownership position to influence change in management’s decision-making strategy for a firm through a variety of private and public mechanisms. In corporate engagement, non-financial ratings can be used as a weapon, as well as a lens through which to target underperforming firms. In this chapter, we provide evidence that suggests that institutional investors will increasingly embrace and utilize non-financial ratings and that this will result in both higher global standards and protection of firm value. We do this via an extensive literature review, supported by interview responses from founders and executives of non-financial rating agencies to develop our understanding of the factors that promoted the emergence of non-financial rating agencies. Further, we assess the robustness of our argument that non-financial ratings can be harnessed to improve global standards by cross-analyzing two dissimilar proprietary non-financial rating agencies’ data in overlapping areas of corporate performance ratings for to check for agreement. Our bivariate analysis finds a strong positive correlation, providing evidence that the databases support each other despite their large differences in research orientations, levels of sophistication, methodologies, and historical geographic focuses. This finding supports the notion that non-financial ratings are accurate and therefore are justified and can be used to promote corporate environmental performance by institutional investors and other actors within the financial marketplace. Show less