Hostname: page-component-78c5997874-mlc7c Total loading time: 0 Render date: 2024-11-10T11:22:41.584Z Has data issue: false hasContentIssue false
  • English
  • Français

CLIMATE FINANCE AND ITS GOVERNANCE: MOVING TO A LOW CARBON ECONOMY THROUGH SOCIALLY RESPONSIBLE FINANCING?

Published online by Cambridge University Press:  14 July 2009

Benjamin J Richardson
Benjamin J Richardson
Affiliation:
Osgoode Hall Law School, York University, Canada. brichardson@osgoode.yorku.cg
Get access Rights & Permissions [Opens in a new window]

Abstract

‘Climate finance’ is becoming an important feature of the emerging legal and policy regimes to address global warming. However, the current approach largely confines the financial sector to a transactional agent to mobilise capital for clean energy and to broker emission allowance trading. The sector's potential to leverage more sweeping positive changes in the economy as sought historically through the movement for socially responsible investment (SRI) has been insufficiently acknowledged. Indirectly, by regulating greenhouse gases the legal system is helping to create a business case for investors to respond to climate change threats. However, the potential contribution of SRI to address climate change problems more comprehensively is presently limited owing to inadequate governance frameworks, as well the sector's increasing abandonment of its traditional ethical agenda.

Type
Article
Information
International & Comparative Law Quarterly , Volume 58 , Issue 3 , July 2009 , pp. 597 - 626
Copyright
Copyright © 2009 British Institute of International and Comparative Law

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Kyoto Protocol to the Framework Convention on Climate Change (1998) 37 ILM 22.

2 See S Meeker-Lowry, Economics as if the Earth Really Mattered: A Catalyst Guide to Socially Conscious Investing (New Society Publishers, Gabriola Island, Canada, 1988); S Bruyn, The Field of Social Investment (Cambridge University Press, Cambridge, 1987).

3 On recent changes to SRI, see C Krosinsky and N Robins (eds), Sustainable Investing: The Art of Long Term Performance (Earthscan, London 2008).

4 N Stern, Stern Review on the Economics of Climate Change (HM Treasury, 2007).

5 G Monbiot, Heat: How to Stop the Planet Burning (HarperCollins, London, 2005); T Flannery, The Weather Makers (Atlantic Monthly Press, New York, 2006); T Homer-Dixon, The Upside of Down: Catastrophe and Renewal and the Renewal of Civilisation (Alfred A Knopf, New York, 2006).

6 F Yamin and J Depledge, The International Climate Change Regime: A Guide to Rules, Institutions and Procedures (Cambridge University Press, 2005); M Peeters and K Deketelaere (eds), EU Climate Change Policy: The Challenge of New Regulatory Initiatives (Edward Elgar, Cheltenham, 2006), D Zillman et al (eds), Beyond the Carbon Economy (Oxford University Press, Oxford, 2008).

7 See G Edwards, The Evolution of Finance Capitalism (Longmans, Green, and Company, 1938); J Froud, A Leaver and K Williams ‘New Actors in a Financialised Economy and the Remaking of Capitalism’ 12 New Political Economy 339 (2007).

8 S Labatt and R White, Carbon Finance: The Financial Implications of Climate Change (John Wiley, 2007).

9 A Shell and M Krantz, ‘Global Warming a Hot Spot for Investors’ USA Today Online (27 February 2007); Leggett, J, ‘Climate Change and the Banking Industry: A Question of Both Risk and Opportunity’ (1996) 179 Bankers Magazine 25Google Scholar.

10 International Finance Corporation (IFC), ‘Who Cares Who Wins’. One Year On (IFC, 2005) 8.

11 Smith, J, ‘The Implications of the Kyoto Protocol and the Global Warming Debate for Business Transactions’ (2005) New York University Journal of Law and Business 511Google Scholar.

12 J Llewellyn, The Business of Climate Change: Challenges and Opportunities (Lehman Brothers, New York, 2007); World Resources Institute (WRI) and Merrill Lynch, Energy Security and Climate Change: Investing in the Clean Car Revolution (WRI and Merrill Lynch, 2005); Worldwide Fund for Nature (WWF) and Allianz, Climate Change and the Financial Sector: An Agenda for Action (WWF and Allianz, Gland, Switzerland, 2005).

13 N Lansbury, Socially Responsible Climate Change? Fossil Fuel Investments of the Socially Responsible Investment Industry in Australia (Mineral Policy Institute, 2002) 30.

14 On the crisis, see G Soros, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means (Public Affairs, New York, 2008); R Shiller, The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do About It (Princeton University Press, Princeton, 2008).

15 See <http://www.carboncapitalmarkets.com>.

16 See <http://www.chicagoclimatex.com>.

17 Remarks, Richard Sandor. CEO, Chicago Climate Exchange (18th Annual SRI in the Rockies Conference, Santa Ana Pueblo, New Mexico, 3–6 November 2007).

18 United Nations Environment Program Finance Initiative (UNEPFI), Green Financial Products and Services: Current Developments and Future Opportunities in North America (UNEPFI, Geneva, 2007) 17–19.

19 R Sparkes, ‘A Historical Perspective on the Growth of Socially Responsible Investment’ in Rory Sullivan and Craig Mackenzie (eds) Responsible Investment (Greenleaf Publishing, Sheffield, 2006), 39.

20 See M Jeucken, Sustainable Finance and Banking: The Financial Sector and the Future of the Planet (Earthscan, London, 2001); Labatt and White, above (n 1).

21 S Davis, J Lukomnik and D Pitt-Watson, The New Capitalists. How Citizen Investors are Reshaping the Corporate Agenda (Harvard Business Press, Cambridge, 2006).

22 See the online climate ethics network at <http://www.climateethics.org>.

23 D Brown, American Heat: Ethical Problems with the United States Responses to Global Warming (Rowman and Littlefield, Lanham, Massachusetts, 2002); P Taylor, An Ecological Approach to International Law: Responding to Challenges of Climate Change (Routledge, London and New York, 1998).

24 Article 3.1 (1992) 31 ILM 849.

25 Janssen, J, ‘Implementing the Kyoto Mechanisms: Potential Contributions by Banks and Insurance Companies’ (2000) 25 Geneva Papers on Risk and Insurance 602CrossRefGoogle Scholar; Mandt, J, ‘Managing Risk in Kyoto Projects’ (1999) 1(2) Environmental Finance 23Google Scholar; Hugenschmidt, H and Janssen, J, ‘Kyoto Protocol: New Market Opportunities or New Risks?’ (1999) 11 Swiss Derivatives Review 22Google Scholar.

26 World Resources Institute (WRI), Changing Oil: Emerging Environmental Risks and Shareholder Value in the Oil and Gas Industry (WRI, Washington DC, 2002).

27 Fiduciary duties arise where the exercise of some discretionary power in the interests of another person gives rise to a relationship of trust. The fiduciary duties of loyalty and prudence require the trustee to manage assets wisely only on behalf the beneficiaries. On fiduciary duties and SRI, see Richardson, B J, ‘Do the Fiduciary Duties of Pension Funds Hinder Socially Responsible Investment?’ (2007) 22(2) Banking and Finance Law Review 145Google Scholar. While fiduciary duties are a concept of common law systems, functionally equivalent concepts exist in some financial legislation in civil law jurisdictions.

28 Mercer Investment Consulting (MIC), A Climate for Change: A Trustee's Guide to Understanding and Addressing Climate Risk (MIC, Carbon Trust, London, 2005) 18–19.

29 Stavins, R, ‘Policy Instruments for Climate Change: How Can National Governments Address a Global Problem?’ (1997) University of Chicago Legal Forum 293Google Scholar.

30 UNEPFI Climate Change Working Group, CEO Briefing. Emissions Trading (UNEPFI, Geneva, January 2004), 4; Standard and Poor's (S&P's), Emissions Trading: Carbon Will Become a Taxing Issue for European Utilities (S&P's, New York, 2003).

31 D Driesen, ‘Economic Instruments for Sustainable Development’ in B J Richardson and S Wood (eds), Environmental Law for Sustainability (Hart Publishing, Oxford, 2006) 277. On reflexive law, see G Teubner, L Farmer and D Murphy (eds), Environmental Law and Ecological Responsibility: The Concept and Practice of Ecological Self-Organisation (John Wiley and Sons, Hoboken, 1994).

32 Richardson, B J and Chanwai, K, ‘The UK's Climate Change Levy: Is It Working?’ (2003) 15(>1) Journal of Environmental Law 39CrossRefGoogle Scholar.

33 Carlarne, C, ‘Climate Change Policies an Ocean Apart: EU and US Climate Change Policies Compared’ (2006) 14 Penn State Environmental Law Review 435Google Scholar.

34 Healy, K and Tapick, J, ‘Climate Change: It's Not Just a Policy Issue for Corporate Counsel—It's a Legal Problem’ (2004) 29 Columbia Journal of Environmental Law 89Google Scholar; Gupta, J, ‘Legal Steps Outside the Climate Convention: Litigation as a Tool to Address Climate Change’ (2007) 16 Review of European Community and International Environmental Law 76CrossRefGoogle Scholar.

35 See eg State of Connecticut, et al v American Electric Power Company, et al (2005) 406 F Supp 2d. 265 (SDNY) (under appeal).

36 No 3:06. Civ 05755 (ND California, filed 20 September, 2006).

37 M Levinson, Liability for Climate Change (JPMorgan Chase, New York November 2006).

38 ibid 1.

39 Australian Conservation Foundation v. Minister for Planning, [2004] VCAT 2029, 23.

40 Friends of the Earth v The Governor in Council and the Minister of the Environment, [2008] FC 1183.

41 See UBS, Climate Change: Beyond Whether (UBS, Zürich, 2007).

42 ISIS Asset Management, A Benchmarking Study: Environmental Credit-Risk Factors in the Pan European Banking Sector (ISIS Asset Management, 2002), 14.

43 Northrop, M, ‘Leading by Example: Profitable Corporate Strategies and Successful Public Policies for Reducing Greenhouse Gas Emissions’ (2004) 14 Widener Law Journal 21, 32Google Scholar.

44 F Barringer, ‘Environmental Groups Planning to Urge Boycott of ExxonMobil’ New York Times (12 July 2005) A14.

45 J Donnelly, ‘Banks are Urged not to Finance Coal Power’ Boston Globe Online (16 January 2007).

46 T Zeller, ‘Bank of America to Stop Financing Mountaintop Mining’ New York Times (4 December 2008).

47 World Resources Institute (WRI) and the Coalition for Environmentally Responsible Economies (CERES), Questions and Answers for Investors on Climate Risk (WRI, Washington DC, 2004) 23.

48 D Berman, ‘Hot for Green Investing’ Financial Post (19 February 2007).

49 Citigroup, Climatic Consequences (Citigroup Research, New York 19 January 2007) 1.

50 K Capoor and P Ambrosi, State and Trends of the Carbon Market 2008 (World Bank, 2008) 59.

51 R Walker, Ethical Funds Company (presentation at the Canadian Responsible Investment Conference, Montreal, 27–29 May 2007).

52 Ethical Funds Company (EFC), Head in the Sands? Climate Change Risks in Canada's Oil and Gas Sector (EFC, Vancourer, 2007) 2–4.

53 World Wide Fund for Nature and Allianz, above (n 12) 9.

54 Carter, N and Huby, M, ‘Ecological Citizenship and Ethical Investment’ (2005) 14 Environmental Politics 255CrossRefGoogle Scholar; Dembinski, P et al. ‘The Ethical Foundations of Responsible Investment’ (2003) 48 Journal of Business Ethics 203CrossRefGoogle Scholar.

55 Sparkes, above (n 19) 39.

56 S Waygood, Capital Market Campaigning. The Impact of NGOs on Companies, Shareholder Value and Reputational Risk (Risk Books, London, 2006).

57 The Bank had incurred trenchant criticism for facilitating environmental degradation through project financing. O Perez ‘The New Universe of Green Finance: From Self-Regulation to Multi-Polar Governance’ in O Dilling, M Herberg, and G Winter (eds) Responsible Business: Self-Governance in Transnational Economic Transactions (Hart Publishing, Oxford, 2007) 151, 153.

58 Richardson, B J, ‘Putting Ethics into Environmental Law: Fiduciary Duties for Ethical Investment’ (2008) 46 Osgoode Hall Law Journal 243, 253Google Scholar.

59 As outlined in Freshfields Bruckhaus Deringer, A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment (UNEPFI, Geneva 2005).

60 J Entine (ed), Pension Fund Politics: The Dangers of Social Investing (American Enterprise Institute, 2005).

61 S Young, The Emergence of Ecological Modernisation: Integrating the Environment and the Economy? (Routledge, New York, 2001); Andersen, M and Massa, I, ‘Ecological Modernisation—Origins, Dilemmas and Future Directions’ (2000) 2 Journal of Environmental Policy and Planning 337CrossRefGoogle Scholar.

62 E Cohen-Rosenthal and J Musnikow (eds), Eco-Industrial Strategies: Unleashing Synergy between Economic Development and the Environment (Greenleaf Publishing, Sheffield, 2003).

63 See research on this relationship: Orlitzky, M, Schmidt, F and Rynes, S, ‘Corporate Social and Financial Performance: A Meta-Analysis’ (2003) 24 Organization Studies 403CrossRefGoogle Scholar; Yamashita, M, Sen, S and Roberts, M, ‘The Rewards for Environmental Conscientiousness in the US Capital Markets’ (1999) 12 Journal of Financial and Strategic Decisions 73Google Scholar; N Lorraine, D Collison and D Power, ‘An Analysis of the Stock Market Impact of Environmental Performance Information’ (2004) 28 Accounting Forum 7.

64 UNEPFI, The Materiality of Social, Environmental and Corporate Governance Issues in Equity Pricing (UNEPFI, Geneva, 2004).

65 See <http://www.iigcc.org>.

66 UNEPFI, Show Me the Money: Linking Environmental, Social and Governance Issues to Company Value (UNEPFI, Geneva, 2006), 4.

67 See <http://www.iccr.org/issues/globalwarm/goalsobjectives.php>.

68 S McGeachie, M Kiernan and E Kirzner, Finance and the Environment in North America: The State of Play of the Integration of Environmental Issues into Financial Research (Canadian Department of the Environment, Ottawa 2005) 57.

69 S Goodman and T Little, The Gap in GAAP: An Examination of Environmental Accounting Loopholes (2003).

70 K Makin, ‘High-stakes Battle Looms over Oil-Sands Pollution’ Globe and Mail (15 August 2007) A1.

71 Social Investment Forum (SIF), 2007 Report on Socially Responsible Investing Trends in the United States (SIF, 2008); European Social Investment Forum (Eurosif), Socially Responsible Investment among European Institutional Investors (Eurosif, Paris, 2006).

72 Social Investment Forum (SIF), 2005 Report on Socially Responsible Investing Trends in the United States: A 10-Year Review (SIF, Washington DC, 2006) 9.

73 P Camejo, The SRI Advantage: Why Socially Responsible Investing has Outperformed Financially (New Society Publishers, Gabriola Island, 2002); Sparkes, R and Cowton, C, ‘The Maturing of Socially Responsible Investment: A Review of the Developing Link with Corporate Social Responsibility’ (2004) 52 Journal of Business Ethics 45CrossRefGoogle Scholar.

74 A Beltratti, Socially Responsible Investment in General Equilibrium (Università Bocconi, Milan, 2003) 21.

75 Corbett, J and Jenkinson, T, ‘The Financing of Industry, 1970–1989: An International Comparison’ (1996) 10 Journal of the Japanese and International Economies 71CrossRefGoogle Scholar; but compare to A Hackethal and R Schmidt, Financing Patterns: Measurement Concepts and Empirical Results, Working Paper (University of Frankfurt, 2003).

76 Jensen, M and Murphy, K, ‘CEO Incentives—It's Not How Much You Pay, But How’ (1990) 68 (3) Harvard Business Review 138Google ScholarPubMed.

77 Langbein, J and Posner, R, ‘Social Investing and the Law of Trusts’ (1980) 79 Michigan Law Review 72CrossRefGoogle ScholarKnoll, M, ‘Ethical Screening in Modern Financial Markets: The Conflicting Claims Underlying Socially Responsible Investment’ (2002) 57 Business Lawyer 681Google Scholar.

78 Loderer, C et al. , ‘The Price Elasticity of Demand for Common Stock’ (1991) 46 Journal of Finance 621CrossRefGoogle Scholar.

79 G Arnold, Handbook of Corporate Finance (Financial Times and Prentice Hall, 2005) 314, 330.

80 Davidson, W, Worell, D and El-Jelly, A, ‘Influencing Managers to Change Unpopular Corporate Behavior through Boycotts and Divestitures’ (1995) 34 Business and Society 171CrossRefGoogle Scholar.

81 Rivoli, P, ‘Making a Difference or Making a Statement? Finance Research and Socially Responsible Investment’ (2003) 13 Business Ethics Quarterly 271CrossRefGoogle Scholar.

82 Heinkel, R, Kraus, A and Zechner, J, ‘The Effect of Green Investment on Corporate Behavior’ (2001) 36 Journal of Financial and Quantitative Analysis 431CrossRefGoogle Scholar; Angel, J and Rivoli, P, ‘Does Ethical Investing Impose a Cost Upon the Firm? A Theoretical Perspective’ (1997) 6(4) Journal of Investing 57CrossRefGoogle Scholar. This discussion, concerning equity investment, is not necessarily applicable to bank lending. Banks can have relatively more influence over borrowers, especially small enterprises with few financing options, and firms in large project financing deals seeking huge loans: Jeucken, above; Thompson, P, ‘Bank Lending and the Environment: Policies and Opportunities’ (1998) 16(6) International Journal of Bank Marketing 243CrossRefGoogle Scholar.

83 Teoh, S, Welch, I and Wazzan, P, ‘The Effect of Socially Activist Investment Policies on the Financial Markets: Evidence from the South African Boycott’ (1999) 72 Journal of Business 35CrossRefGoogle Scholar; but compare to Kumar, R, Lamb, W and Wokutch, R, ‘The End of South African Sanctions, Institutional Ownership, and the Stock Price of Boycotted Firms’ (2002) 41 Business and Society 133CrossRefGoogle Scholar.

84 T Burroughes, ‘Ethical Investors Losing Out as Tobacco Stocks Burn Up Britain's Equity Markets’ The Business (24 February 2007).

85 Lorraine, Collison and Power, above (n 63); Cormier, D, Magnan, M and Morard, B ‘The Impact of Corporate Pollution on Market Valuation: Some Empirical Evidence’ (1993) 8 Ecological Economics 135CrossRefGoogle Scholar; Hamilton, J ‘Pollution as News: Media and Stock Market Reactions to the Toxics Release Inventory Data’ (1995) 28 Journal of Environmental Economics and Management 98CrossRefGoogle Scholar.

86 J Parkinson, Corporate Power and Responsibility: Issues in the Theory of Company Law (Clarendon Press, Oxford, 1995) 168–69.

87 Davis, Lukomnik and Pitt-Watson, above (n 21) 15–16.

88 ibid 16–18.

89 Richardson, B J, ‘Diffusing Environmental Regulation through the Financial Services Sector: Reforms in the EU and other Jurisdictions’ (2003) 10(3) Maastricht Journal of European and Comparative Law 1CrossRefGoogle Scholar.

90 Perez, above (n 57).

91 See <http://www.foe.org/camps/intl/declaration.html>.

92 See <http://www.equator-principles.com/index.shtml>.

93 See <http://www.globalreporting.org>.

94 See generally Ruth Hillary (ed), ISO 14001: Case Studies and Practical Experience (Greenleaf Publishing, Sheffield, 2000).

95 See <http://www.sustainability-index.com>.

96 See <http://www.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp>.

97 See eg S Wood, ‘Voluntary Environmental Codes and Sustainability’ in B J Richardson and S Wood (eds), Environmental Law for Sustainability (Hart Publishing, Oxford, 2006) 229; R Gibson (ed), Voluntary Initiatives: The New Politics of Corporate Greening (Broadview Press, Peterborough, 1999); Moon, J, ‘The Firm as Citizen? Social Responsibility of Business in Australia’ (1995) 30(1) Australian Journal of Political Science 1CrossRefGoogle Scholar.

98 eg Maitland, Ian, ‘The Limits of Business Self-Regulation’ (1995) California Management Review (1995) 27(3) 132CrossRefGoogle Scholar; Wood, above (n 97).

99 See Teubner, Farmer and Murphy, above (n 31).

100 eg Vidovic, M and Khanna, N, ‘Can Voluntary Pollution Prevention Programs Fulfill Their Promises? Further Evidence from the EPA's 33/50 Program’ (2007) 53 Journal of Environmental Economics and Management 180CrossRefGoogle Scholar; US Government Accountability Office (GAO), Climate Change: EPA and DOE Should Do More to Encourage Progress Under Two Voluntary Programs (GAO, Washington DC, 2006); C Woolfson and M Beck (eds), Corporate Social Responsibility Failures in the Oil Industry (Baywood Publishing, Amityville, 2005).

101 UN Economic and Social Council (ECOSOC), Sub-Commission on Promotion and Protection of Human Rights, Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights (UN ECOSOC, New York, 2003).

102 Climate Group: <http://www.theclimategroup.org/about/corporate_leadership/climate_principles>.

103 Article 2.7, at <http://www.theclimategroup.org/assets/resources/TCP_English.pdf>.

104 See <http://carbonprinciples.org/>.

105 See <http://www.unpri.org/principles>.

106 UNPRI, ‘Frequently Asked Questions’: <http://www.unpri.org/faqs>.

107 ibid.

108 UNPRI Secretariat, PRI Report on Progress 2008 (UNPRI, London, June 2008), 2.

109 UNEPFI has a Climate Change Work Stream: <http:www.unepfi.org/work_streams/climate_change/index.html>.

110 AMP Capital, ‘AMP Capital a signatory to the United Nations Principles of Responsible Investment’, <http://www.ampcapital.com.au/corporatecentre/unpri.asp>.

111 See <http://www.incr.com>.

112 See <http://www.iigcc.org>.

113 See <http://unepfi.net/cc>.

114 M Mansley and A Dlugoleck, Climate Change—A Risk Management Challenge for Institutional Investors (Universities Superannuation Scheme, London 2001).

115 Williams, C and Conley, J, ‘An Emerging Third Way? The Erosion of the Anglo-American Shareholder Value Construct’ (2005) 18 Cornell International Law Journal 555Google Scholar.

116 California Public Employees' Retirement System (CalPERS) and the California State Teachers' Retirement System (CalSTRS).

117 J Sandred, ‘Catching the Green Wave: Investment in Environmental Technology Gaining Momentum’, San Francisco Chronicle (31 May 2004).

118 Philpott, J, ‘Keeping it Private, Going Public: Assessing, Monitoring, and Disclosing the Global Warming Performance of Project Finance’ (2005) 5 Sustainable Development Law and Policy 45Google Scholar.

119 ibid 47.

120 Bank of America, ‘Bank of America Climate Change Position’, at <http://www.bankofamerica.com/environment>. Yet, as recently as June 2007, the Bank of America was the target of protest actions for its continuing investments in the coal industry: ‘Activists Drape 50ft Banner Across From B of A Headquarters, Call on Bank to Stop Funding Dirty Coal’ Asheville Indymedia (23 October 2007).

121 ‘HSBC Earns Credit for Being First ‘Carbon Neutral’ Bank' GreenBiz.com (7 December 2004).

122 Innovest, Climate Change and the Financial Services Industry. Module 1—Threats and Opportunities (UNEPFI Climate Change Working Group, Geneva, 2002) 16–17.

123 Flavin, C, ‘Storm Warnings: Climate Change Hits the Insurance Industry’ (1994) 7 World Watch 10Google Scholar.

124 A Dlugolecki, ‘An Insurer's Perspective’ in Jeremy Leggett (ed) Climate Change and the Financial Sector (Gerling Akademie-Verlag, Munich, 1996) 64, 75.

125 Kirk, D, ‘Insurers Voice Need to Combat Climate Risks’ (1999) 33(45) Business Insurance 45Google Scholar; Nutter, F, ‘Global Climate Change: Why US Insurers Care’ (1999) 42(1) Climatic Change 45CrossRefGoogle Scholar.

126 FM Research, Capital Punishment: UK Insurance Companies and the Global Environment (Friends of the Earth, London, 2000) 47–49.

127 See further Jaffee, D and Russell, T, ‘Catastrophe Insurance: Capital Markets and Uninsurable Risks’ (1997) 64 Journal of Risk and Insurance 205CrossRefGoogle Scholar; D'Arcy, S and France, V ‘Catastrophe Futures: A Better Hedge for Insurers’ (1992) 59 Journal of Risk and Insurance 575CrossRefGoogle Scholar.

128 See Chichilnisky, G and Heal, G, ‘Managing Unknown Risks’ (1998) 24(4) Journal of Portfolio Management 85CrossRefGoogle Scholar.

129 See Tynes, J, ‘Catastrophe Risk Securitization’ (2000) 19(1) Journal of Insurance Regulation 3Google Scholar.

130 PricewaterhouseCoopers (PWC) and International Emissions Trading Association (IETA), Uncertainty in Accounting for the EU Emissions Trading Scheme and Certified Emission Reductions (PWC and IETA, London, 2007) 15–16.

131 Economist Intelligence Unit, A Change in the Climate. Is Business Going Green? (UK Trade and Investment, London, 2007) 8.

132 eg Canadian Institute of Chartered Accounts (CICA), MD&A Disclosure about the Financial Impact of Climate Change and Other Environmental Issues: Discussion Brief (CICA, 2005); Smith, J, ‘The Implications of the Kyoto Protocol and the Global Warming Debate for Business Transactions’ (2005) 1 New York University Journal of Law and Business 511, 529Google Scholar; M Chan-Fishel, Fifth Survey of Climate Change Disclosure in SEC Filings of Automobile, Insurance, Oil and Gas, Petrochemical, and Utilities Companies (Friends of the Earth, San Francisco, 2006).

133 S Mufson, ‘SEC Pressed to Require Climate-Risk Disclosures’ Washington Post (18 September 2007) D01.

134 See <http://www.cdproject.net>.

135 See <http://www.cdproject.net/faqs.asp>.

136 Remarks by Paul Dickinson, Chief Executive Officer, CDP (UNEPFI Global Roundtable, Melbourne, Australia, 24–25 October 2007).

137 See <http://www.ghgprotocol.org>.

138 See <http://www.weforum.org/en/initiatives/ghg/GreenhouseGasRegister>.

139 See <http://www.globalreporting.org>.

140 See <http://www.globalreporting.org/ReportingFramework/G3Online>.

141 It comprises three specific standards: ISO 14064-1: 2006, Greenhouse Gases—Part 1: Specification with Guidance at the Organization Level for the Quantification and Reporting of Greenhouse Gas Emissions and Removals; ISO 14064-2: 2006, Greenhouse Gases—Part 2: Specification with Guidance at the Project Level for the Quantification, Monitoring And Reporting of Greenhouse Gas Emission Reductions and Removal Enhancements; ISO 14064-3: 2006, Greenhouse Gases—Part 3: Specification with Guidance for the Validation and Verification of Greenhouse Gas Assertions.

142 ISO 14065: 2007, Greenhouse Gases—Requirements for Greenhouse Gas Validation and Verification Bodies for Use in Accreditation or Other Forms of Recognition.

143 Monks, R et al. , ‘Shareholder Activism on Environmental Issues: A Study of Proposals at Large US Corporations (2000–2003)’ (2004) 28 Natural Resources Forum 317, 319CrossRefGoogle Scholar.

144 ibid 321.

145 Social Investment Forum (SIF), 2005 Socially Responsible Investing Trends in the United States: 10-Year Review (SIF, Washington DC, 2006) 19 (in each year, some of the resolutions were withdrawn before the vote, usually because management agreed in advance to respond positively to the requests made).

146 ibid 10.

147 Investor Network on Climate Risk, ‘Investors Achieve Major Company Commitments on Climate Change’ (20 August 2008), at <http://www.incr.com/Page.aspx?pid=227>.

148 ibid.

149 As evident in the work of the UK-based IIGCC, at <http://www.iigcc.org>.

150 SIF, above (n 145) 22.

151 Williams, C and Conley, J ‘Corporate Social Responsibility in the International Context: Is there an Emerging Fiduciary Duty to Consider Human Rights?’ (2005) 74 University of Cincinnati Law Review 75, 96Google Scholar.

152 D Cogan, Unexamined Risk: How Mutual Funds Vote on Climate Change Shareholder Risk (CERES, Boston, 2006) 299.

153 Cited in Cogan, ibid 28.

154 M Cremers and R Romano, ‘Institutional Investors and Proxy Voting: The Impact of the 2003 Mutual Fund Voting Disclosure Regulation’, ECGI-Law Working Paper No 083/2007 (Social Science Research Network, 24 April 2007) 2–3.

155 For a more detailed discussion, see Choi, S, ‘It's Getting Hot in Here: The SEC's Regulation of Climate Change Shareholder Proposals Under the Ordinary Business Exception’ (2006) 17 Duke Environmental Law and Policy Forum 165Google Scholar.

156 ibid 178–79.

157 Xcel Energy, ‘SEC No-Action Letter, 2003’, Lexis 500 (April 1, 2003) 1.

158 ExxonMobil Corporation, ‘SEC No-Action Letter, 2005’, Lexis 466 (March 23, 2005) 1.

159 SIF, above (n 145) 19 (only shareholder proposals on political contributions were more numerous among US investors in 2005).

160 Ford published its report on 2005, and claimed to have reduced carbon emissions from its manufacturing facilities by 15 per cent, with further reductions planned, and was adopting measures to improve the fuel efficiency of its cars: Ford Motor Company, Ford Report on the Business Impact of Climate Change (Ford, Dearborn, Michigan, 2005) 3.

161 Innovest, Climate Change and the Financial Services Industry. Module 2—A Blueprint for Action (UNEPFI, Geneva, 2002) 31–34.

162 World Business Council for Sustainable Development (WBCSD), Energy and Climate Change: Sharpening the Focus for Action—A Business Perspective (WBCSD, Geneva, 2005).

163 See Zhang, Z and Maruyama, A, ‘Towards a Private-Public Synergy in Financing Climate Change Mitigation Projects’ (2001) 29 Energy Policy 1363CrossRefGoogle Scholar.

164 Taylor, P, ‘The Business of Climate Change: What's Ethics Got to Do With It?’ (2007), 20 Global Business and Development Law Journal 161Google Scholar.

165 Article 3.1 (1992) 31 ILM 849.

166 See L Rajamani, Differential Treatment in International Environmental Law (Oxford University Press, 2006).

167 Keeble, J, Topiol, S and Berkeley, S, ‘Using Indicators to Measure Sustainability Performance at a Corporate and Project Level’ (2003) 44 Journal of Business Ethics 149CrossRefGoogle Scholar; O Schmid-Schönbein and A Braunschweig, EPI-Finance 2000; Environmental Performance Indicators for the Financial Industry (E2 Management Consulting AG, Zürich, 2000).

168 Carbon footprints of investment portfolios are already been measures: Trucost, Carbon Counts 2007: The Carbon Footprint Ranking of UK Investment (Trucost, London, 2007).