“Those portfolios will tank”: Mindy Lubber, money and water
We’re already reaping the financial repercussions of climate change. Four Twenty Seven projects that by 2040, roughly $78 trillion, equivalent to about 57% of the world’s current GDP, will be exposed to flooding. On this episode of What About Water? we ask the question: can market incentives align with climate priorities? And how do we hold big corporations accountable?
We speak with Mindy Lubber, CEO and president of Ceres, a sustainability nonprofit driving climate solutions through a surprising demographic – influential investors and fortune 500 companies. Mindy breaks down investors’ call for action leading up to COP26 and how, if we really want to create change, influencing corporate interest is part of the solution.
Mindy Lubber is the CEO and President of the sustainability nonprofit organization Ceres. She leads an all-women executive leadership team and 125 employees working to mobilize the most influential investors and companies to tackle the world’s biggest sustainability challenges: climate change, water scarcity and pollution, and inequitable workplaces. She has been at the helm since 2003, and under her leadership, the organization and its powerful networks have grown significantly in size and influence.
Lubber has received numerous awards for her leadership. In 2020, Lubber received the United Nations ’Champions of the Earth’ Entrepreneurial Vision award. In the same year, Lubber made Barron’s Magazine’s list of the 100 most influential women in U.S. finance, and then again in 2021. She has also received the Climate Visionary Award from the Earth Day Network, William K. Reilly Award for Environmental Leadership from American University, and the Skoll Award for Social Entrepreneurship from the Skoll Foundation. She has been recognized by the United Nations and the Foundation for Social Change as one of the World’s Top Leaders of Change. In 2019 and 2020, Ceres was named a top 100 women-led businesses in Massachusetts by the Globe Magazine and Commonwealth Institute.
Prior to Ceres, Lubber served as a Regional Administrator at the U.S. Environmental Protection Agency under former President Bill Clinton. She also founded Green Century Capital Management and served as the director of the Massachusetts Public Interest Research Group (MASSPIRG).
She resides in Brookline, Mass., with her husband Norman Stein. She has two children, Abe and Jessie.
Climate Action 100+ — An investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.
Ceres – A nonprofit organization transforming the economy to build a just and sustainable future for people and the planet. Ceres works with the most influential capital market leaders to solve the world’s greatest sustainability challenges.
Practicing Responsible Policy Engagement: How Large U.S. companies lobby on climate change.
What’s Missing In Our Fight Against Climate Change – OpEd by Mindy Lubber for WBUR
Assess material and systemic climate risks – Ceres Data and Analysis of S&P 100
Advocate by the numbers – Ceres Data and Analysis of S&P 100
Photo CreditMindy Lubber – Submitted
Mindy Lubber: If you’re talking about climate change or water, telling us what you’re going to do by 2050 is really telling us nothing. If you don’t start now – literally this year, now – um, to have an impact, it will be too late. We will get past the tipping point of being able to act in a way we need.
Jay Famiglietti: This fall investor’s handling assets of $52 trillion signed a pact saying governments must end fossil fuel subsidies, phase out coal and make companies show how their business contributes to climate change. This may be the strongest call yet from big money: pass real meaningful laws with teeth, or they’ll spend the trillions of dollars they control elsewhere.
Does it pay enough yet for corporations to be responsible? And…what about water?
I’m Jay Famiglietti, Executive Director of the Global Institute for Water Security at the University of Saskatchewan. On this episode of the podcast, we’ll hear from Mindy Lubber about the influence of big money and whether market incentives align enough with our planet’s need for clean water.
Before she moved to the financial sector, our guest served as regional administrator at the U.S. Environmental Protection Agency under former president Bill Clinton. Mindy Lubber went on to become the CEO and president of Ceres, a nonprofit focused on sustainability. One that mobilizes the most influential investors and companies to tackle the world’s biggest climate challenges.
She joins us now. Mindy, welcome to What About Water.
Mindy: Terrific to be here and so much about water to talk about.
Jay: Thank you so much for joining us. And that statement that global financial investors signed ahead of a climate summit in Glasgow COP26, the call to end fossil fuel subsidies, phase out coal, make private companies show their environmental damage….
What are the consequences for companies and governments that ignore that call?
Mindy: There’s a reason investors made that call, not advocates, but investors. And they made the call along with all the work being done by advocates and scientists and academics like yourself who are changing the world, but they made the call because if we act on climate and on water, we actually have a shot at building a future for our kids in a global economy.
They also know at the same time, if we continue to ignore the risks of the growing climatic that changes from climate change or the growing problems from water shortages, both quality of water and quantity of water, we cannot build a future, as if that weren’t enough, we also will absolutely devastate our economy. So investors got together.
We work with hundreds, if not thousands of investors, and they made a statement going into the COP that acting on climate and the issues impacted by climate like water are an imperative and need to move at a different pace and scale than we’ve seen before.
Jay: Yeah, I, you know, I, I couldn’t agree more, especially on the water part and the, you know, the urgency of the need to move that pace and scale.
That’s such a hard message to get across. So, you know, hopefully the work with investors can be the catalyst to get it done.
Mindy: You know, having been in this world of social change as you have for awhile or otherwise, a short while called nearly 40 years now, I certainly have the humility and am humble enough to know that it’s no one set of tactics and strategies.
So you and I work on the analysis of the financial risks of not treating water appropriately so we can have enough for our future. There’s a lot that hopefully will change water, climate, and the other sustainable development goals. There’s litigation, there’s grassroots organizing, there’s important academic and scientific research.
There’s pressure from consumers on companies. What we do at Ceres and where we’re working with you and using your extraordinary research is how to make the case to investors that acting on water is an absolutely bottom line financial imperative. I know of no business, almost no business (I’m sure you could come up with something somewhere) where they’re not dependent upon water. Every manufacturing company, every mining company, the list goes on and on. Um, and right now we are headed to having somewhere around 25% less water than we need by mid-decade, not mid-century, mid-decade, and we are doing precious little about it. So we’ve got to stand up.
We’ve got to speak up. We’ve got to make this not an environmental issue only, which of course it is, or a human issue, which water profoundly impacts all quality of life. And clearly is going to be worse for people in the developing world who have less access to technology. It impacts everything, but we also need to make the case that it profoundly impacts our economy.
If we want to bring our economy to its knees, let’s put businesses in a position where they can’t get the water, they need to run their companies. And we’re seeing it every day when the apparel companies like Gap or Levi-Strauss or any apparel company got hit with both the drought where some of their cotton crop died, or with storms where there was too much water and their cotton crop died, that was a three or 4% hit to their bottom line.
Companies can’t afford to have that happen. We don’t want that to happen. And in the end, this is about our economy, but more profoundly our humanity.
Jay: So I’m curious, how did you make that jump from a regional EPA administrator to the job that you’re doing now? What, what happened?
Mindy: Well, it does relate to what we’re talking about, Jay.
I, you know, I’ve spent my career doing many things, but all in the spirit of environmental change and justice, and I’ve done it in many different ways, changing state policy to, in having a profound impact. You know, in 1980, I worked on toxics reform, uh, within the Massachusetts state legislature. I worked in politics trying to get a guy named Mike Dukakis elected to president – a great and fun experience that ended in failure to be sure.
But then I also started an environmental investment firm and looked at financial implications of the environment in 1990, and then went to the Clinton administration where I was the chief regulator, as well as oversight of all environmental laws at a federal level for the six New England states.
And when I walked out of the EPA offices and we shut the lights, when the Clinton administration ended, I thought long and hard about where can I have impact. I could go to a law firm. I could go here. I could go to a think tank. I could go to an advocacy group, but it seemed like private sector players, the world’s largest companies and investors somehow thought dealing with climate change or water shortages or toxics in our water or ocean pollution were only something environmentalists should care about rather than these things make up the fundamental platform of what our world’s economy sits on.
If we don’t take care of our environment, we have no world economy. Now I don’t mean to jump over these other small factors, like the world that’s going to be able to take care of our kids.
And we are precious close to not having that. What we just saw at the COP, at the major global UN negotiations on climate change, where water was absolutely an essential part of some of those discussions, was that we are on the verge of building a future that is worse for our kids than anything we’ve ever seen in our lives.
You and I know that if a bus were coming at our kids and our kids are grown up, but even now with grown-up kids, certainly when they were little, if that bus were coming at our kids, we’d jump in front. That’s what we do to build a future and build safety. We have a bus in water shortages and climate change coming at our kids.
And for you and me maybe our grandkids at some point, and we are not doing enough to stop it. We either stand up now and act at a pace and scale that’s very different than anything we’ve done, or we’re not going to get there. And as it relates to water, what more do we need to know than every leading scientist and economist are telling us we will be around 25% short? How do we know something so clear and so profoundly disturbing and not act on it?
I’ll say one more thing. The young woman Greta Thunberg who has been fighting enormously successful on climate change as a young girl, she says, how do I look at you adults, and know – we all know – that climate change is coming at us like a Mack truck.
And she’s right. We’re smart people. We know what’s there. We know what the science is, and we are not acting at the pace and scale. And it’s time we figured out how to do just that.
Jay: Uh, you know, I want to follow up on the, on the kids. It is the, the young people and also the poorest people that are going to be hardest hit by the, by climate change, by water shortages, by water pollution.
So we’re just talking about what we can do. But how about what they can do. What can young people do to hold investors and financial companies accountable?
Mindy: Look, I put enormous stock in the strength, the commitment and the vision of young people. And I think they’re coming on with a vengeance on these issues. And there’s a lot they could do.
Uh, number one, don’t go to work for a company who’s not a values-driven company. So I’ve got a son who finished business school a couple of years ago. at Sloan, at MIT, and it used to be that the preponderance of the students wanted to work for investment banks. Now they want to work for values-driven companies.
So one is, if you are coming out of any school, go to work for a company that’s values-driven. You can do the kind of work and send the message to every company that’s competing for the best and the brightest that that’s not where you’re going to choose. Number two, you’re also consumers, so stop shopping at companies that, you know, after all the ratings – and you and I do ratings, and many of that could be found on our website at Ceres – if a company is not being responsible, as it relates to natural resources and human resources, find another company to shop at and buy from.
Finally every company right now, and investment firm in 2021 cares about their reputation as it relates to climate change and sustainability, that is just an imperative now. You’ve got to be seen as somebody who cares and has some values driving the company. Be part of a campaign that shows the companies who have values that they’re doing a good work and stand out in front of the companies that don’t have those values with your sign, with your megaphone, with any other way of making it clear that’s no longer good enough.
And we’re seeing it happening. Glasgow during the climate negotiations, a hundred thousand young people, they weren’t all young people, but largely, stood outside the negotiations and they had an enormous impact. Now, did we get everything we need from the climate negotiations?
We did not. Did we make some progress? Absolutely. Were the loud voices of those hundred thousand people outside the negotiating rooms impactful? I would say absolutely. So young people have all sorts of options, including: go out and vote, and vote for people who share your values and not people who are going to make the problem worse.
We have no more time to make these problems worse. Building a sustainable future is going to happen now, or it really might not happen at all.
Jay: Let’s take a step back. The average person doesn’t often associate the financial sector and investors with being at the forefront of climate action. And, you know, we often see platitudes about reducing emissions and some greenwashing and annual reports and advertising, and often not much else.
How motivated do you think these top companies are to actually scale back and tackle some of these climate and water issues in a meaningful way?
Mindy: I think we’re in the middle of a revolution. We’re not there yet. So I’m not sitting here saying, Jay, we’re in great shape. Let’s go. But 15 years ago when we talked to companies, CEOs, boards of directors, we run a training program for corporate boards or the largest asset owners or asset managers about climate risk and water risk, they rolled their eyes. Isn’t that cute? You want us to give you a little donation? Go to our foundation. You know, we gave money to some poor community somewhere. So pat us on the head.
That’s not what we’re looking for. And no, it’s not cute. These are imperatives of our future. That’s not where we’re at today.
Over those last 16, 17 years companies have gone from don’t bother me. I don’t even get why this has anything to do with business to, ah, you’re making the case, the science, the economics are showing that we need to act on these issues. We’ll take a look at it. So we then went to a stage of ‘Let us examine it and do some self-reflection.’
There was then a stage of acknowledgement. Yep. This is a problem for our sector, for our industry. And then about two years ago, we started seeing grant commitments. I’m going to cut my greenhouse gas emissions by 50%, or I’m going to get to net zero by 2050. Or I’m going to change my water practices by 2025. A lot of grand commitments.
And that’s good. Companies going out on a limb and taking a stand is good, but where we’re at today, to answer your question, now we need to see the beef. You know, show us the beef, so to speak (although beef is not so good for water or climate) right? Show us the proof. So if you’re talking about climate change or water, telling us what you’re going to do by 2050 is really telling us nothing.
If you don’t start now, literally this year, now, to have an impact, it will be too late. We will get past the tipping point of being able to act in a way we need. So what companies need to be moving to is from word to deed. Don’t tell us what you’re going to do in 2050. Tell us what you can do in 2022, 2025, 2030, 2035.
Make sure that’s driven by science. We call it science-based targets. Don’t just give us general, This is where I’d like to go. Science tells us we need to get to 1.5 degrees centigrade, and there are some people who understand that. I’m a lawyer, so of course it doesn’t mean so much to me. It means more to you as a scientist. Um, but we know what we have to do.
Little baby steps is the same as doing nothing at this point. We don’t get there. And we don’t get there if we start in 2040. We get there if we start now and we start at a different pace and a different scale. So we’ve made good progress. We’re not debating whether or not climate risk or water risk are real financial issues.
That’s good. You know, great. Let’s not pat ourselves on the head for getting the job done. What we’ve done is we’ve made the case. And companies and investors are making commitments. Now we need to make sure those commitments are grounded in science-based targets that are short, medium, and long-term, that are transparent to the public and to employees and consumers and others.
And that are able to have accountability. We could see next year, whether or not things were done. But let me take that a little bit further with water. You know, we did a Ceres analysis at one point. We found that 50% of the stocks listed in each of the four major stock indices are industries with medium to high water risk.
That means that investors invested in any of these sectors — it’s food, it’s apparel, I could go on and on — that investors right now are in the crosshairs of the global water crisis. They are either going to invest in companies that are using water responsibly or they’re not, and it will make a difference.
And at some point, those portfolios will tank if they’re not analyzing companies in their portfolios for what their risk is from water and climate. You know, every financial analyst analyzes risk. That’s their mantra. That’s their guide book. That’s what they learn in analyst school. But they think about risk as trade risk or currency risk or inflation risk. And I would argue that water risk and climate risk are as compelling and impactful and dangerous and financially relevant as trade risk is. And that’s the language we have to be speaking. Don’t invest in companies that three years from now literally might not have enough water to make their product or run their machineries. Those are companies that are going to fail, not companies that thrive in the stock market, but let’s look at that now and let’s act on it, not only as a human imperative, but as a financial imperative.
Jay: So how do we know what the companies are doing? What sort of reporting is required and will that be changing in the future?
Mindy: It’s a good question. Right now, we are fighting extremely hard to get the Securities and Exchange Commission in the United States to mandate the disclosure of climate and water risk. In 2010, we got guidance put into place, some language that said, companies need to disclose their financial risk from climate change and water was part of that. That was not enforced upon. We’re looking to get a more formal regulation enacted and the SEC will come out with a draft rule on that matter in the next couple of months.
And again, the job of the Securities and Exchange Commission is to protect investors, to make sure that investors who want to make a decision on Coke or Pepsi or Unilever or any publicly traded company, have the risk information they need to make smart decisions. So if we ignore the risk of order, of climate, we’re really asking investors to make decisions with one hand tied behind their back. They just can’t do it responsibly.
And again, you know, it was always seen as ‘trade risk is a real risk’ and ‘inflation risk was real risk’ and climate and water risk are soft risks that, you know, companies should disclose if they want to or on a good day but not always.
That argument has got to end. The financial implications of climate change will bring us to our knees in a way greater than we saw in the subprime meltdown in the late two thousands. The impacts are extraordinary. And somehow thinking we could wink and blink it away, that it’s not as hard of a risk of inflation is wrong. It is a material financial risk, and the SEC is charged with getting companies to disclose that. And that is something I hope to see happen over the next two or three or four months.
In the European Union, they’re moving on that. In the UK they’re moving on that. And again, all that asks for is disclosure. It’s not even changing practices, it’s saying disclose your risk. Now, of course, we hope that when companies measure the implications from climate and water risk, they’ll manage those problems better. And disclosure is the place to start.
It’s certainly not enough.
Jay: We’ve been talking about investing, but you come from this background in the EPA of reviewing policy. So what do you think is the balance? You know, a lot of scientists don’t actually know about the work that you do, right? They don’t actually know about the importance of working with investors and they just focus on policy.
What do you see as the balance — is the policy side moving quickly enough?
Mindy: So the answer is it is not moving quickly enough and it’s urgent for it to happen. And I’ll tell you why. We’ll move hundreds of companies. And hundreds of investors working with us on climate risk on a project we have called Climate Action 100+. We have 590 investors with assets under management of about $55 trillion.
Those are a lot of zeros, a lot of numbers and so on. And that’s good. And the hundreds of companies that are moving are good, but there are a hundred thousand companies that are not moving. That are barely taking baby steps.
And until we have a policy in place – and we’re going to have different policies in the U S and Canada and the EU and the UK and Brazil, India, China – but until we have policies in place where everybody is required to do something, not pleaded with, please do it because it’s a nice thing, but required to do it where it’s mandatory, it’s the law, we’re not going to have a level playing field. You know, some of the big companies will act, others will game the system and they’ll not act. We need everyone to act to get to the pace and scale.
And so in the end, I think we’re going to need policy changes for all sectors of the economy. Because it’s the only way to move all the players quickly enough to make a difference. And we need to have that happen sooner rather than later. For us, you know, many of our investor members and corporate members have come around then, or with us lobbying in the halls of Congress calling for more climate protections or water protections.
Ceres had, you know, the honor of being with President Biden for the signing of the infrastructure bill, because there’s so much infrastructure around many of the climate questions and around many of the water issues. The debate around can kids turn on the faucets and parents feel safe that they’re drinking safe water?
Well, not in a lot of cities right now. So finally, we’ve got a bill passed that hopefully will address that. We need policy changes that impact every city and town across the country and every kid, not the wealthy communities, but every community.
Jay: I want to take our last few minutes to talk about the Ceres investor water toolkit.
Can you tell me a little bit about that?
Mindy: Well, you know, much to my chagrin, investors don’t have quite the same number of tools to act on water that they may have in other areas. So part of it is bringing together some of the smartest people in water, some of the smartest players in the financial sector, along with some of the smartest scientists like you, Jay, um, to really look at what are the implications to portfolios. And to work with analysts and with investors on how to analyze water risk – what to look for, what to do, how to know if there’s a risk there and where to invest their money.
You know, it’s all doable. None of this is brain surgery. Our toolkits are usually very practical. These are the things to look for and look for structural things of boards of directors of the world’s largest companies. Are they asking questions about climate and water? Are the CEO’s being held accountable for metrics in climate and water, as much as they are for putting more plastic widgets out on the market. What are the systems in place and what are large companies telling their suppliers? If they’re not saying to their supply chain: use less water, use less carbon, we’re only going to use you as our suppliers, if you’re environmentally and socially responsible, then everybody will start to change.
But investors need to drive that change. And that’s why we’re working so hard with that community of people. It’s not more important than litigation or grassroots organizing, but it is a very important space because capital markets are the world’s largest financial players and drive so much of our economy, either in their practices or through their lobbying.
Jay: Mindy, thanks so much for joining us today. I have to say that this conversation makes me feel like we can change the world. It makes me feel like you’re leading the charge and you know, it’s been such an inspiring conversation. I really appreciate it. Thanks again for taking the time out of your busy schedule to talk with us.
Mindy: Great, well I look forward to working with you, Jay. And yes, we can change the world and let’s have at it. Take care.
Jay: Let’s, let’s do it.
Mindy Lubber is the CEO and president of Ceres, a nonprofit organization transforming the economy to build a just and sustainable future for people and the planet.
Water and climate risks are real. They are as important as trade and inflation risks. And inaction on them will bring industry to its knees. No one wants that.
What About Water is produced by the walrus lab and the Global Institute for Water Security at the University of Saskatchewan. Check out what about water.org as we continue to post water related stories, content and resources. Our crew here at What About Water is Mark Ferguson, Erin Stephens, Laura McFarland, Fred Reiben, Jesse Witow, Shawn Ahmed and Andrea Rowe.
Thanks to Wayne Giesbrecht, our studio technician, and to Farha Akhtar and to Jen Quesnel at Cascade Communications who put it all together. We record and produce this podcast on Treaty Six Territory. We live and work on this, the Homeland of First Nations and Métis people. And we respect that relationship.
What About Water. Available on Spotify, Apple, or wherever you download your favorite podcasts. I’m Jay Famiglietti. Thanks for listening.