Excerpted from the Domini 2021 Impact Report
In 2021, we fine tuned our approach to corporate climate change policies and practices, cyberwarfare risk of sovereigns, and company efforts to address systemic racism. We asked our Strategic adviser, Steve Lydenberg, to give us a few highlights regarding these updates:
Raise the Bar: Climate Commitments and Actions
Update: Domini expanded its expectations of climate commitments and actions from companies.
The world now faces a decisive moment of opportunity in which it can still mitigate and adapt to the impact of climate change. Corporations play a key role and require thoughtful, robust climate action plans. These plans should incorporate thorough assessments of risks and opportunities across their markets and industries, and recognize the intersection between environmental issues and social justice in the lowcarbon transition. We must deliberately evaluate how the crisis and transition impact our global community and focus on a just transition. The current climate crisis requires a response by all and action with urgency.
Domini has developed a set of standards and expectations for companies, which help guide our research and interaction with the companies we invest in. We go beyond the assessment of greenhouse gas emissions reductions. We look for data that companies are working to lower their climate impact by shifting their capital expenditure to energy efficiency, renewable energy, recycling and circular economy initiatives, business transformation, physical risk mitigation, and a just transition.
Defining New Weapons: Cyberwarfare
Update: Domini developed and adopted cyberwarfare considerations for its sovereign debt analysis.
There has been a substantial surge in cyberattacks over the past two years, including a series of ransom- ware attacks against governments, companies, and individuals—many of which imposed enormous costs. Furthermore, in our opinion, certain types of cyberwarfare can be viewed as weapons of mass destruction, for example, those that target electric grid and infrastructure systems, power plants, water treatment facilities, hospitals, transportation systems, nuclear power, and weapons facilities.
Some national governments have used major cyberattacks as a part of broader cyberwarfare strategies. They are notable outliers in terms of their track record of attacks, intended targets, and capabilities. We exclude the sovereign debt of countries most extensively involved in cyberwarfare attacks as we recognize these attacks as weapons of mass destruction.
Equality for All: Addressing Systemic Racism
Update: Domini updated its diversity standards and expressly included its concern of systemic racism in its global community theme.
Issues of racism and discrimination cut across virtually all the topics raised in our standards, from environ-mental justice to board diversity. We believe investors can play an important role in encouraging corporations on these issues. Addressing systemic racism requires deliberate and proactive efforts from all stakeholders. Companies should acknowledge and make concerted efforts to confront adverse impacts on human rights in their operations.
For decades, Domini has considered issues of diversity and inclusion as critical to achieving our goal of universal human dignity. In 2021, we further strengthened our focus by emphasizing the systemic aspects of racism and sexism. We have integrated the assessment of products and services that help mitigate these specific challenges at core business levels. We expect companies not only to prevent discrimination, but to implement best practices by actively mitigating the current challenges of systemic racism and sexism, as well as other forms of inequality, by identifying the existing gaps and opportunities for their products and services.