The business risks and opportunities of the climate crisis are undeniable. As the 2006 Stern Report showed, when it comes to climate change, there are serious financial risks of a do-nothing approach, but there are also significant economic opportunities from dealing with climate change. And it now appears the risks are even higher than originally thought.

Last month, Sir Nicolas Stern admitted that his report underestimated the business impacts of global warming.

Luckily, many companies are stepping up to the plate, folding climate action directly into their business models. Financial institutions such as Goldman Sachs, Bank of America, State Street, Citi and Morgan Stanley are integrating sustainability factors into their investment research and decisions, and are pouring billions into renewable energy. Bravo!

But other actions by most of these companies are contradicting their good work. That's what's happening with their mutual funds’ proxy voting. Each year, Ceres supports shareholders who file resolutions asking companies to address climate change. Mutual funds have a fiduciary duty to vote on these resolutions at companies that are part of their portfolios. In the four years of mandatory proxy voting disclosure by mutual funds, Morgan Stanley funds have opposed all 215 climate resolutions they have faced. State Street funds have opposed all 54 they faced.

Ceres released these findings this spring in a report written by Bill Baue and Jackie Cook. Baue and Cook found that Goldman Sachs is the only bank walking its talk by integrating climate change across all of its business practices. Goldman adopted a company-wide environmental policy in 2005 and invested $1.5 billion in clean energy in 2006. In terms of proxy voting, Goldman funds supported nearly half of the climate resolutions it voted on in 2007. We hope our report encourages healthy competition for this leadership position, driving support percentages well over the half-way mark.

There are signs that Wall Street is thawing in its opposition to climate resolutions. Wells Fargo adopted a new proxy voting policy for 2008. All of the 40-plus Wells Fargo funds covered in our report will follow voting recommendations from Institutional Shareholder Services. ISS has some of the best proxy-voting policies out there, calling for support of resolutions seeking disclosure on climate risks.

Ceres applauds this move, and urges ISS and Wells Fargo to go further by also supporting climate resolutions seeking carbon emissions reductions. ISS is taking steps in this direction. This year ISS recommends voting FOR a resolution asking ExxonMobil to set goals for reducing its greenhouse gas emissions. They also ask the company to adopt a policy for boosting development of renewable energy sources.

There are other signs of thawing as well. In 2007, fund giant Fidelity shifted from routinely opposing all climate resolutions to predominantly abstaining. The percentage of abstentions across the board more than doubled in the last four years, from 12 percent in 2004 to over 24 percent in 2007. We think the move to abstentions represents a first step toward support.

Time is drawing short for business to tackle climate change. Ceres hopes that our report next year on mutual fund proxy voting finds big increases in support for climate resolutions.

About Mindy Lubber

Mindy S. Lubber is the President of Ceres, the leading U.S. coalition of investors and environmental leaders working to improve corporate environmental, social and governance practices. She also directs the Investor Network on Climate Risk (INCR).

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