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Green philosophy, even in money

The state's CFO pushes for accounting of carbon footprint in its financial affairs.

By ASJYLYN LODER, Times Staff Writer
Published November 28, 2007

Those who manage $20-billion in state money will now have to account for how climate change might affect their bottom line.

"This has become a business issue more than a tree-hugger issue," Alex Sink, Florida's chief financial officer, said Tuesday. The state's $140-billion pension fund could soon follow her lead, she said. "It is about dollars and cents, and the bottom line."

For utilities, that might mean planning ahead for possible carbon regulation. For insurers, it might mean taking into account the risks of insuring coastal properties against rising sea levels.

While Gov. Charlie Crist has enjoyed most of the attention for his efforts to combat climate change, Sink has been working steadily for months toward shielding the state's investments from climate risk. She's joined the growing ranks of state investors pressing companies to tell investors how, and if, they are planning ahead for a carbon-constrained economy.

Two weeks ago, Sink announced that fund managers in charge of $20-billion in Florida's treasury would have to explain how they were accounting for the risks of climate change.

"Some were very sophisticated, and some weren't thinking about it at all," said Kathy Baughman McLeod, Sink's deputy chief of staff.

The move capped months of work. Since taking office, Sink has met with financial leaders from around the world in an effort to understand Florida's financial exposure to climate change.

In April, Sink joined the Investor Network on Climate Risk, a group representing more than $4-trillion in assets. Two month's later, the State Board of Administration followed suit, joining a dozen other state treasuries and pension funds that are members of the network. The network is coordinated by CERES, a coalition in Boston of investors and environmental activists.

"What we're saying is assessing that risk and disclosing it are crucial to investors, to help them understand how companies are taking into account the risks of climate change," said Mindy Lubber, CERES' president.

As Sink and others swell the network's ranks, its influence grows. CERES members, including Sink, signed a petition asking the Securities and Exchange Commission to require companies to tell their investors how they're planning for climate risk. The SEC agreed to a meeting with CERES, scheduled for next week in Washington, D.C.

The group's clout has also raised eyebrows on Wall Street, said Allan Bedwell, an environmental strategist for CDM, a consulting and engineering firm that helps companies navigate the risks and opportunities of a carbon-constrained economy. Lenders, rating agencies and insurers are paying attention, he said.

"We're beginning to see some changes in behavior, because institutional investors represent one of the largest blocks in today's economy," Bedwell said.

Sink oversees the state Department of Financial Services, the agency responsible for managing state money. In plain terms, the state's treasury is essentially the state's checking account, with the money invested in a variety of funds. Sink is also one of three trustees of the $180-billion State Board of Administration, which includes the $140-billion Florida Retirement System.

Sink said Tuesday that it's her responsibility to make sure that money is prudently invested, and there when Floridians need it. Using a century-old analogy, she said she doesn't want to invest taxpayer money in buggy whips if everyone will be driving cars in 20 years.

Asjylyn Loder can be reached at aloder@sptimes.com or (813) 225-3117.

[Last modified November 27, 2007, 22:49:19]