As the treasurer and chief financial officer of the Unitarian Universalist Association (UUA), I have a long-term fiduciary responsibility to manage the assets of our religious denomination and congregations with particular attention to any potential risks in our portfolio. The UUA is an active shareowner of over 500 companies, and we have found that companies that are actively cutting emissions of carbon dioxide and other greenhouse gases and preparing for the uncertainties of climate change are companies that perform well too. That’s why we support policies that help the markets factor in the costs of pollution and the risks of a warming climate.
In July, the Minnesota Public Utilities Commission (PUC) made the prudent decision to require our public utility companies to factor in the cost of carbon pollution to our state. This is called the “social cost of carbon calculation.” Put simply, this is a dollar estimate of the future damages from droughts, sea level rise, heat waves and other climate impacts wrought by each ton of carbon dioxide released to the atmosphere.
Now, with much greater scientific knowledge at hand, the PUC has wisely decided to revise the state’s social cost of carbon calculation to better reflect the true cost of climate change and ensure that utilities are continuing to invest in clean energy solutions that provide a number of financial benefits for society. This was a smart decision that will help the state mitigate the risks of climate change and account for the real costs of carbon pollution — including health impacts, drought and sea level rise.
On the cutting edge since ’93
Minnesota has been on the cutting edge of addressing climate change since 1993. Since then, lawmakers have required utilities and regulators to factor in the environmental and health costs of carbon pollution when making decisions on utility resources. As an organization with 24 Minnesota congregations, this law is important to us.
Prior to the PUC decision, Xcel Energy, Minnesota’s largest utility, said that a higher social cost of carbon would give utilities certainty as they plan for the future, and empower them to reduce carbon emissions. This is the kind of action the state and our country desperately need to continue the transition to a cleaner economy.
While this new cost is shy of the initial proposals supported by the Minnesota Pollution Control Agency, Minnesota Department of Commerce, Xcel Energy and environmental and renewable energy groups, it an important shift that better reflects the economic impact of carbon in our atmosphere.
Vital information for making decisions
Many in the business community believe that efficient allocation of capital requires an accurate accounting of all of the costs of production — including the costs of pollution. Companies such as Walmart, Tennant, and Microsoft factor the costs of carbon pollution and the future costs of climate change into their own decision-making processes — helping companies more accurately forecast and evaluate investments. When making investment decisions for the long term, this kind of information is vital.
Minnesota is a leader but not alone in this effort. Despite a lack of leadership at the federal level, lawmakers and regulators in several states — including New York, Illinois and Colorado — are using a social cost of carbon to measure and reduce carbon impacts from their power grids. We encourage other states to follow suit and adopt, update and strengthen their social cost of carbon measures.
Tim Brennan is the treasurer and chief financial officer of the Unitarian Universalist Association, a religious denomination and institutional investor with over $500 million in assets under management. Unitarian Universalist Association is a member of the Ceres Investor Network on Climate Risk and Sustainability.
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