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By David GordonDirector, Eaton Vance Advisor Institute

Full disclosure: This was not written in darkness. The title hints at the all-too-real prospect that it could have been written in darkness, as abnormally cold February winter weather shut down much of the Texas power grid. Some 4 million homes and businesses lost electricity, many of them for days, and frozen water lines left millions of residents without safe running water — or, worse, with broken pipes and water damage. How could this happen in modern times?

A Texas teaching moment

Texas generates far more net electricity than any other state and leads the nation in wind-powered generation, crude oil production and natural gas production.1 Officials with the Electric Reliability Council of Texas (ERCOT), which operates the Texas power grid, reported the decision to begin rolling blackouts during a winter storm that narrowly prevented "a catastrophic failure that could have left Texans in the dark for months."2

Consider, for a moment, what you would do if your state lost electrical power for months. If you are wondering what would change, the answer is simple: everything. The plight of Texas provides a parable of sorts for explaining to clients what responsible investing is all about, and why it matters.

We often say that responsible investing is about proactively addressing off-balance-sheet risks — such as reputation risk, regulation risk and litigation risk. A close call with catastrophic and life-threatening collapse could be seen (in a triumph of understatement) as a failure to proactively address off-balance-sheet risk.

We will learn more in the weeks and months ahead about why so many Texas wind turbines froze, why natural gas transmission lines froze, why power generation plants lacked winterization, why grid operators were caught off guard and why rolling blackouts turned into sustained outages that lasted for days. Those situational details are tangential to the larger discussion we can have with clients about corporate responsibility and risk management.

How would your clients answer questions such as:

  • Should managers plan for the unexpected, and even the unlikely?
  • Is finger-pointing an effective business strategy?
  • Is "vulnerable" the exact business opposite of "sustainable"?

These are provocative rhetorical questions. The near-disaster in Texas provides an opportunity to engage with clients everywhere about potential vulnerabilities in their own portfolios, and to start a conversation about responsible investing.

Bottom line: If you've been waiting for responsible investing to resonate broadly with clients and prospects, your wait is over. Seize this opportunity while it is fresh.