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$130trn investor coalition commits to end support for corporates that block climate action

Unveiled today (14 March), the ‘Global Standard on Responsible Climate Lobbying’ has been developed by investor networks that collectively represent more than 3,800 members with more than $130trn (£866bn) of assets under management. Contributors include the UN Principles for Responsible Investment; the Institutional Investors Group on Climate Change (IIGCC); The Asia Investor Group on Climate Change (AIGCC); AP7; BNP Paribas and the Church of England Pensions Board.

It is worth noting that the Church of England was recently criticised by green groups for investing in energy companies including Shell, TotalEnergies, ExxonMobil, BP and Drax, despite its stated support for limiting the global temperature increase to 1.5C.

The Standard and its accompanying statement stipulate that organisations supporting it will take action against corporates that “lobby… to delay, dilute or block climate action”. Investors may choose to divest from such firms but this is not a requirement from the standard; in the first instance, they must “escalate the issue”, for example, by filing shareholder resolutions.

Also included in the new Standard is a commitment for supporters to funnel more money into businesses that can prove they consistently lobby in support of the goals of the Paris Agreement – and to support coalitions that exist for the sole purpose of coordinating lobbying for Paris-aligned policies. Of course, signatories must also ensure their own lobbying is also Paris-aligned across the entirety of their business.

To this latter point, signatories commit to publicly disclose all alliances and coalitions they participate in or collaborate with on climate-related lobbying. As well as providing names, they must disclose how much they pay them annually and whether members are represented on their boards and committees.

While many coalitions have been forged in recent years to help investors collaborate on net-zero transition plans, much of the focus, to date, has been on whether companies are reducing their direct and indirect emissions only. There has been less attention paid to their influence on policy. Nonetheless, a recent survey of 164 investors from ISS Governance found that two-thirds expect the companies they invest in within high-emitting sectors to take a Paris-aligned climate lobbying stance. The new Standard intends to formalise this ambition.

“The expectation for companies to advocate responsibly on climate policy is not new,” said the Church of England Pension Board’s senior engagement manager Clare Richards. “The time to demonstrate the full application of the responsible climate lobbying standard as a matter of urgency is now.”

BNP Paribas Asset Management’s head of stewardship for the Americas, Adam Kanzer, added: “The private sector needs government support to fulfil the high ambitions of the Paris Agreement. Therefore, public policy must be a key pillar of any major company’s climate strategy, and be well-governed and appropriately disclosed. Most importantly, it should be aligned with the IPCC’s recommendations for avoiding catastrophe.

“The Global Standard on Responsible Climate Lobbying contains 14 key elements for use in constructing and assessing these programs. Some of these standards will represent relatively new ideas for companies, such as the use of an external standard – the 1.5C goal of the Paris Agreement – to guide corporate lobbying. We’re also asking companies to work to address misaligned policy positions taken by their trade associations, which otherwise puts companies in the awkward position of financing both sides of the issue. We must ensure that we are all rowing in the same direction. Corporate lobbying that is misaligned with the 1.5C goal of the Paris Agreement is not simply a waste of corporate assets, it is a common threat to our future.”

With the 2022 AGM season and corporate reporting season on the horizon, time will tell how rapidly the Standard’s requirements on engagement and disclosures will bear fruit.

Sarah George

© Faversham House Ltd 2022 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.

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