Corporates face greenwashing concerns over misaligned trade association memberships

The new report, published on Tuesday (13 February) by financial think tank Planet Tracker, urges corporations to reassess affiliations with industry and lobbying groups.

The research found that many major companies with ambitious climate goals aligned with the Paris Agreement are part of trade associations that are at odds with the climate movement. Planet Tracker states that assessing affiliations is crucial if companies want to avoid accusations of ‘greenwashing’.

“Consistent messaging and diligent trade association oversight should be the norm, and where there is persistent misalignment, an exit from these trade associations should be planned,” Planet Tracker’s transition research analyst Ion Visinovschi said.

“Without clear transition plans and associated capex details, financial institutions face heightened uncertainty in cashflow forecasting, potentially impacting their assumptions on free cash flow and dividend cover.”

Planet Tracker highlights corporate trade association membership as an area where companies could be inadvertently misaligning their climate goals.

Previously, Planet Tracker analysed the climate transition plans and strategies of major corporations in the consumer and chemical sectors, that were part of the Climate Action 100+ benchmark. It found that every single company apart from Danone and Nestlé were members of trade associations that were at odds with corporate climate commitments.

The German Chemical Industry Association (VCI) had seven “at odds” companies as a member, followed by the Tennessee Chamber of Commerce & Industry, National Association of Manufacturers (NAM), US Chamber of Commerce, American Fuel & Petrochemical Manufacturers (AFPM), each with five.

There are some examples of good stewardship practices emerging.

Chemical giant LyondellBasell has addressed membership concerns in its Climate Advocacy Report, which evaluates its memberships in key trade associations, categorising each based on alignment with climate policy positions. Bayer’s Industry Association Climate Review (2023) also assesses 63 associations. It discloses the methodology used for assessing alignment as well as an explanation for each evaluation. Both have commitments to reveal trade memberships as a result.

Greenwashing lobbying

Late last year, a study from InfluenceMap found that more than half of corporates have introduced ambitious climate targets, but these do not align with the organisation’s current policy lobbying and influencing activities.

The data, based on analysis of 293 companies from the Forbes 2000 list, categorises brands into performance brackets based on individual policy engagement and industry associations. It found that 21.5% of companies are at “significant risk” and 36.5% of companies are at “moderate risk” of greenwashing.

In total, 58% of the world’s largest corporations have put forward climate commitments that are being undermined by their approaches to policy influencing.

The report warns of a “major rift”, between public-facing pledges and obscured lobbying and influence activities, with InfluenceMap warning that corporates could be greenwashing as a result.

At COP27, the High Level Expert Group outlined a new set of key recommendations to help these entities develop and deliver net-zero targets credibly, avoiding common greenwashing pitfalls.

The report aims to build on the Race to Zero and Science Based Targets initiative by providing corporates and investors with time-based frameworks to deliver net-zero, based on short, medium and long-term targets.

InfluenceMap claims that 58% of corporates would be classed as greenwashing under the UN’s guidance.