Investors ask most-emitting companies to prove their climate lobbying is Paris-Agreement-aligned
Dozens of the world's highest emitting corporates have been asked to explain how their lobbying activities impact climate change by an influential group of investors.
Several key members of investor group Climate Action 100+ penned a letter to the companies on Tuesday (26 October), asking them to ensure that their climate lobbying is consistent with its Investor Expectations framework, released in 2019. The framework recommends that businesses disclose information about all of their direct and indirect lobbying, identifying instances in which engagement is not aligned to the Paris Agreement.
This process, the group claims, can help businesses take action more rapidly. For example, they may choose to exit trade associations whose environmental agendas differ from their own.
The letters also advised companies of best practices for establishing strong governance of environmental lobbying activities and robust disclosure frameworks. Ceres’ Blueprint for Responsible Policy Engagement on Climate Change, specifically, is highlighted. The Blueprint provides practical steps for businesses to align with 1.5C.
Signatories to the letters are all members of the Ceres Investor Network and Climate Action 100+, which collectively accounts for more than $47trn of assets under management. They include BNP Paribas, Mercy Investment Services and the retirement funds for the State of California and the State of New York.
“As investors, we are urging companies to scrutinize their own public policy advocacy and also that of their trade associations, which too often have been strong opponents of forward-looking policy on climate change,” Boston Trust Walden’s director of ESG shareholder engagement Timothy Smith said.
“We believe that dues-paying member companies should hold their trade associations accountable and urge changes, as necessary, in their positions on climate policy at the state and federal level.”
Earlier this year, InfluenceMap released research highlighting the role of pro-fossil-fuel lobby groups in the development of Covid-19 stimulus plans. It reveals that the oil and gas sector made 31 policy interventions between March and June – the most of any sector – with 64% having been successful either in full or in part. Demands were fairly evenly split between rolling back existing or planned climate legislation and providing financial interventions that favour fossil fuel production over other sectors.
Neither Ceres nor Climate Action 100+ has disclosed a full list of the 47 companies it sent the letters to this week. However, the organisations said in a statement that sectors covered include oil and gas, electric utilities, transport and food and beverage manufacturing.
Climate Action 100+ recently confirmed its intention to create a benchmark tracking corporate alignment with the transition to net-zero by 2050 and to publish this resource in 2021.
To help inform the benchmark, it wrote to 161 of the world's largest corporate emitters requesting that they commit to net-zero targets and prove they are changing their business models and processes accordingly.
Elsewhere, the IIGCC has kick-started trials of what has been described as the world's first blueprint for aligning investment portfolios with the Paris Agreement on climate. Brunel, APG, Scottish Widows, the Church of England Pensions Board and Standard Life will collectively apply the blueprint to assets valued at $1.3trn (£1trn) by the end of 2020.