Five weeks before a pivotal UN climate conference (COP24) starts, a group of investors, led by the Church of England Pensions Board and Swedish national pension fund AP7, sent a letter to 55 companies to challenge them on climate lobbying.
The investors have targeted these 55 European companies because of their high greenhouse gas emissions and significant role in energy-intensive sectors, the group explained in a statement released on Monday (29 October).
Each company has been asked to review relationships with key trade associations and lobbying organisations, to ensure alignment with their formal company positions supporting the implementation of the Paris climate agreement, it added, specifying that a set of ‘investor expectations’ outlining best practice on lobbying has also been sent to each company.
“We would ask you to review the lobbying positions being adopted by the organisations of which you are a member. If these lobbying positions are inconsistent with the goals of the Paris Agreement, we would encourage you to ensure they adopt positions which are in line with these goals,” the letter reads.
“More generally, we would ask you to ensure that your lobbying practices align with the ‘Investor Expectations’ document you have been sent, and that you are transparent about your own policy positions and how you ensure these are implemented in your direct and indirect lobbying activities,” it said.
Auto sector the worst
The 55 high-emitting companies have been assessed by InfluenceMap, a UK-based NGO that monitors lobbying activity by companies.
The organisation scored the companies according to their overall position on climate policy, the extent of their influence on policy-makers and on whether publicly-stated corporate climate policies matched those of the trade associations acting on their behalf, the investors said.
One of the worst performing sectors was the auto sector, the scoring list shows, comprising Fiat, Daimler, BMW, Renault, Volkswagen and Peugeot PSA, while RWE top the list of utility companies.
Among the chemicals companies, the list ranked German giants Bayer and BASF as the most active in climate lobbying, with Siemens and Danone being the most active in the food and beverage sector.
Among the oil and gas companies, BP, Total and Royal Dutch Shell are the top three on the list.
The letter to the companies outlines three key reasons why corporate lobbying activities that are inconsistent with meeting the goals of the Paris Agreement present financial risks to investors, the group continued.
- Regulatory risks: Delay in action now is likely to result in the need for stronger and more drastic regulatory interventions later, leading to much higher costs for companies.
- Systemic economic risks: Delay in the implementation of the Paris Agreement increases the physical risks of climate change, posing a systemic risk to economic stability, and introducing uncertainty and volatility into investor portfolios.
- Reputational and legal risks: Companies may face a backlash from their consumers, investors or other stakeholders if they or the organisations that they support are seen to be delaying or blocking effective climate policy. This may also lead to legal risk, particularly for companies which continue to invest in high-carbon projects, or whose corporate disclosures are alleged to be misleading.
The investor action follows the news of a leaked document in September that suggested that BusinessEurope, a large confederation representing trade bodies across the EU, was planning to “oppose” greater EU ambition on climate policy.