International institutional investors with assets worth more than €61 billion in assets under management have called on nine multinational energy and mining companies to leave EU lobbying associations, because of their “regressive” climate change policies.
The Brussels-based associations include BusinessEurope, The European Chemical Industry Council (CEFIC), FuelsEurope, Eurometaux (the European Association of Metals), and the International Association of Oil and Gas Producers.
The 25 global institutional investors include pension funds, trusts, and foundations from three continents. Last month, they wrote to nine publicly listed FTSE 100 giants – BHP Billiton, BP, EDF, Glencore, Johnson Matthey, Proctor and Gamble, Rio Tinto, Statoil and Total. Each is a member of at least one of the associations.
The investors include AP4, the Swedish National Pension Fund (€31 billion under management), and the British UNISON Staff Pension Scheme. Sarasins and Partners (UK, €19 billion), The Pensions Trust (UK, €8.7 billion) and Australian Ethical Investment (€546m) also signed.
Pro-climate in public, anti-climate in private?
They argued that the companies’ public positions on climate change were being undermined and contradicted by associations pushing for weaker climate regulation. The businesses likely pay membership fees to the lobbying groups to influence EU legislation in their favour.
Organised by ShareAction, the initiative is the latest example of investors looking to use their influence to drive greener company policy. The UK-based responsible investment movement also coordinated recent shareholder resolutions at BP and Shell, which called on the energy companies to disclose the business risks of climate change.
One letter to BP, obtained by EURACTIV, cited research by the University of Westminster’s Policy Studies Institute. The research said the four associations contributed to “obstructive lobbying” on the EU’s 2030 Climate and Energy targets and the consultation on reform of the Emissions Trading System.
Both policies are cornerstone of the bloc’s fight against climate change and were closely watched by governments ahead of November’s UN Climate Change Conference in Paris. The conference aims to secure an international agreement to limit global warming.
Distancing themselves from the lobbyists would “reassure shareholders of the consistency of your position on climate change,” the letter said.
“These associations gain legitimacy by being able to say they speak on behalf of major industry players […] your withdrawal would help undermine this claim,” it added.
Arne Lööw, head of corporate governance at the Fourth Swedish National Pension Fund said, “As we approach important UN negotiations on climate change, we are pleased to support this initiative.
“We […] would encourage companies to withdraw from associations who have lobbied in ways which seem inconsistent with the companies’ own statements on climate action.”
ShareAction Chief Executive Catherine Howarth added, “Tackling the problem of climate change should be high on the agenda of responsible investors worldwide. Our pension funds in particular have an important role to play in ensuring their portfolios are protected over the long term from the economic damage of climate change.”
In August, consumer products company Unilever quit BusinessEurope, hinting at tensions over the group’s stance on environmental policies. Shell has also recently quit the US lobbyist, the American Legislative Exchange Council.
EURACTIV asked all the associations to comment yesterday (1 September).
“Every company does its own assessment of the advantages of belonging to BusinessEurope’s Advisory and Support Group (ASG), which is a growing group,” said BusinessEurope.
BusinessEurope criticised the EU ETS reform in July.
“It does not match with the objective of keeping a strong and competitive industrial base in Europe. By unnecessarily reducing the volume of free CO2 emission allowances so drastically, it raises the risk of investment leakage, exposing our industries to unfair competition from countries without comparable climate efforts,” it said at the time.
“The International Association of Oil and Gas Producers positions, on climate as on other issues, are in line with those of our members. We have advocated for a straight-forward and effective EU 2030 climate and energy policy, namely for one single target, for CO2 emissions reduction,” said spokesman Alessandro Torello.
Referring to the letter to BP, FuelsEurope said in a comment that they argued against targets for renewable energy was a misrepresentation of their position.
It said, “FuelsEurope believes that an EU single greenhouse gas reduction target for 2030, without multiple overlapping targets is the most effective to achieve Europe’s future climate change goals.”
“Indeed, as we have learned from the implementation of the 2020 package, overlapping targets on renewables and energy efficiency have distorting effects on the carbon price signal within the EU ETS.”
“This undermines an optimal and cost-effective adoption of technology neutral solutions for carbon abatement, leading to rising energy costs in the EU compared to its competitors.”
EURACTIV has contacted all the companies. At time of publication, only Anglo-Australian mining and petroleum multinational BHP Billiton had responded. It said its membership of the International Association of Oil and Gas Producers was based on its services to improve safety, environmental and social performance.
This article will be updated in the Positions section below, if further responses from companies or associations are received.
Campaigners welcome pressure
Campaigners welcomed the ShareAction initiative. Wendel Trio, director of Climate Action Network Europe, said, “It has been clear for a while now that BusinessEurope does not represent the interests of the business community. Its efforts to water down climate policies disregard the desire of many in the business community to tackle the climate challenge.”
It is not the first time that BusinessEurope has been criticised for attempting to weaken environmentally friendly policies.
In November last year, EURACTIV exclusively revealed how it told the European Commission to kill off air pollution and landfill laws as part of the executive’s push for ‘better regulation’.
A separate worldwide campaign has heaped pressure on polluters by demanding institutions such as universities divest from their fossil fuel investments.
About 200 institutions with a combined asset size over $50 billion have committed to divest , including Stanford and Glasgow universities.
A BHP Billiton spokesperson said, "Industry associations are an important forum for discussion and debate of key industry issues and we believe they are most effective when they allow discussion of a wide range of views. BHP Billiton considers its role is to share our position in a clear and constructive way which enables us to have an effective influence within the industry.
"BHP Billiton ceased its membership of Eurometaux in December 2014 as it was no longer relevant to our business requirements.
"BHP Billiton’s membership of the International Association of Oil and Gas Producers (the Association) is based on the services the Association provides to improve safety, environmental and social performance. The Association provides guidance, collects data and publishes performance indicators on a range of relevant topics including environmental performance of operations, management of health impacts, occupational safety and process safety. Their safety alert systems allow for the sharing of information on serious incidents.
"The Association develops its climate change policies in conjunction with its members, who have diverse perspectives on the issue. Where possible, we contribute our views to their policy development whilst continuing to develop and advocate our own policy independently with relevant stakeholders.
"We are committed to transparent and open communications and have an ongoing and extensive engagement program with investors, government and the broader society.
"We continue to share with our stakeholders lessons learnt and identify solutions that we believe can drive emissions reductions at the lowest cost. In September 2014, BHP Billiton signed the World Bank’s Putting a Price on Carbon statement, which was presented at the 2014 United Nations’ Climate Summit in New York, and we are a member of their Carbon Pricing Leadership Coalition.
"We have also hosted several policy roundtables, bringing cross-sectoral business groups together to discuss different ways that business and government can address climate change. Internationally, we look forward to the 21st Conference of the Parties (COP21) in Paris in late 2015, delivering a positive outcome that puts the world on a path to limit global temperatures to less than two degrees Celsius above pre-industrial levels, in line with current international commitments.”
Glencore would not comment at this stage.
Global leaders will met in Paris this December for the United Nations Climate Change Conference, which aims toi make legally binding a target to keep global warming below two degrees.
Ahead of the meeting investors are upping pressure on their portfolio companies, which include major energy and mining giants, to improve their performance on climate change.
Recent shareholders resolutions at BP and Shell called on the energy companies to disclose the business risks of climate change.
Now one campaign group of institutional investors has called on firms to quite EU lobby groups that fight against pro-climate policies.
- 30 November: UN Climate Change Conference
- Letter: Letter to BP
- Press release: Leading investors call on FTSE 100 companies to leave regressive climate lobbying groups
- Report: Policy Studies Institute report
- The Guardian: Shell urges shareholders to accept climate resolution