Investor Group Launches Standard to Assess and Guide Corporate Climate Lobbying
A group of investors and leading sustainable investment groups announced the launch of the Global Standard on Responsible Climate Lobbying, a new global framework aimed at ensuring that corporate lobbying and political engagement align with global climate goals, and calling on companies to commit to responsible lobbying and to provide transparency on their activities in this area.
Launched by asset owners and managers including BNP Paribas Asset Management, AP7 and the Church of England Pensions Board, and sustainable investment-focused groups AIGCC, Ceres, ICCR, IIGCC, PRI, Shareholder Association for Research & Education and IGCC, the new standard comes as investors are increasingly focused on corporate lobbying practices in their climate engagements. According to a media release from Ceres and ICCR, the upcoming 2022 proxy season has seen a record 46 resolutions filed seeking information about companies’ climate lobbying practices, with several companies including Amgen, JPMorgan Chase & Co, Merck, Union Pacific, and United Health, having already negotiated agreements to provide lobbying disclosures in order to have the resolutions withdrawn.
Tracey Rembert, associate program director for climate at ICCR, said:
“The tenor of the engagements with U.S. companies this year has really been striking on this issue. Companies seemed much more prone to asking what practices they should consider for aligning their policy influence with their stated climate commitments, as well as looking for feedback on the practices investors consider most critical and how shareholders are defining and assessing indirect lobbying activities—an issue becoming front and center regarding the roadblocks to passing many climate bills.”
The new standard sets out a set of indicators and expectations for companies across key categories including policy & commitment, governance, action and disclosure. Key expectations include making public commitments to align climate change lobbying with the goal to limit global temperature rise to 1.5⁰C, ensuring that the alliances and coalitions of which the company is a member also conduct lobbying in line with these goals, assigning responsibility at the board level for oversight of climate lobbying, establishing an annual monitoring and review process and publishing detailed annual reviews covering the company’s assessments and actions related to its climate lobbying activities. Disclosure requirements also include reporting on membership in associations engaged in climate lobbying, including how much the company pays to these organizations, and disclosing an overall assessment of the influence that the company’s climate lobbying had on supporting public climate change policy and on the company’s ability to deliver on its own transition strategy.
In a statement accompanying the launch of the new standard, the investor group said:
“As investors and investor groups, we recognise the centrality of ambitious climate policy and responsible corporate climate lobbying to limiting global warming to 1.5⁰C. We are seeking to align our investments with ambitious climate policy from governments, the ambition of which is in turn shaped and influenced by the views and interests of companies and other stakeholders. We recognise that corporate lobbying – directly and through organisations such as trade associations, industry alliances and industry coalitions – has frequently opposed policy measures that would support the goal of delivering net-zero emissions by 2050. Equally, we recognise that responsible corporate lobbying has the potential to unlock action on climate transition initiatives.”
The investor group also announced their own commitments to demonstrate best practices on climate policy lobbying, to support policy measures directed at achieving net zero by 2050, and to convey these expectations to their portfolio companies.
Adam Kanzer, Head of Stewardship, Americas, BNP Paribas Asset Management, said:
“We must ensure that we are all rowing in the same direction. Corporate lobbying that is misaligned with the 1.5°C goal of the Paris Agreement is not simply a waste of corporate assets, it is a common threat to our future.”