In this important piece by Adam Matthews, Director of Ethics & Engagement at The Church of England Pensions Board, we are reminded that leadership from the private sector on climate requires policy advocacy to be consistent with the Paris Climate Accord and the latest scientific guidance. Tim Nixon, Managing Editor, Thomson Reuters Sustainability.
Lobbying in and of itself is not wrong. It is entirely reasonable for companies to contribute to public policy discussion, and advocate positions that are in their interest. However, it becomes problematic when this advocacy is in tension with the well defined positions of wider society (say, a global agreement on climate change), and where a company appears to be committed to two incompatible positions, such as support for the Paris Climate Agreement on the one hand, whilst on the other financing lobbying associations that undermine regulation designed to implement that very same agreement.
In the case of negative climate lobbying it becomes an important business issue. These concerns are not just of interest to ’ethical’ or ’responsible’ investors. Climate change is a material issue for the long-term performance of very many businesses and those of us who have fiduciary responsibilities toward beneficiaries increasingly appreciate the relationship between society’s long term health and long term business performance.
When it comes to climate lobbying the stakes are high, as we seek to transition the entire global economy to a low carbon model. The added pressure is that time is against us. Exactly four weeks ago the International Panel on Climate Change (IPCC) that advises the United Nations climate negotiations, reported that we are heading for three degrees of global warming with enormous disruption to health, livelihoods, food security and economic growth. The report did conclude that it is possible to limit this to 1.5°C if we act quickly but to do so it is clear we need more regulation by governments.
Unblocking the blocks
One of the biggest blocks between the global ambition signed in Paris, and our current trajectory towards three degrees of warming world is insidious lobbying. Most major European companies have stated support for the international agreement on climate, the Paris Climate Agreement. This is to be welcomed. However, it is vital that companies who have committed to supporting the Paris Agreement ensure consistency in the lobbying undertaken on their behalf.
One alleged example of such lobbying emerged last month, when a leaked document reportedly suggested that BusinessEurope, a large confederation representing trade bodies across the EU, was planning to “oppose” greater EU ambition on climate policy through a set of classic lobbying tactics of delay and obfuscation. This despite the body’s public support for Paris. Any strategy that gives the impression of support in one moment, but which in the next moment seeks to undermine the chances of anything significant being agreed, is at odds with the long-term interests of our pension beneficiaries as well as wider society.
Focusing on high-emitters
This is why we as the Church of England Pensions Board have joined forces with the Swedish National Pension Fund AP7, BNP Paribas Asset Management and other major investors with over £3 trillion in assets under management to raise the issue of corporate lobbying on climate change. We are also being supported in this endeavour by the environmental law firm Client Earth, the independent organisation tracking lobbying behaviour, InfluenceMap and the movement for responsible investment ShareAction.
We have written to the Board Chairs of 55 European companies that are among the highest greenhouse gas emitters such as BP, energy producer RWE, automakers Daimler and BMW and chemical companies such as BASF and asked them to support a set of investor expectations that clearly set out best practice on corporate climate lobbying.
Specifically, we are asking the companies to do four things. The first is to commit to lobby positively in line with the Paris climate Agreement. Secondly, to have robust governance procedures in place including Board Oversight, regular monitoring and reviews processes and transparent process to assess consistency between the company lobbying positions and those of their trade associations. Thirdly we ask that when they identify positions that are not aligned with their company advocacy that they take action by either making public statements highlighting the difference, working to change the association position, ending their membership or forming proactive coalitions to oppose the lobbying. Finally, we ask the companies to be transparent about their approach to this issue.
Ensuring sustainable and transparent business
We as investors and owners want our companies to succeed and to safeguard our shared interest in achieving the goals of the Paris Climate Agreement. This means conducting sustainable business operations that are not limited to managing direct climate impact but also ensure a responsible public affairs strategy. Companies must provide transparency and appropriate oversight when it comes to the work of trade associations and think tanks acting on their behalf or enabled through their resourcing.
Just think if we turned the lobbying might of these high emitting companies to achieving the Paris Agreement we would have a stronger chance of limiting warming to 1.5 degrees and preserving the long term health of both society,business and the pensions of our beneficiaries
Adam Matthews is Director of Ethics & Engagement at The Church of England Pensions Board