Global Standard on Responsible Climate Lobbying sets out check list for how businesses can ensure their engagement on policy issues is in line with their net zero goals
Global investors have teamed up to launch a new climate standard for corporate lobbying that is designed to stop firms and their trade associations from compromising efforts to deliver on the goals of the Paris Agreement through their political engagement activity.
The new Global Standard on Responsible Climate Lobbying, unveiled this morning, sets out 14 requirements for climate-related engagement activity that companies must meet, or risk having their actions challenged in a shareholder vote.
The recommendations include a public commitment to align all climate-related lobbying to the Paris Agreement’s temperature rise target of 1.5C, disclose all funding and other support for trade bodies involved in climate-related lobbying, undertake a public assessment of the impact direct and indirect climate lobbying activities have had on internal climate plans and the decarbonisation of the broader economy, and produce an annual review of how policy engagement activities align with global climate goals.
The project has been led by Swedish pension fund AP7, BNP Paribas Asset Management, and the Church of England Pensions Board, and has been backed by a number of the world’s leading sustainable investment networks and initiatives, including the Institutional Investor Group on Climate Change (IIGCC), the Investor Group on Climate Change, the Principles for Responsible Investment (PRI), and Ceres.
“For too long corporate lobbying activities have either been shrouded in opacity or run simply and overtly in contrary to the goals of the Paris Agreement,” said Stephanie Pfeifer, CEO of the IIGCC. “While the ambition is for all companies to adhere to the new standard, it is particularly pertinent for companies that claim to support a net zero pathway while simultaneously pursuing lobbying activity that runs counter to this.
“The new Global Standard will be a vital tool for investors to use in calling out and mitigating irresponsible climate lobbying through corporate engagement and good stewardship.”
The scheme comes as companies face mounting pressure to align their lobbying activity with their in-house sustainability goals, amid fears there is a growing mismatch with firms’ publicly stated decarbonisation ambitions and the ways they seek to influence legislation and regulation behind closed doors through both their own activities and through their membership of trade bodies.
Various reports have detailed how big oil and gas companies and technology giants fail to complement their public support for the net zero transition with pressure on lawmakers to introduce policies and regulations that can spur decarbonisation, with companies found in many instances to be actively trying to derail policies that could lead to faster emissions reductions.
Even some of those companies with the most ambitious internal decarbonisation strategies have been accused of supporting trade groups and think tanks that have lobbied intensively against climate policies.
Charlotta Dawidowski Sydstrand, sustainability strategy at the AP7 pension fund, stressed that resolutions would be filed at firms that failed to crack down on lobbying activity that undermined climate goals.
“Time must be called on negative climate lobbying,” she said. “As active owners we are committed to engaging collectively and individually with companies globally to highlight and improve their climate lobbying accountability and performance and to escalate this stewardship where required. We will convey this expectation to the companies in which we invest and signal this commitment through our own actions.”
Clare Richards, senior engagement manager at the Church of England Pensions Board, noted that the standard aimed to drive a shift away from environmentally irresponsible lobbying. “We want the standard to set a high bar for companies, and to encourage a move away from ‘negative lobbying’ towards actively engaging in ‘responsible lobbying’ through supporting policies aligned with the goals of the Paris Agreement,” she said. “The expectation for companies to advocate responsibly on climate policy is not new. The time to demonstrate full application of the responsible climate lobbying standard as a matter of urgency is now.”
Want to find out more about how the net zero transition will impact your business? You can now sign up to attend the virtual Net Zero Finance Summit, which will take place live and interactive on Tuesday 29 March and will be available on demand for delegates after the event.