Pension funds lead challenge against 55 companies on climate lobbying practices

The Church of England Pensions Board and Sweden’s AP7 are leading a $2tr group of investors in challenging 55 large European companies on their approach to climate lobbying.

The investors have written to the companies, and have said they may file a shareholder resolution later this year. The move comes just two weeks after the IPCC Special Report predicted that the world is heading towards warming of three degrees.

Church of England Pensions Board director of ethics and engagement Adam Matthews said that “misleading and misaligned” corporate lobbying practices undermine the ability of governments to act on climate change and meet the goals of the Paris Agreement.

“The influence of trade associations is often exerted behind closed doors and can be deeply insidious to public policy making on climate change. As the recent report from the IPCC clearly highlighted, the stakes are high and time is against us. It is therefore right that investors are challenging Europe’s most high-emitting companies to ensure consistency in their lobbying practices,” he added.

The 55 high-emitting companies have been assessed by InfluenceMap (an independent NGO that monitors lobbying activity by companies) and the worst performers in seven industry sectors will be the focus of the investors’ engagement.

Companies were scored by InfluenceMap for 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. One of the worst performing sectors was the auto sector.

In the run-up to the key United Nations climate negotiations in 2020, the funds have targeted this group of 55 European companies due to their high greenhouse gas emissions and significant role in energy-intensive sectors.

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. A set of ‘investor expectations’ outlining best practice on lobbying has been sent to each company.

The letter sent to the chair of each company asks them to review the lobbying positions being adopted by the organisations. It asks that if the goals are inconsistent with the goals of the Paris Agreement, to adopt positions that are in line with these goals.

“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,” the letter reads.

Commenting, AP7 pension fund’s Charlotta Dawidowski Sydstrand said: “AP7 has identified that weaknesses in current climate policy globally pose a risk to the long-term value growth of our pension portfolios. At this point in time, we find it unacceptable that companies counteract ambitious climate policy, either directly or through their business organisations. Lobbying on climate issues should be evaluated, managed and reported on transparently. We are hoping this will become a natural component of companies’ sustainability reporting.”

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