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Major US investors call on largest corporate emitters to disclose how their climate lobbying aligns with climate science

26th October 2020

Call to action comes ahead of the launch of the Climate Action 100+ Net-Zero Company Benchmark set to be published early next year

Highlights increased calls from North American and European investors for companies to improve disclosure of direct and indirect climate lobbying

Call to action comes ahead of the launch of the Climate Action 100+ Net-Zero Company Benchmark set to be published early next year

Institutional investors have issued an urgent call to 47 of the largest U.S.-based corporate greenhouse gas emitters to disclose how their climate lobbying aligns with the most ambitious goals of the Paris Agreement and science-based climate policies.

The call to action comes just months ahead of a public benchmark of these companies on their climate actions set to be released early next year.

In letters addressed to the Chief Executive Officers and Chairs of Boards of Directors, the investors specifically warned companies to ensure their climate lobbying is consistent with the Investor Expectations on Corporate Lobbying on Climate Change released last year. The investors urged companies to ensure all lobbying activities — both direct lobbying by the companies and indirect lobbying through their trade associations — are Paris-aligned and to take action when there is misalignment.

The investors also asked companies to establish strong governance of their climate lobbying activities and provide full public transparency of those activities. The letters advised companies of best practices for corporate climate lobbying provided in resources, including the Ceres Blueprint for Responsible Policy Engagement on Climate Change. The Blueprint highlights that the latest science indicates that limiting global temperature rise to 1.5-degrees Celsius is necessary in order to avoid the most catastrophic outcomes, including climate-driven drought, floods, extreme heat and poverty for millions of people.

“As long-term investors, we need to see our portfolio companies address the financial risks posed by climate change.  We are concerned about the impact of climate change on our investments, as well as its impact on the economy as a whole,” said New York State Comptroller Thomas P. DiNapoli, one of the letter signatories. “In order to assess these risks to our portfolio companies, we need greater transparency and accountability, especially when it comes to lobbying — or supporting trade organizations that are lobbying — against efforts to address this ever-mounting threat.”

Investor signatories of the letters include BNP Paribas Asset ManagementBoston Trust WaldenCalifornia Public Employees Retirement System (CalPERS), the California State Teachers’ Retirement System (CalSTRS), Mercy Investment ServicesNew York City Comptroller’s OfficeNew York State Common Retirement Fund, and Wespath Benefits & Investments. All of the investors are also signatories to Climate Action 100+ and members of the Ceres Investor Network.

“As investors, we are urging companies to scrutinize their own public policy advocacy and also that of their trade associations, which too often have been strong opponents of forward-looking policy on climate change,” said Timothy Smith, Director of ESG Shareowner Engagement at Boston Trust Walden. “We believe that dues-paying member companies should hold their trade associations accountable and urge changes, as necessary, in their positions on climate policy at the state and federal level.”

The 47 firms, which span across a range of high-emitting sectors — including oil and gas, electric power, transportation, and food and beverage — are focus companies of Climate Action 100+, the world’s largest investor-led initiative on climate change, with more than USD $47 trillion in collective assets under management. Ceres is a founding partner network of the initiative and helps to coordinate and support investor engagements in North America.

Earlier this year, all 161 focus companies of the Climate Action 100+, including the 47 notified this month, were informed that they would be benchmarked on their climate progress against a set of key indicators that reflect the goals of the initiative. Paris-aligned corporate lobbying a key indicator in which corporate progress will be assessed. The full assessment — Climate Action 100+ Net- Zero Company Benchmark — is set to be released in early 2021.

“The urgency of the climate crisis means that companies must not only take bold in-house actions to reduce emissions to net-zero and improve governance of climate risk, they must also look beyond their four walls and publicly advocate for federal and state policies to mitigate climate change,” said Ceres CEO and President Mindy Lubber and member of the Climate Action 100+ global steering committee. “Investors are looking at those advocacy efforts and if corporate trade association lobbying matches what companies are publicly stating.”

Over the past year, growing numbers of investors have asked companies to increase disclosure of direct and indirect lobbying activities. During the 2020 U.S. proxy season, shareholder proposals asking companies to disclose how their climate lobbying aligns with the goals of the Paris Agreement received record high investor support. One resolution, filed by BNP Paribas Asset Management, won a first-ever 53% majority vote at Chevron Corp., including voting support from the largest asset manager — BlackRock. Similar proposals won 46% vote in favor at Delta Air Lines and 31% in favor at United Airlines.  Where investors have not seen progress from company engagements, it is expected that similar resolutions will be filed for the 2021 season.

At many companies, these investor engagements on climate lobbying have succeeded in improving disclosure. In Europe, at least 15 companies, including BP, Equinor, Shell, and Total, have published analyses of their trade associations’ positions on climate change and their degree of alignment with the company’s support for the Paris Agreement. Several of these companies have also decided to leave certain trade associations where they have identified misalignment.

“The private sector cannot address the full range of impacts from climate change without strong public policy designed to help stabilize the climate. Companies should establish the Paris Agreement’s goals as their North Star when meeting with regulators and legislators,” said Adam Kanzer, head of stewardship – Americas, BNP Paribas Asset Management. “Their lobbying activities should be consistent with the Paris Agreement and the best available science, well governed and transparent.”

Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Through powerful networks and advocacy, Ceres tackles the world’s biggest sustainability challenges, including the climate crisis, water scarcity and pollution, and inequitable workplaces. Ceres is a founding partner of Climate Action 100+ and The Investor Agenda. The Ceres Investor Network includes over 175 institutional investors, managing more than $29 trillion in assets, advancing leading investment practices, corporate engagement strategies, and key policy and regulatory solutions.

Climate Action 100+ is the world’s largest investor initiative on climate, ensuring the world’s largest corporate greenhouse gas emitters take necessary action on climate change. More than 500 investors with more than $47 trillion in assets collectively under management are engaging companies on improving governance, curbing emissions and strengthening climate-related financial disclosures.