AP7, BNP Paribas Asset Management, and the Church of England Pensions Board are supporting the development of a framework in 2020 that will enable investors to assess whether and to what extent corporate lobbying is aligned with the goals of the Paris Agreement on Climate Change. Building on work undertaken in recent years by stakeholders on several continents, the primary aim of this project, instigated by the investors and coordinated by Chronos Sustainability, is to develop a framework for assessing corporate lobbying in a relevant, systematic and credible manner. Ultimately, the goal is providing a means by which companies, investors and other stakeholders can ensure that all efforts – whether delivered at first-hand or through an intermediary such as a trade association – are directed towards activities that positively support attainment of the Paris Goals.
Helena Viñes Fiestas from BNP Paribas Asset Management, said: “As shareholders, we expect that when companies engage with public policymakers they will support cost-effective policy measures to mitigate climate change risks and support an orderly transition to a carbon-neutral economy by 2050 at the latest. In recent months, BNPP AM has engaged with companies, and filed resolutions, to request greater transparency on their lobbying practices and to be consistent with the goals of the Paris Agreement. This project will help us further refine our dialogue with companies, as how they influence policymaking can help avoid catastrophic consequences – not least financial.”
The project will identify the variety of ways in which companies and their proxies exert influence on the policy process – in support of or seeking to defuse or delay climate-related regulation – and define how these activities should be managed and overseen by companies. The research will also assess gaps in current practitioner approaches to lobbying, and will develop a means for analysing, assessing and comparing corporate practices on lobbying.
Central to this work is the development of a framework allowing investors to assess company lobbying practices and processes in a systematic, consistent and relevant manner. This framework – which will draw on input from a wide range of stakeholders and include recommendations designed to feed into the Transition Pathway Initiative (TPI) and wider engagement processes – will better enable investors to identify those companies that lobby positively in line with the Paris Agreement; ones with robust lobbying governance and oversight processes; and those companies that act effectively when trade associations or other bodies behave in ways running counter to the company’s own climate change commitments.
Charlotta Dawidowski Sydstrand, Sweden’s AP7 Pension Fund, said: “There is an urgent need for action to address climate change risks as a material investment issue for current and future generations. AP7 has identified that weaknesses in current climate policy globally pose a risk to the long-term value growth of our pension portfolios. We find it unacceptable that at this point in time companies still counteract ambitious climate policy, either directly or through their business organisations. We are championing this research project in order to provide greater understanding of what good practice looks like when it comes to lobbying on climate issues.”
There have been significant advances in this area over the past year, with companies increasingly responding to shareholder concerns by committing to undertake reviews of their own climate lobbying processes. Companies that have already embarked on such processes acknowledge that tighter governance of these practices provides them with greater understanding of what is being targeted with their tacit endorsement, and also ensures better value for money in deploying their resources in a way that is more closely aligned with their long-term business strategy. The project aims to bring additional understanding to and improve the role of corporations in the policymaking process. It is intended that the framework will be ready by the autumn, and feed into preparation for 2021 engagement plans as well as COP26 in Glasgow.
The development of the framework – which seeks to build on and complement the work conducted by InfluenceMap and others – will be led by Dr Rory Sullivan of Chronos Sustainability, supported by Dr Richard Perkins of the London School of Economics and Political Science. The project’s governance also draws on the insights of Ceres, IIGCC, and PRI.
Clare Richards, Church of England Pensions Board, said: “Misaligned and misleading corporate lobbying practices undermine the ability of governments to act on climate change and meet the goals of the Paris Agreement. The stakes are high, and it is right that investors are working with and challenging companies to clean up their lobbying activities and demonstrate better practice. We are delighted to be partnering with these leading investors on this vital issue, and look forward to drawing on feedback from companies, civil society, policymakers and other interested parties when the consultation opens in late June 2020.”
