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Companies risk greenwashing with their trade group activities, report says

Unilever, BASF, Procter & Gamble, Walmart and Colgate-Palmolive aren't assessing this 'climate alignment', according to Planet Tracker.

Blurred image of a convention center.

Blurred image of a convention center. Credit: Shutterstock/Pla2na

Companies with ambitious environmental objectives are failing to reconsider or disclose their affiliations with trade groups that actively lobby against climate goals and decarbonization policies, a new study has found.

An analysis published in February by think tank Planet Tracker has revealed how major corporations in the consumer goods and chemicals sectors that are signed up to the Climate Action 100+ initiative remain members of a number of trade associations that are routinely "misaligned" with the goals of the Paris Agreement.

Air Liquide, BASF, Colgate-Palmolive, Dow, Incitec Pivot, Lyondell Basell, Procter & Gamble, Toray Industries, Walmart, Woolworths and Unilever are among the firms accused of remaining members of a number of trade associations at odds with their stated environmental objectives.

Nestle and Danone were the only companies assessed that were not members of trade associations deemed to have undermined climate policy.

The report revealed how corporates that have publicly committed to meeting net zero goals remained members of trade associations, such as the German Chemical Industry Association, the Tennessee Chamber of Commerce & Industry, the National Association of Manufacturers, the U.S. Chamber of Commerce and American Fuel and Petrochemical Manufacturers, which stand accused of lobbying against a range of net zero policies.

As such, Planet Tracker has called on companies to better scrutinize their membership of associations and "take decisive action" to address where their lobbying goals are misaligned.

Climate policy advocacy guidelines from the World Resources Institute (WRI) recommend that all companies should perform a regular audit of trade associations' positions on climate change and develop a strategy for "self-correction" based on explicit criteria for leaving or staying within an association that diverges from the corporate's stated climate goals.

WRI recommend that all companies should perform a regular audit of trade associations' positions on climate change and develop a strategy for 'self-correction.'

However, environmental campaigners and sustainable investors have long feared that many companies with ambitious climate goals in place remain members of trade associations and lobby groups that then work on their behalf to block decarbonization policies.

An analysis published in November 2022 by sustainability non-profit Ceres revealed just 8 percent of companies on the S&P100 Index proactively assess their trade associations' climate policies, with an even smaller proportion of 5 percent acknowledging the obstructive nature of trade associations' lobbying on climate policy.

Ion Visinovschi, transition research analyst at Planet Tracker, said companies that failed to ensure their trade association memberships are aligned with their climate goals were at "increased risk of greenwashing."

"Consistent messaging and diligent trade association oversight should be the norm, and where there is persistent misalignment, an exit from these trade associations should be planned," he said. "Without clear transition plans and associated capex details, financial institutions face heightened uncertainty in cashflow forecasting, potentially impacting their assumptions on free cash flow and dividend cover."

The report cites chemical giants Lyondell Basell and Bayer as examples of companies taking proactive action to address concerns over misaligned industry affiliations.

The report cites chemical giants Lyondell Basell and Bayer as examples of companies taking proactive action to address concerns over misaligned industry affiliations. Both firms have demonstrated a commitment to evaluation and engagement, having published reports exploring their memberships of trade associations, categorizing each based on its level of alignment with their climate policy positions.

BusinessGreen reached out to a number of companies included in the report for a request for comment on the findings.

A spokesperson from Unilever said the company planned to "shortly" publish a climate policy engagement review, which would analyze its industry associations' alignment with its climate policy priorities.

"We've committed to ensuring that our direct engagement on climate policy is consistent with our stated objectives in delivering the 1.5 degrees Celsius ambition of the Paris Agreement," they added. "Furthermore, we have long championed the importance of aligning indirect climate engagement through industry groups, climate alliances and trade associations."

Pressure on companies to explain how they square their trade body memberships with their stated climate goals will only mount as investors look to meet their own portfolio decarbonization targets and mitigate their exposure to climate risks. Increasingly stringent regulations and standards designed to tackle "greenwashing" could also extend to cover corporate engagement with those trade bodies, which inadvertently or otherwise are left to do the dirty work of privately lobbying against ambitious climate policies — policies that some of their own members publicly claim to support.

Corporates would do well to follow the example set by Lyondell Basell and Bayer and start reviewing their affiliations with industry groups, as a critical first step to impressing upon investors and other stakeholders that they are not letting lobbyists undermine climate goals on their behalf. 

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