This article originally appeared in the State of Green Business 2021. You can download the entire report here.
For decades, companies have been lobbying in Washington D.C., and at other capitals around the world. Much of it has gone against the interest of sustainable outcomes.
As just one example, oil companies have spent millions of dollars lobbying to block climate change policies, according to a 2019 report from InfluenceMap. Others have lobbied to support roads over public transit, or conventional energy facilities over renewables, or the interests of Big Ag over organic and regenerative farmers.
There are signs this is changing. More companies understand that their interests are directly linked to a clean environment, healthy citizens and a cohesive society.
More recently, there has been a push for companies to do better. Fred Krupp, president of the nonprofit Environmental Defense Fund (EDF), said the business world needs to "unleash the most powerful tool they have to fight climate change: their political influence."
I think, as an investor, it’s incumbent upon us to ask companies to make sure they are connecting those dots.
And now, with a new administration in the United States, there may be room for companies to advocate for a national response to climate change that has been missing — or at least moving in the wrong direction — in recent years. President Joe Biden already has signaled that he will re-enter the Paris Climate Agreement and named environmental issues as one of his four priorities along with racial justice.
It’s a start.
But pro-climate policy changes won’t take hold without a bold push from companies. "There’s a way in which the activism is meeting the traditional Capitol Hill lobbying in a way that [nobody] could have predicted," said Anne Kelly, vice president of government relations at Ceres, where she leads the Ceres Policy Network and Business for Innovative Climate and Energy Policy (BICEP).
Until relatively recently, it’s been safe for companies to stay on the sidelines of sustainability-related policy issues. While climate change may have been deemed an important issue, there were always more pressing ones: wages; healthcare; tax policies; and others. Environmental and social issues rarely rose to the top of those lists.
Moreover, policy engagement was never part of the coveted sustainability rankings companies sought. "Most corporate sustainability rankings do little to encourage companies to engage in climate policy, as they neither recognize support for nor penalize opposition to climate policy," according to a 2019 report from EDF. "This blind spot prevents them from presenting a complete picture of sustainability performance and diminishes their value by omitting the most important measure of sustainability leadership."
A number of factors are pushing companies to act. There’s the physical manifestation of climate change right in front of us. The western United States was on fire for weeks. Hurricane seasons have been intensifying and lasting longer. These go right to the heart of the work companies do.
But some are stepping into the breach.
Take food and pet care company Mars, for example. It has an agricultural supply chain, which is vulnerable to the impacts of climate change. As a result, many of its suppliers — who farm a wide variety of commodities, from cocoa to coffee — may go out of business if their farms are no longer viable due to floods, droughts or other climate-induced impacts. The company, along with Danone, Unilever and others, formed the Sustainable Food Policy Alliance to, among other things, press for the development of agricultural carbon markets.
"I think they see the long-term threat to their business. And rather than waiting for the problems and trying to adapt, they want to see real action taken to avoid the problems," said Bill Weihl, founder and executive director at ClimateVoice, an organization with the mission to mobilize workers to urge companies to take a stand on climate in business practices and policy advocacy.
Weihl’s group offers a case in point of what’s possible. Last year, eight companies — Akamai Technologies, IKEA North America Services, Kaiser Permanente, Mars, Nestlé USA, Schneider Electric, Unilever and Worthen Industries — signed a letter of support for a bill in the Virginia state legislature to put the state on a path to 100 percent zero-carbon electricity by 2045. They also lobbied legislators to pass it. The bill was signed into law in March.
In some cases, shareholders are among those pushing companies to use their influence on policy issues. In November, the Interfaith Center on Corporate Responsibility (ICCR), a coalition of shareholder advocates who view managing their investments as a catalyst for social change, called on businesses to lobby in support of pro-climate policies. Specifically, ICCR asked 25 companies to accelerate their respective company’s advocacy to address climate change before national and local governments.
With companies setting net-zero commitments, which vary in detail and approach, it’s become increasingly important for their government affairs teams or public policy board committees to connect the dots to ensure that a company’s efforts align with the goals of the Paris Agreement, including the nationally determined contributions in the countries in which they operate.
"Are they really matching that with policy advocacy that serves the same interest?" asks Laura Devenney, senior ESG research analyst at Boston Trust Walden, a member of ICCR. "The context is changing and is poised to potentially accelerate even more here [in the United States], very quickly on the policy front. I think, as an investor, it’s incumbent upon us to ask companies to make sure they are connecting those dots."
The 2020 ICCR initiative builds on previous calls to action. In July, a group of 72 private- and public-sector leaders, including investors, former regulators, lawmakers, NGOs and foundations, sent a letter to the U.S. Federal Reserve and other key financial regulatory agencies asking them to take immediate action to address climate change. In November 2019, the Fed sent signals that highlight the risks of climate change to our financial system.
All together, these acts have laid the foundation for more corporate advocacy to come. So, what might that look like? Ceres’ Kelly said she believes that companies would like to see carbon pricing because they believe it’s the most efficient mechanism for lowering carbon emissions. "You’ll see record numbers of them getting behind it," she said. The schemes matter, along with the details. "But what’s shifted is you have increasing numbers of companies saying, ‘Wow, this is really serious. This is really urgent.’"
As ClimateVoice’s Weihl put it: "Important climate policies are being debated at every level of government — in cities, counties, states and countries. Companies have influence everywhere they operate, and when they choose to stay silent on climate policies, they enable the fossil-fuel industry to dominate the debates."