Two Steps Forward

Corporate climate action: A matter of policy

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Adapted from GreenBuzz Weekly — subscribe here.

For years, companies have led a kind of double life when it comes to climate change.

On the one hand, they have projected leadership — touting their commitments, targets and timetables, and sharing their progress in meeting or exceeding them. But when it came time to advocate for regulations and legislation that aligned with those efforts, they suddenly became mute.

That could be changing, and not a moment too soon.

Recently, climate advocates and activists have begun shining a klieg light on this disparity — some would call it hypocrisy — of companies doing one thing and lobbying for another, or simply keeping quiet when they should be speaking up. As a result, companies will find it increasingly more difficult to lurk in the shadows.

Consider a couple of reports published last week.

The first, from the Environmental Defense Fund (PDF), evaluated the methodologies of eight leading corporate sustainability rankings on whether and how they incorporate policy advocacy on climate change. Specifically, the NGO assessed whether companies’ policy engagement activities were considered in the rankings, and how, if considered, they were tabulated as part of the companies’ overall rankings or scores.

Five of the eight rankings were found to include questions or criteria on a company’s public policy positions or activities (not necessarily specific to climate change policy). Two of the rankings penalize or disqualify companies that actively have opposed progressive climate policy. Only one, InfluenceMap’s Climate Policy Engagement A-List, highlights companies that have engaged in activities supportive of climate policy.

InfluenceMap, a U.K.-based nonprofit, considers such factors as regulatory consultations, CEO activism and public comments on policy to assess both where a company falls on the climate policy spectrum and the intensity of its associated engagement efforts. It also scrutinizes the activities of major trade associations and may disqualify companies if they belong to groups that work against climate policy.

The other high-scorer, Corporate Knights Global 100, automatically excludes companies that lobby to block climate change policy.

Three other rankings — CDP Climate Change Score, the Dow Jones Sustainability Indices and Good Company Ratings — include questions or criteria related to political positions and activities, but don’t penalize or disqualify companies for lobbying or other political activities against climate action. Three others — Barron’s 100 Most Sustainable Companies, CR Magazine 100 Best Corporate Citizens and Newsweek Green Rankings — do not reward companies supporting climate policy or ding those lobbying against it.

"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," notes the EDF report. "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."

The EDF report is a valuable contribution to the field, but its methodology omits a giant swath of the corporate world: Companies that are sitting on the sidelines.

One could argue — and activist groups are increasingly doing so — that silence is complicity. So, companies unwilling to speak up on climate issues need to be called out, even if their own climate commitments, and that of their suppliers, are top-tier.

To date, there are no rankings whose methodologies incorporate companies that simply aren’t publicly engaged on climate advocacy. That’s a missed opportunity, and this gap is likely to be filled in the coming months.

It makes sense. After all, so many companies have embraced renewable energy, committed to dramatically reducing their greenhouse gas emissions, made climate-neutral pledges and pushed their suppliers to do similarly. Climate policy advocacy is the logical next step for companies to demonstrate leadership.

Transparency can be revealing. Consider another recent report, from the aforementioned InfluenceMap, which found that the five largest publicly traded oil and gas majors — BP, Chevron, ExxonMobil, Royal Dutch Shell and Total — have invested more than $1 billion of shareholder funds in the three years following the Paris Agreement "on misleading climate-related branding and lobbying."

Company disclosures of spending on climate lobbying and branding are very limited, InfluenceMap explained. To fill this transparency gap, the organization devised a methodology "using best-available disclosures and intensive research of corporate messaging to evaluate oil major spending aimed at influencing the climate agenda, both directly and through their key trade groups."

InfluenceMap compared oil companies’ lobbying efforts with their marketing messages and, to practically no one’s surprise, found them diverging. "The research reveals a trend of carefully devised campaigns of positive messaging combined with negative policy lobbying on climate change," it concluded. "The aim is to maintain public support on the issue while holding back binding policy."

One case in point is BP, which has declared: "The transition to a low-carbon economy is one of the great challenges of our time." Yet, the company donated $13 million to a campaign, also supported by Chevron (its motto is "Reducing greenhouse gas emissions is a global issue that requires global engagement and action") that successfully stopped a carbon tax in Washington state.

Meanwhile, the five Big Oil companies — which have combined revenue of more than $1 trillion, overwhelmingly from oil and gas — are targeting only about 3 percent of their $115 billion of combined new investments toward low-carbon solutions, according to company disclosures. And they’ve spent nearly $200 million a year on "lobbying designed to control, delay or block binding climate-motivated policy," InfluenceMap said.

None of this is surprising or new. It’s been well known for decades that companies, and not just oil majors, have tried to have it both ways. And, at some level, it’s understandable that companies would rather chart their own course than have one prescribed (or proscribed) by governments.

But the times are changing in lockstep with the growing urgency to solve the climate crisis. And as such disclosures grow, being seen as silent or hypocritical on climate policy will be harder for companies, as their shareholders and employees, not to mention activists, demand both transparency and action. Companies would be well-advised to examine how the alignment, or lack thereof, of their corporate statements and lobbying activities will be viewed by increasingly interested parties.

Increasingly, there's no place to hide. It's about time.