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Why policy should be part of your net-zero climate strategy

Climate-centric companies are typically “outgunned” by the fossil fuels industry. NGOs suggest they won’t be able to reach their net-zero goals without changing that habit.

 A "Climate Emergency" banner hangs between trees in a makeshift campsite in Cardiff, Wales,

 A "Climate Emergency" banner hangs between trees in a makeshift campsite in Cardiff, Wales, city center as part of the climate change protest by Extinction Rebellion. Photo taken July 19. Image by Shutterstock/Ceri Breeze

Scrutiny of corporate America’s campaign donations to politicians intensified in the wake of the January insurrection that saw violent rioters breach the U.S. Capitol Building, and the revelations were less than flattering for some well-known companies, many of which have paused to reassess their strategy.

It isn’t just support for fundamental democratic ideals that’s on the line.

Over the past year, a number of independent reports from NGOs and research organizations have disclosed a huge gap when it comes to advocacy and engagement for policies that relate to the environment or tackling climate change.

Here’s the overarching, not-so-surprising takeaway: Established companies, industry associations and business trade groups have spent far more time and money fighting climate policies than advocating on its behalf.

To consider just one industry, just 4 percent of the 2019-2020 reporting lobbing activities of five big technology companies — Alphabet, Amazon, Apple, Facebook and Microsoft — were focused on climate policy at the U.S. federal level, according to a January report by U.K. think tank InfluenceMap. That compares with 38 percent for BP, Chevron, ConocoPhillips, ExxonMobil and Shell.

This is the kind of dialogue we are now facing.

The state-level story isn’t all that encouraging, either. In California, Apple, Alphabet and Facebook focused 4 percent of their lobbying activities to climate-related causes, compared with 51 percent for Chevron. All four companies are based in the state.

InfluenceMap graphic

Courtesy: InfluenceMap

"We don’t judge the companies; we don’t say what they should or should not do," Dylan Tanner, executive director of InfluenceMap, told me when we spoke about the data. "But there will be a raft of new policies under the new administration. We have large industry groups that are likely to fight them. We have many new climate statements and top-line statements. Will they be backed up by full support?"

He added: "While this is singling out the tech companies, it is an issue that applies to corporate America."

That theme was echoed last week during a GreenBiz 21 session focused on the role of climate policy in corporate sustainability strategy. The net-zero, Paris Agreement-aligned commitments made over the past two years are doomed to fall short in the absence of science-based "sound policy" that aligns with those ambitions, said Marty Spitzer, senior director, climate and renewable energy for WWF. Even the Business Roundtable and the U.S. Chamber of Commerce, the latter of which has been historically hostile to environmental regulations, support durable, "market-based" policies related to climate change, he pointed out.

"There are people looking into how U.S. companies are investing and how you are placing your money," Spitzer said during the session. "This is the kind of dialogue we are now facing."

One of the first places sustainability teams can start is by researching and evaluating their company’s trade association memberships, said Victoria Mills, managing director of the Environmental Defense Fund, one of the nine NGOs involved in developing the AAA framework last year to assist companies with developing policy strategies. (AAA stands for Advocate, Align and Allocate.) In many cases, these groups’ lobbying agenda may support policies at odds with an increasing number of their members’ climate plans, Mills said. As an example, she cited the U.S. Chamber’s support of an October Department of Labor ruling that makes it more difficult for pension funds to consider ESG concerns in their investment decisions.

On the flip side, however, companies might find cover in becoming part of organizations that can amplify their positions. Mills pointed to the formation of the Zero Emission Transportation Association, dedicated to advocating for policies that enable 100 percent electric vehicle sales across all major sectors by 2030. The 28 founding members included a who’s-who of EV players, including ChargePoint, EVgo and Tesla. The utility sector was well-represented by the likes of ConEdison, Duke Energy and Edison International, but no legacy automakers were on the list.

"The vast majority of companies are silent on these issues," Mills said.

The climate crisis has reached a point where there can be no room for misinterpretation on the scale of the challenge, or indeed on the importance of regulatory measures to support businesses in driving the transition to a net-zero emissions economy.

Amy Meyer, an associate focused on corporate climate advocacy with World Resources Institute, likewise advised companies to take a far closer look at their trade association connections and challenged them to leave those that don’t support their worldview. Meyer’s other suggestion: Companies should consider publishing climate policy goals alongside their corporate climate commitments. "Words are the first step to action," she said.

While federal policy is essential, don’t overlook local and state opportunities, said Bill Weihl, the former sustainability leader who founded advocacy organization ClimateVoice. Companies have a powerful opportunity to make a difference in the communities where they do business, and policies that support agendas such as job creation or responsible transportation alternatives are incredibly important, he said. "One of the most important elements of your policy is the regional economy where you work," Weihl said.

For those struggling with where to begin, the panelists noted that a number of organizations — aside from their own — offer resources where sustainability teams can educate themselves about policies that may be germane to their strategies. Among those that were named: Ceres (with Climate Action 100+); the Alliance for an Energy Efficiency Economy; Environmental Entrepreneurs; and We Are Still In.

What companies are setting an example worth emulation? Unilever is often cited as leading with pro-climate policy. In June 2019, CEO Alan Jope wrote a letter to the business groups of which it was a member, requesting that they confirm whether their lobbying positions supported the Paris Agreement. It also supports the United Nations Global Compact’s Commitment to Responsible Engagement in Climate Policy.

"The climate crisis has reached a point where there can be no room for misinterpretation on the scale of the challenge, or indeed on the importance of regulatory measures to support businesses in driving the transition to a net-zero emissions economy," Jope wrote.

To see how Unilever’s strategy compares with the big tech firms, see the chart below.

InfluenceMap graphic

Courtesy: InfluenceMap

Why is the position of tech companies, in particular, so important? The answer is simple: They have the money and influence to make a real impact.

Right now, "Big Tech" accounts for about 25 percent of the value of the S&P 500 and 20 percent of its profits, notes InfluenceMap.

"Big Tech companies are some of the most powerful businesses in the world," said Democratic Sen. Sheldon Whitehouse of Rhode Island in a statement about the InfluenceMap report. "They make things happen — when they want things to happen. This report shows how Big Tech has refused to lift a finger to push comprehensive climate action in Congress. That may soon change, and the best place to start is ensuring that Big Tech’s trade associations are powerful advocates for ambitious climate action." 

This story was updated Feb. 16, 2021, to clarify EDF's role in the AAA Framework.

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