Trade associations and climate:shareholders make themselves heard
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In the wake of shareholder resolutions at Rio Tinto in both the UK and Australia over its links with climate-lobbying trade groups, new research from UK thinktank InfluenceMap identifies the 10 major global companies who maintain extensive networks of trade associations and lobbyists whose aggregate positions on climate are most misaligned with their own. We also unpick Rio Tinto's trade association network and assess its coherence with the company's own climate change agenda.
This group of ten includes corporate names (Pfizer, Microsoft, IBM and UPS) with little business exposure to the fossil fuel value chain and whose own positive climate positions sharply contrast with those of their lobbyists including the National Association of Manufacturers, the US Chamber of Commerce and the American Legislative Exchange Council.
In September 2017, a resolution was heard at BHP’s annual general meetings challenging the company’s continued support of powerful trade groups whose positions and actions on climate contradicted its own. This resolution was widely covered in the media and led to the mining giant conducting an internal audit of its trade association links that was made public.
Following this, attention has turned to Rio Tinto, with a resolution on its links with climate-obstructive trade associations filed in February 2018, raised at the company's annual meeting this year in London (April), and also to be firmly on the agenda at its annual meeting in Melbourne (May). The Australasian Centre for Corporate Responsibility has again lead the way in convening shareholders on the topic.
Rio Tinto's forward strategy no longer involves thermal coal and Rio's chief climate manager stated in 2017 that the world needs to move more quickly away from coal with accelerated “government policy action”. However, it maintains links with powerful trade groups with precisely the opposite viewpoint, including the Minerals Council of Australia, the US Chamber of Commerce and the National Mining Association (US).
InfluenceMap's investor-focused and detailed analysis of over 250 global companies and 100 trade associations highlights the 10 major global companies who maintain extensive networks of trade associations and lobbyists whose aggregate positions on climate are most misaligned with their own.
European oil majors BP and Shell have improved their own positions on climate policy in the last three years while their lobby groups remain staunchly oppositional. The two UK majors remain a target for investors on their trade association links on climate.
As a major asset owner and energy user, Rio Tinto has an interest in sensible, predictable climate and energy policy at a national level. Rio's CEO has said that the company aims to be 'part of the solution' to climate change. Yet the company continues to fund, with shareholders' money, lobby groups that constitute significant blockages in our global ability to deal with the threat of climate change. In calling attention to this misalignment, we hope to improve governance around lobbying activities that risk the future of shareholders' assets and the planet.
The impact of corporate lobbying in the US comes from both direct lobbying as well as indirect attempts to influence public policy through trade associations and other organizations. For almost a decade investors have urged companies to review such memberships and disclose information about their direct lobbying at the state and federal level and also how their dollars are channelled through third parties. In addition investors have publicly applauded companies that actively raised their voices on staying in the Paris Accord or placing a price on carbon, being a positive public presence on climate policy.
2018 is a critical stock-taking year for public policy ambition on climate change. Governments, sub-nationals, businesses, and investors are preparing for key summits by assessing their commitment levels against the goals of the Paris Agreement. More collective action and co-leadership is needed from countries and other key actors to address non-diversifiable climate risks. We reflected our concerns about negative lobbying in the 2015 and 2016 ‘Aiming for A’ resolutions at the UK-listed oil and gas majors and diversified miners to encourage positive advocacy and discourage trade association misalignment. We welcome CEO-led initiatives like the Oil & Gas Climate Initiative and the withdrawals we have seen from ALEC. In addition to influencing from within, companies could do more to clarify publicly where their positions differ from their key sectoral and wider business trade associations. Withdrawal is the ultimate sanction.
We have been tracking climate lobbying and trade groups for several years and working with investors on the corporations of concern to them. We have detected a genuine uptick in concern recently and I personally feel 2018 will be the year shareholders get tough on companies who maintain links to egregious lobbyists holding back critical policy progress on a key existential threat to our common future.
Australian investors are paying the price for climate and energy policy uncertainty in this country, still having to invest within a policy vacuum that has been exacerbated by certain trade associations prosecuting a case for slower progress on responding to climate change. The climate change lobbying of some of these trade associations has been strongly influential in Australian politics and has in many cases been inconsistent with the public positions of many of its own corporate members who have put forward public positions in support of stronger climate change action. It is well beyond time to ensure lobbying by trade associations is pulled into line to better reflect the positions of the companies they represent, and investors are keen to see these companies ensuring they are having an influence within these trade associations or to remove their support.
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