Institutional investors are challenging 55 large European companies on their approach to climate lobbying, telling them to ensure they fall in line with the Paris Agreement and that their lobbying is not hypocritical.
The Church of England Pensions Board (CoEPB) and Swedish national pension fund AP7 are at the head of the initiative targeting firms including BP, Rio Tinto and Volkswagen.
Investors with a collective $2 trillion of assets under management are involved in an initial letter-writing campaign, but may register shareholder resolutions.
They say their action aims to clarify lobbying positions by the companies in response to the recent IPCC Special Report that predicted the world is heading towards warming of 3°C.
Each of the 55 companies is described as a high-emitter of greenhouse gasses and playing significant roles in energy-intensive sectors.
Adam Matthews, director of ethics and engagement at the Church of England Pensions Board, said: “Misleading and misaligned corporate lobbying practices undermine the ability of governments to act on climate change and meet the goals of the Paris Agreement. The influence of trade associations is often exerted behind closed doors and can be deeply insidious to public policy making on climate change.”
Alice Garton, a lawyer at ClientEarth which is supporting the action, said: “Fossil fuel companies are seeing the energy transition bite and their executives are starting to panic.
“But aggressively lobbying to keep these outdated business models intact while public-facing statements assure shareholders the business cares about the climate is deeply hypocritical [and] puts businesses at real risk of litigation.”
AP7 Pension Fund has identified risk stemming from weaknesses in current climate policy to the long-term value growth of its portfolios.
Three key financial risks identified by the group are: regulatory risks if action delayed now leads to stronger regulatory interventions and higher costs later; systemic economic risks posed by climate change that introduces uncertainty and volatility into investor portfolios; and reputational and legal risks.
Charlotta Dawidowski Sydstrand, of AP7, said: “At this point in time we find it unacceptable that companies counteract ambitious climate policy, either directly or through their business organisations. Lobbying on climate issues should be evaluated, managed and reported on transparently. We are hoping this will become a natural component of companies’ sustainability reporting.”
InfluenceMap scored companies and drew up a list of laggards and leaders for the investor group, which is part of the IIGCC, a European forum for investor collaboration on climate action. The group has over 160 investor members and €21 trillion in assets collectively under management.
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