What is climate change lobbying?
Lobbying by companies on climate change refers to efforts of companies and of their agents to directly or indirectly influence decision-making related to climate change by political or bureaucratic actors. Lobbying can have a significant positive or negative impact on the stringency and effectiveness of public climate policy. This included policies that are directly concerned with climate change and policies with other primary purposed but that may impact on climate change, such as fiscal or energy policy.
Some companies have lobbied governments to put in place regulations and policies that help the private sector to contribute to domestic and international climate change goals, for example targets related to achieving the Paris Agreement temperature targets. However, some companies, particularly in high-carbon sectors, have chosen to lobby to maintain the current systems of industry regulation, to delay change towards net zero, and to call for limited climate action that would be insufficient to meet the goals of the Paris Agreement.
There is a history going back several decades of fossil fuel companies and associates lobbying governments against climate policies, funding economists to argue the policies would be hugely expensive. For example, it has been argued that the strategy employed by the American Petroleum Institute since the 1990s was successful in delaying key policies, including the implementation of the Kyoto Protocol, and in the 2010s that it influenced President Trump’s decision (since reversed) to withdraw the US from the Paris Agreement.
Different ways of lobbying
Sometimes lobbying is characterised as either direct or indirect. Direct lobbying involves direct contact between the lobbying party and decision-makers. This might include having meetings with politicians or civil servants, funding or strategically disseminating studies to policymakers, or inviting political actors to special events. Indirect lobbying is when the lobbying party seeks to influence policy by shaping and mobilising support from the public and other stakeholders – for example, through the mass media, via websites, by funding climate-sceptic groups and studies, or by staging protests outside parliament.
Companies lobby both prior to and after the formal adoption of climate laws. Such lobbying may be especially significant in the case of overarching climate laws and other legal instruments where many of the policy details are worked out later on. A well-documented example arose in the case of the European Union’s Emissions Trading System (ETS), where lobbying against regulation was successful in weakening and reducing the effectiveness of the ETS. Another example comes from the United States, where companies lobbied against the Waxman-Markey Bill (formally the American Clean Energy and Security Act). The Bill failed to make it through the US Senate in 2010. Lobbying by companies has been estimated to have increased the likelihood of the bill not passing by 13%.
Such lobbying is not always negative. An example of lobbying in support of greater climate action is an open letter sent by more than 150 CEOs of major global businesses in May 2022, to the President of the European Commission, calling on the EU to accelerate the green transition as a way to strengthen energy security. Signed by companies including Microsoft, Unilever and Iberdrola, the letter recommends specific measures, such as accelerating energy efficiency improvements and the move to renewables.
Lobbying by trade associations, industry alliances and coalitions
Trade associations, industry alliances and coalitions are key actors in the policy process. These organisations can increase the weight policymakers give to companies’ views, as they are often seen as representing a collective, unified business voice. Such associations have often had a powerful and negative influence on the policy process, opposing policies that support the goal of the Paris Agreement on climate change. In the energy sector, for example, the majority of companies continue to support trade associations who actively oppose climate change policy; for instance, the think tank InfluenceMap has found that most of the largest global companies, including several in the energy sector, have a “net negative impact on climate policy through their trade association links”.
There are signs of change. Companies have been criticised for supporting trade associations whose views do not align with the company’s own stated positions on climate change. As a result of investor pressure, several of the major energy companies have recently reviewed the climate lobbying activities of their trade associations (see, for example, Anglo American and Shell), and some have ceased being membership of certain associations as a result. It is also important to recognise that some industry-backed trade associations do lobby in support of climate-related policy. For example, in the UK the Confederation of British Industry (CBI) has changed its position in recent years to become supportive of ambitious climate policy.
Support for ‘responsible’ lobbying
There is growing scrutiny of the alignment of corporate lobbying practices with the statements companies make on how they will act on climate change. Many large investors are increasingly concerned about the potential financial impacts on their investments of policy that fails to ensure a sufficiently rapid reduction in greenhouse gas emissions, and that exposes their investment portfolios to significant physical climate-related work. These investors have supported the development of the ‘Global Standard on Responsible Climate Lobbying’, which was launched in March 2022. This standard is likely to form the basis for investor expectations of companies, and will be incorporated into Climate Action 100+, the global investor engagement programme focused on high impact sectors.
This Explainer was prepared by Rory Sullivan, Robert Black and Georgina Kyriacou. It is based on ‘Company lobbying and climate change: good governance for Paris-aligned outcomes’, a Grantham Research Institute policy brief by Rory Sullivan, Robert Black, Richard Perkins and Clare Richards (published in February 2022).