{"id":58926,"date":"2022-02-25T11:01:50","date_gmt":"2022-02-25T11:01:50","guid":{"rendered":"https:\/\/www.lse.ac.uk\/granthaminstitute\/?post_type=news&p=58926"},"modified":"2024-08-16T10:25:32","modified_gmt":"2024-08-16T09:25:32","slug":"what-role-should-institutional-investors-be-taking-in-the-governance-of-corporate-climate-change-lobbying","status":"publish","type":"news","link":"https:\/\/www.lse.ac.uk\/granthaminstitute\/news\/what-role-should-institutional-investors-be-taking-in-the-governance-of-corporate-climate-change-lobbying\/","title":{"rendered":"What role should institutional investors be taking in the governance of corporate climate change lobbying?"},"content":{"rendered":"\n

By Rory Sullivan, Robert Black, Richard Perkins and Clare Richards<\/p>\n\n\n\n

The issue of corporate lobbying activity by companies on climate change, and how responsibly it is carried out, is fast becoming a central issue for global investors. This commentary explores the actions investors can take to ensure that corporate lobbying does not undermine implementation of the Paris Agreement.<\/p>\n\n\n\n

Setting the scene<\/h2>\n\n\n\n

Lobbying by companies on climate change refers to efforts by companies and their agents to directly or indirectly influence climate-significant policy decision-making by political or bureaucratic actors.<\/p>\n\n\n\n

Not all corporate climate change-related lobbying is bad. Nor is such lobbying always in conflict with climate change goals. In fact, there are many examples of companies lobbying governments for regulations and policies that help the private sector to contribute to domestic and international climate change goals – one is the We Mean Business Coalition<\/path><\/svg><\/a>, another is the pro-regulatory lobbying by some businesses which contributed to the adoption of the EU’s Emissions Trading System. And investor networks such as the Institutional Investors Group on Climate Change (IIGCC)<\/path><\/svg><\/a> and the Principles for Responsible Investment (PRI)<\/path><\/svg><\/a> have also consistently pressed governments to take stronger action on climate change.<\/p>\n\n\n\n

However, it is true that lobbying by companies, particularly those in high-carbon sectors, and their trade associations has often been a significant barrier to the ratcheting up of policy ambition and commitments needed to meet the goals of the Paris Agreement on climate change. A recent example is how the European natural gas industry sought to weaken key elements of the EU Green Deal in 2020–2021 through obscuring the relationship between gas and greenhouse gas emissions and through amplifying political concerns around security of energy supply, as revealed by analysis from InfluenceMap<\/path><\/svg><\/a>.<\/p>\n\n\n\n

Delays in the adoption and implementation of climate change policy expose investment portfolios to weather-related risk. Delays also expose the companies in these portfolios to the risk of rapid and unpredictable changes in climate change and energy policy. Furthermore, lobbying against progressive climate change policy can damage the reputation of industry sectors and of industry associations, undermining their reputation for sustainability or corporate responsibility and, potentially, their social licence to operate.<\/p>\n\n\n\n

Four areas where investor action would make an immediate, positive impact<\/h2>\n\n\n\n

1. Investors should adopt a holistic definition of climate lobbying<\/h3>\n\n\n\n

A clear definition would enable investors and other stakeholders to better hold lobbyists to account, signify well-defined actions for lobbying (e.g. joint interventions) and support governance frameworks for responsible lobbying.<\/p>\n\n\n\n

The definition should be clear that responsible climate change lobbying:<\/p>\n\n\n\n