As major companies evolve their climate-related corporate and policy engagement practices to meet the demands of investors, the nation’s largest publicly traded companies are increasingly lobbying for policies that will help the U.S. achieve its commitments under the Paris Agreement. However, very few are publicly reckoning with the role of their own trade associations in obstructing climate action, according to a new report released today by the sustainability nonprofit Ceres.
The report, Responsible Policy Engagement Analysis 2022: How Companies Are — and Aren’t — Leading on Climate Policy, examines the climate-related risk management, governance and lobbying practices of more than 100 S&P 100 companies. (The report analyzed 104 companies that comprised the S&P 100 during 2021 and 2022.) It found significant progress compared to last year in the number of large, publicly traded companies advocating for climate action, as half of the benchmarked companies lobbied in support of at least one Paris-aligned climate policy during the last three years.
"This was a landmark year for corporate support of ambitious climate policy,” said Anne Kelly, vice president of government affairs at Ceres. “Lawmakers passed the most meaningful climate legislation in U.S. history with strong support from major companies who know that building a clean energy economy to fight the climate crisis is vital for business and the planet. As heartening as it is to see more companies lobbying for robust climate action, our findings also show there is significant room for companies to grow in their roles as climate leaders. Truly successful companies have the confidence to align their climate policy advocacy with their publicly stated climate goals.”
Intended to help companies find their voice as climate advocates and give investors actionable insight into best practices and performers, the Ceres Responsible Policy Engagement Analysis 2022 benchmarks S&P 100 companies against the expectations laid out in the Ceres Blueprint for Responsible Policy Engagement on Climate Change.
The Blueprint, released in 2020, outlines tactics companies must adopt in order to:
Assess their climate-related business risks
Systematize decision-making for climate risks
Advocate in support of Paris-aligned policy, and
Engage trade associations to support Paris-aligned policy
In addition to analyzing companies against these expectations, Ceres also released an interactive database to assess and compare companies’ performance on a series of critical metrics.
“Wespath believes it is imperative for companies to implement governance aligning their climate policy advocacy, including climate lobbying practices, with the climate commitments made to investors, customers and stakeholders,” said Jake Barnett, director of sustainable investment stewardship, Wespath Institutional Investments. “However, with best practices for corporate climate lobbying still emerging, it may be difficult for investors to assess the performance of individual companies or sectors. This report provides transparency into corporate climate lobbying practices, equipping investors with tools for effective analysis and corporate policy engagement.”
Despite the progress on climate-related lobbying, the analysis still found significant gaps on the part of companies in this area:
While 50% of companies have lobbied for Paris-aligned climate policy, that pales in comparison to the 93% that acknowledge climate change represents a material risk to their businesses. That means many companies are not supporting policies that would protect their own corporate interests. It is also lags the 65% of companies that have acknowledged the need for Paris-aligned climate policies, meaning many companies are not actively advocating for the very policies they say the U.S. needs.
The most ambitious federal climate legislation in U.S. history, the Inflation Reduction Act of 2022, was publicly championed and celebrated by 11% of the assessed companies as it was introduced and passed over the summer. However, at least 19 additional S&P 100 companies championed its climate provisions in the months ahead of the bill’s introduction — meaning that 29% of the S&P 100 participated in the advocacy effort that led to its passage. While that is a number to celebrate, it still points to the need for more progress in this area.
29% of the companies still lobbied against certain Paris-aligned policies in recent years. That figure includes some companies that lobbied in support of other such policies, painting a complex picture of the corporate climate lobbying landscape.
Most notably, companies are very rarely holding their own large trade organizations accountable for their histories of obstructing ambitious climate policy, according to the Ceres analysis. While the vast majority of S&P 100 companies are members of organizations like the U.S. Chamber of Commerce and the Business Roundtable, only 8% have publicly assessed those organizations’ climate policies. Even fewer have publicly acknowledged the organizations’ history of obstruction (5%) or disclosed that they have taken action to try to change their trade groups’ positions (3%).
“Until this misalignment is addressed, corporate leadership on climate policy will continue to represent a significant weakness in the U.S. business community’s growing efforts to lead the transition to a clean, resilient, and sustainable economy,” the analysis reads.
"Large companies are establishing themselves as climate leaders, both through their own internal practices and by lobbying for the policies we need to address this crisis,” said Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets. “Yet their own trade groups risk undermining this important progress and impeding the demands of their investors. To address this misalignment, companies must hold their trade organizations to account. Our analysis shows that too few are.”
“Investor expectations are that companies align what they say with what they do,” said Marcela Pinilla, director of sustainable investment, Zevin Asset Management. “Marketing, sustainability reports, and net zero commitments get companies accolades all over. But if a company has not evaluated what they are lobbying against through their third party memberships, suddenly it’s a waste of resources for shareholders.”
The results of the analysis and other relevant issues will be discussed at a Nov. 30 Ceres webinar, Beyond Rhetoric: The Case for Responsible Policy Engagement.
The new analysis comes after a year that has brought more harrowing evidence of the devastating effects of climate change on businesses and the economy, significant federal climate policy action, and a 2022 proxy season that saw a record 110 agreements between investors and companies on climate-related shareholder resolutions — including 17 on Paris-aligned lobbying.
It also comes as financial institutions face significant backlash from state policymakers who are acting to pressure investors away from considering climate change and other financial risks in their investments. These efforts mark a significant risk to investors, companies, the economy, and the planet. Future editions of this analysis may examine the ties between publicly traded companies and the associations that are pushing for these policies across the U.S., such as the State Financial Officers Foundation and the American Legislative Exchange Council.
Ceres has long worked with companies and investors to advance climate policies that protect businesses, capital markets, and the U.S. economy from the severe impacts of extreme weather, heat waves, drought, sea level rise, and other climate impacts. In May, Ceres organized its fourth annual Lawmaker Education and Advocacy Day event—LEAD on Climate—connecting more than 100 companies with members of Congress to push for the investments that were included in the Inflation Reduction Act. Ultimately, Ceres mobilized nearly 3,000 companies of all sizes and across industries to publicly champion those investments.
Ceres has also marshalled support from investors, companies and regulators for the U.S. Securities and Exchange Commission’s proposed rule that would require climate risk disclosure from publicly traded corporations, in addition to organizing companies as advocates for robust state climate policies across the country. The rule is expected to be adopted later this year.
Editor’s Note: The results of the analysis and other relevant issues will be discussed at a Nov. 30 Ceres webinar, “Beyond Rhetoric: The Case for Responsible Policy Engagement.” Registration is open here.
About Ceres
Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through our powerful networks and global collaborations of investors, companies and nonprofits, we drive action and inspire equitable market-based and policy solutions throughout the economy to build a just and sustainable future. For more information, visit ceres.org and follow @CeresNews.