Stockholm (NordSIP) – A group of investors worth $2 trillion led by Swedish state pension fund AP7 and the Church of England Pensions Board have sent a letter to 55 European companies to challenge them on climate lobbying, elevated greenhouse gas emissions and persistent investments in energy-intensive sectors, it was revealed in the statement released Monday (29 October).
The action follows news of a leaked document in September suggesting that BusinessEurope, a large confederation representing trade bodies across the EU, was planning to oppose greater EU ambition on climate policy ahead of the COP24 UN climate conference in five weeks.
The 55 companies have been asked to review relationships with key lobbying organisations and to ensure alignment with their formal company positions supporting the implementation of the Paris climate agreement. A set of ‘investor expectations’ outlining best practices has also been sent to each company.
Supported by AP4 (the fourth Swedish national pension fund), Nordea, Öhman and the Church of Sweden in the Nordic contingent of major investors, the letter is based on an assessment of the 55 high-emission companies by InfluenceMap, an NGO monitoring lobbying activity. Companies were assessed according to overall positions on climate policy, extent of influence on policymakers, and whether official corporate policies match those of trade associations acting on their behalf.
Among the most active corporate lobbying transgressors are the auto sector (BMW, Fiat, Daimler, Renault, Volkswagen and Peugeot PSA), chemicals companies (Bayer, BASF), food and beverages (Siemens, Danone, Nestle) and of course oil and gas companies (BP, Total, Royal Dutch Shell).
The letter to the Chair of each company states: “We would ask you to review the lobbying positions being adopted by the organisations of which you are a member. If these lobbying positions are inconsistent with the goals of the Paris Agreement, we would encourage you to ensure they adopt positions which are in line with these goals. More generally, we would ask you to ensure that your lobbying practices align with the ‘Investor Expectations’ document you have been sent, and that you are transparent about your own policy positions and how you ensure these are implemented in your direct and in-direct lobbying activities.”
The letter also outlines key reasons why corporate lobbying activities inconsistent with meeting the Paris objectives present financial risks to investors, citing:
– Regulatory risks: Delay in action now is likely to result in the need for stronger and more drastic regulatory interventions later, leading to much higher costs for companies.
– Systemic economic risks: Delay in the implementation of the Paris Agreement increases the physical risks of climate change, posing a systemic risk to economic stability, and introducing uncertainty and volatility into investor portfolios.
– Reputational and legal risks: Companies may face a backlash from their consumers, investors or other stakeholders if they or the organisations that they support are seen to be delaying or blocking effective climate policy. This may also lead to legal risk, particularly for companies which continue to invest in high-carbon projects, or whose corporate disclosures are alleged to be misleading.
“AP7 has identified that weaknesses in current climate policy globally pose a risk to the long-term value growth of our pension portfolios,” said AP7 ESG manager Charlotta Dawidowski Sydstrand. “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.”