“Ethical Markets, as a member of the WeAreStillIn coalition, welcomes these 200 investment groups calling on companies to align their lobbying on the Paris Agreement goals for addressing the climate emergency!
~Hazel Henderson, Editor“
With a combined $6.5 trillion in AUM, investors urge companies to ensure corporate and trade association lobbying are consistent
Letter on Investor Expectations on Climate Lobbying
Dear [US company CEO]
The signatories and supporting asset managers and owners, representing more than $6.5 trillion in assets, are writing to share our expectations on the topic of corporate lobbying on climate change and to request information about how [company] ensures that its lobbying activities are consistent with the goals of the Paris Agreement on climate change. We look forward to dialogue on this important issue.
As investors, we view fulfillment of the Paris Agreement’s goal—to hold the increase in the global average temperature to “well below” 2°C above preindustrial levels, and to pursue efforts to limit the temperature increase to 1.5°C— as an imperative. We are convinced that unabated climate change will negatively impact our clients, plan beneficiaries, and the value of our portfolios. The IPCC’s report issued in October 2018 makes it clear there is still time to avert serious consequences, but expanded action must begin immediately.
As investors, we are accustomed to managing risk and measuring our performance in terms of risk-adjusted returns. Climate change presents a very different challenge, however. We have entered a realm of increasing risk and uncertainty. Traditional techniques for managing these risks to our portfolios will only take us so far. Similarly, corporate commitments to embrace energy efficiency and set greenhouse gas reduction goals are necessary and welcome, but to facilitate the deployment of capital at a necessary pace and scale, a strong public policy framework is needed.
Currently, there are critical gaps between the pledges and commitments national governments have made and the actions required to stave off the worst effects of climate change. Companies have an important and constructive role to play in enabling policy-makers to close the ‘ambition gap’ which would also contribute positively to the long-term value of our investment portfolios.
Accordingly, when evaluating your company’s response to climate related risks and opportunities, we will consider the alignment of your lobbying activities with our shared goals for a stable climate.
Corporate lobbying activities that are inconsistent with meeting the goals of the Paris Agreement present several financial risks to investors:
- Regulatory risks: Delay in action now will likely 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 which elevates uncertainty and volatility in our portfolios and poses a systemic risk to global economic stability.
- Reputational and legal risks: Companies may face backlash from their consumers, investors or other stakeholders if they, or the organizations they support, are seen to be delaying or blocking effective climate policy.
We write to you today because companies have significant influence on climate and energy policies and we are concerned about lobbying activities that are inconsistent with addressing the risks posed by climate change. In particular we ask for a review of your own corporate lobbying activities as well as the trade associations and other politically active organizations of which you are a member that represent business interests but, unfortunately often lobby against public policy initiatives addressing the climate crisis. We understand these organizations do not always speak for all their members, and that it is not reasonable to expect full agreement on every issue. Climate change, however, is a unique challenge that requires alignment at all levels of an organization.
We therefore ask you to take the following steps:
- Ensure your own lobbying practices and those of trade associations in which you are a member align with the Investor Expectations on Corporate Climate Lobbying described in the Appendix to this letter.
- Review the lobbying positions taken by the organizations of which you are a member.
- If these lobbying activities are inconsistent with the goals of the Paris Agreement, we encourage you to engage the organization to ensure its positions are updated. If the organization is unwilling or unable to demonstrate alignment with the Paris Agreement, consider taking the steps necessary to disassociate your company from these policies.
We are pleased to report that a dozen European companies have already committed to these steps.
Thank you for your consideration of the Investor Expectations on Corporate Climate Lobbying. We look forward to seeing greater transparency from your company on these issues. Our goal is to assess company progress using the enclosed Investor Expectations as guiding standards. We ask that you make public by [XDate] the steps that [XCompany] has taken or will take to align with these Expectations.
Please confirm receipt of this letter by emailing Rob Berridge @ [email protected]. An investor will follow up with your organization on the details of this request as part of the Climate Action 100+ engagement agenda.
Sincerely,
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Adam M. Kanzer Head of Stewardship – Americas
BNP Paribas Asset Management
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William Apfel, Executive Managing Director
Boston Trust Walden Company
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Simiso Nzima Investment Director – Global Equity / Head of Corporate Governance
CalPERS
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Kirsty Jenkinson Director of Sustainable Investment & Stewardship Strategies
CalSTRS
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Bryan J. Pini, President & Chief Investment Officer
Mercy Investment Services
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Scott Stringer New York City Comptroller
New York City Comptroller’s Office
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Thomas P. DiNapoli New York State Comptroller
New York State Common Retirement Fund |
David H. Zellner, Chief Investment Officer
Wespath Benefits & Investments
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This request is supported by 192 additional institutional investors who have asked to be kept informed of company responses to this request.
INVESTOR EXPECTATIONS ON CORPORATE LOBBYING ON CLIMATE CHANGE
INVESTOR EXPECTATIONS:
Our expectation is that when companies engage with public policy makers, they will support cost-effective policy measures to mitigate climate change risks and support an orderly transition to a low carbon economy. We believe that companies should be consistent in their policy engagement in all geographic regions and that they should ensure any engagement conducted on their behalf or with their support is aligned with an interest in a safe climate, in turn protecting the long-term value in our portfolios across all sectors and asset classes. The following expectations are informed by the Principles for Responsible Investment report into corporate lobbying, as well as recent engagements on the issue, and the Global Reporting Initiative’s Standards for Public Policy Reports.
INVESTOR PRINCIPLES ON LOBBYING:
As long-term institutional investors, we expect those companies that engage with policy makers directly or indirectly through trade associations, lobbying organizations described as charitable organizations that include policy advocacy, or think-tanks taking positions on climate change-related issues to:
i. Lobby Positively in Line with the Paris Agreement
Support and lobby for effective measures across all areas of public policy that aim to mitigate climate change risks and limit temperature rise to well below 2 degrees Celsius. This support should apply to all engagement conducted by the company in all geographic regions, and to policy engagement conducted indirectly via third party organizations acting on the company’s behalf or with the company’s financial support.
ii. Establish Robust Governance Procedures
Establish robust governance processes to ensure that all direct and indirect public policy engagement supported by the company is aligned with the company’s climate change commitments and supports appropriate policy measures to mitigate climate risks. We expect companies to establish a clear framework that has:
· Board oversight: Ensuring accountability by assigning responsibility for governance at board and senior management level.
· Monitoring and Review: Establishing processes for monitoring and reviewing climate policy engagement, including identifying all climate change policy engagement being conducted by the company either directly or indirectly, across all geographic regions.
List of Companies Receiving the Investor Letter on Investor Expectations on Corporate Lobbying on Climate Change, September 2019:
| Company | CA100/+ | Sector |
| AMERICAN AIRLINES GROUP INC. | Plus | Transportation |
| American Electric Power Company, Inc. | 100 | Utilities & Power Producers |
| Berkshire Hathaway | 100 | Other |
| Boeing Company | 100 | Transportation |
| BUNGE LIMITED | Plus | Food, Beverages and Forestry |
| Caterpillar Inc. | 100 | Industrials |
| Chevron Corporation | 100 | Oil & Gas |
| COLGATE-PALMOLIVE COMPANY | Plus | Food, Beverages and Forestry |
| ConocoPhillips | 100 | Oil & Gas |
| Cummins Inc. | 100 | Industrials |
| DELTA AIR LINES, INC. | Plus | Transportation |
| DEVON ENERGY CORPORATION | Plus | Oil & Gas |
| DOMINION ENERGY, INC | Plus | Utilities & Power Producers |
| DowDuPont Inc. | 100 | Chemicals |
| Duke Energy Corporation | 100 | Utilities & Power Producers |
| Exelon Corporation | 100 | Utilities & Power Producers |
| Exxon Mobil Corporation | 100 | Oil & Gas |
| FIRSTENERGY CORP. | Plus | Utilities & Power Producers |
| Ford Motor Company | 100 | Automobiles |
| General Electric Company | 100 | Industrials |
| General Motors Company | 100 | Automobiles |
| Ingersoll-Rand Co. Ltd. | 100 | Industrials |
| International Paper Company | 100 | Food, Beverages and Forestry |
| KINDER MORGAN, INC. | Plus | Oil & Gas |
| Lockheed Martin Corporation | 100 | Transportation |
| Marathon Petroleum | 100 | Oil & Gas |
| Martin Marietta Materials, Inc. | 100 | Construction Materials |
| NEXTERA ENERGY, INC. | Plus | Utilities & Power Producers |
| NRG ENERGY, INC. | Plus | Utilities & Power Producers |
| OCCIDENTAL PETROLEUM CORPORATION | Plus | Oil & Gas |
| PACCAR Inc | 100 | Transportation |
| PepsiCo, Inc. | 100 | Food, Beverages and Forestry |
| Phillips 66 | 100 | Oil & Gas |
| PPL CORPORATION | Plus | Utilities & Power Producers |
| Procter & Gamble Company | 100 | Food, Beverages and Forestry |
| Southern Copper Corporation | 100 | Mining & Metals |
| THE AES CORPORATION | Plus | Utilities & Power Producers |
| THE COCA-COLA COMPANY | Plus | Food, Beverages and Forestry |
| The Southern Company | 100 | Utilities & Power Producers |
| UNITED CONTINENTAL HOLDINGS, INC. | Plus | Transportation |
| United Technologies Corporation | 100 | Transportation |
| Valero Energy Corporation | 100 | Oil & Gas |
| VISTRA ENERGY CORP. | Plus | Utilities & Power Producers |
| WAL-MART STORES, INC. | Plus | Food, Beverages and Forestry |
| WEC ENERGY GROUP, INC. | Plus | Utilities & Power Producers |
| WEYERHAEUSER COMPANY | Plus | Food, Beverages and Forestry |
| Xcel Energy Inc. | Plus | Utilities & Power Producers |
Media contact: Barbara Grady at [email protected]