FTSE 100 companies’ membership of trade associations that have lobbied against progressive climate policies puts their investors at risk, says ShareAction in an investor briefing released today.
The briefing analyses the risks of membership of obstructive EU trade associations to companies and their investors, and sets out key recommendations to enable investors to more accurately assess the risks and take action.
It is based on independent research conducted by the Policy Studies Institute (PSI) at the University of Westminster, which recently highlighted how several major EU trade associations have actively lobbied against climate change mitigation. Many publicly owned companies are paying members of these trade associations, which seems at odds with their public calls for a strong international policy framework to combat climate change.
ShareAction says this discrepancy is one that investors should be concerned about, particularly those with a commitment to timely action to address the economic risks of climate change.
Obstructive lobbying on climate change legislation can undermine attempts to create the clear policy landscape which is widely recognised as necessary to underpin the transition to a low carbon economy.
The release of the briefing comes after Shell’s announcement on Friday that the company will not be renewing its membership of the American Legislative Exchange Council (ALEC) – a trade association renowned for taking climate-sceptic positions. Shell cited ALEC’s stance on climate change as its reason for leaving the trade association.
A key recommendation in the briefing is that for investors to effectively scrutinise the risks of corporate lobbying, there is a need for greater transparency on the alignment of companies’ climate positions with those of the trade associations they support.
Greater disclosure will allow investors to determine whether the lobbying being undertaken on behalf of companies is in the best interests of the company and its investors. In cases where there is a misalignment of policy positions, ShareAction believes companies should review membership and take action to publicly distance themselves from policy positions on which they take different views.
Clare Hierons, Chief Operating Officer, said: “The financial risks that climate change pose have never been clearer, and investors need to recognise that through funding trade associations, companies can have an impact far beyond their own operations.
“We hope that this briefing will stimulate investors to challenge companies on the transparency and consistency of their public policy positions; thereby undermining obstructive lobbying by trade association and allowing the EU to take more ambitious action.”