Institutional Investors Press CEOs to Disclose Climate Lobbying Practices

A group of some of the largest institutional investors in the world sent letters to 47 of the largest US-based corporate greenhouse gas emitters, pressing them to disclose their climate lobbying practices to make sure they align with the goals of the Paris Agreement.

The 47 companies are among the 161 focus companies of Climate Action 100+, an initiative on climate change that is backed by more than 500 investors with a combined $47 trillion in assets under management (AUM).

In letters addressed to CEOs and board of director chairs, the group warned companies to make sure their climate lobbying, including indirect lobbying through their trade associations, is consistent with the Investor Expectations on Corporate Lobbying on Climate Change that was released last year. The investors also called on the firms to take corrective action if there is any misalignment with those expectations.

“We urge you to make the climate lobbying issue a high priority for your government affairs office and board public policy committee in their work with top management to address rising expectations regarding climate policy advocacy,” said the letter.

To align with the goals of the Paris Agreement, the investors requested the companies set strong governance of their climate lobbying activities and provide full public transparency of their lobbying activities. The investors group said the latest science indicates that limiting global temperature rise to 1.5 degrees Celsius is required to avoid the most catastrophic outcomes, including droughts, floods, extreme heat, and poverty for millions of people.

“As long-term investors, we need to see our portfolio companies address the financial risks posed by climate change,” New York State Comptroller Thomas DiNapoli, who is among the letter’s signatories, said in a statement. “In order to assess these risks to our portfolio companies, we need greater transparency and accountability, especially when it comes to lobbying.”

Other signatories of the letters include BNP Paribas Asset Management, Boston Trust Walden, the California Public Employees’ Retirement System (CalPERS), the California State Teachers’ Retirement System (CalSTRS), Mercy Investment Services, the New York City Comptroller’s Office, the New York State Common Retirement Fund, and Wespath Benefits & Investments. All the investors are also signatories to Climate Action 100+ and members of the Ceres Investor Network on Climate Risk and Sustainability, which includes more than 175 institutional investors, managing more than $29 trillion in assets.

Earlier this year, the Climate Action 100+ focus companies were notified that their climate progress would be benchmarked against a set of indicators that reflect the goals of the initiative. The full assessment is expected to be released early next year.

“The urgency of the climate crisis means that companies must not only take bold in-house actions to reduce emissions to net-zero and improve governance of climate risk,” said Ceres CEO Mindy Lubber, “they must also look beyond their four walls and publicly advocate for federal and state policies to mitigate climate change.”