Nine companies including Glencore, Rio Tinto and BP targeted over membership of Brussels trade body Business Europe
By Megan Darby
Institutional investors worth nearly US$70 billion have called on nine major companies to cut ties with EU lobbying firms known for undermining climate policies.
Coordinated by Share Action, the funds targeted multinationals over their links with Business Europe and other trade associations known for regressive positions on climate change.
They wrote to chiefs of BHP Billiton, BP, EDF, Glencore, Johnson Matthey, Procter and Gamble, Rio Tinto, Statoil and Total, asking them to reconsider their memberships.
Arne Lööw, head of corporate governance at AP4 (Fourth Swedish National Pension Fund), was a signatory to the letters.
“We believe it is important that investors put pressure on companies who are financing associations seeking to undermine climate legislation,” he said.
Lööw encouraged companies to “withdraw from associations who have lobbied in ways which seem inconsistent with the companies´ own statements on climate”.
Some companies have already changed their affiliations in line with their positions on climate change.
Consumer goods giant Unilever left Business Europe last year, while BP and Shell are letting their membership of the Washington-based American Legislative Exchange Council lapse.
A study by the Policy Studies Institute in March found three quarters of the world’s biggest companies got trade associations to speak for them on climate issues.
Groups like BusinessEurope, Cefic, FuelsEurope and the International Association of Oil and Gas Producers sought to water down EU legislation on greenhouse gas emissions, analysts found.
These hostile positions often conflicted with their members’ stated policies to support climate action.
European oil companies in particular have taken pains in the past year to present themselves as part of the solution to rising emissions.
That is partly in response to investor pressure, as pension providers, insurers and sovereign wealth funds try to clean up their portfolios.
Catherine Howarth, chief executive at ShareAction, said: “These international investors are united in the need to challenge companies who belong to trade associations that lobby obstructively behind closed doors to weaken climate policy in the EU.
“Tackling the problem of climate change should be high on the agenda of responsible investors worldwide. Our pension funds in particular have an important role to play in ensuring their portfolios are protected over the long term from the economic damage of climate change.”
It is in the business community’s interests to pursue low carbon opportunities, added Wendel Trio of Climate Action Network Europe.
“It has been clear for a while now that BusinessEurope does not represent the interests of the business community,” he said.
“It is good to see that leading investors condemn the short-sightedness of such obstructive lobby groups.”
Another driver for coal and oil majors to embrace the climate agenda is a growing fossil fuel divestment movement.
At an international divestment conference in Paris on Tuesday, UN environment chief Achim Steiner endorsed activist calls to shift finance out of climate-polluting sectors.
“Climate change is an opportunity to remove ourselves from a dependency on fossil fuels,” he told delegates. “A transition out of fossil fuels is not only inevitable, it is beginning to manifest itself.”
Norway’s US$900 billion sovereign wealth fund is the biggest so far to sell shares in coal companies, in light of the climate threat.
Bank Track is calling on private banks to stop financing the coal sector, ahead of this December’s critical climate summit in Paris.
Scientists estimate a third of oil reserves, half of natural gas and more than 80% of coal need to stay unburned if global warming is to be held to 2C – the international goal.
Bill McKibben, writer and co-founder of campaigning network 350.org, highlighted the conflict with energy company business plans, which universally assume continued demand growth.
“If you follow the business plans of these companies, as they exist, that will break the planet,” he said.