Hundreds of American companies have promised to cut greenhouse gas emissions, but their lobbying hasn’t always jibed with their public promises. Now shareholders are demanding transparency, asking for details about corporate climate advocacy on Capitol Hill and in statehouses across the country.
Investors have filed a record 13 shareholder proposals targeting climate lobbying this year, up from four filed last year. They’re asking whether companies that publicly promise to go green are privately funding trade groups and think tanks that deliver a different message to lawmakers.
“There is a lot of talking out of both sides of the mouth that goes on, and trade associations have often provided cover for that,” said Mary Minette, director of shareholder advocacy at Mercy Investment Services.
ExxonMobil, Sempra Energy, Phillips 66, United Airlines and railroad giant Norfolk Southern have urged shareholders to vote against proposals that would require them to report how their political activity aligns, or doesn’t, with goals of the Paris Climate Agreement, particularly their involvement with trade associations and other third-party groups.
Other companies, some of them big polluters, have taken the opposite approach. At least six have disclosed or will disclose more information about their lobbying, including Duke Energy, Entergy, AIG, CSX, FirstEnergy and Valero.
Chevron published its first lobbying report in December after a majority of shareholders voted for a similar proposal last proxy season, as did ConocoPhillips after engaging with investors.
Lobbying expenditures in general have emerged as a focus of concern. Investors worry that a company’s political activity might be contrary to its stated goals or pose risk to the bottom line. While climate lobbying has taken center stage, dozens of corporations are facing proposals on their broader lobbying and trade association memberships. Shareholders are asking Boeing, for example, about its influence over regulators after failures in its 737 Max airliners. Questions at Citigroup and Best Buy are focused on racial justice.
Swedish pension fund AP7 called corporate lobbying on climate “a widespread global problem” hindering progress on the Paris agreement.
The jump in shareholder campaigns this year coincides with President Joe Biden’s pledge to set the U.S. on a path to net-zero emissions by 2050 and decarbonize the U.S. power sector by 2035.
At a global climate conference on Thursday, Biden is expected to announce ambitious goals to slash U.S. emissions. And his administration is at work selling Congress on an infrastructure and jobs package that would include investment in electric vehicles and renewable energy — a plan that already has triggered corporate lobbying.
“The public policy has to match the corporate climate ambition,” said Laura Devenney, a senior analyst on environmental, social and governance issues at Boston Trust Walden, which co-filed the shareholder proposal at Exxon with BNB Paribas.
A mismatch could present reputational risk for a company. Worse, it might hurt government efforts to address climate change, which if left unchecked could disrupt the global economy, Devenney said.
Oil, gas and chemical companies have plenty of influence in Washington. The industry spent more than $101 million on lobbying in 2020, placing it among the top-spending industries behind health care, technology and insurance giants, according to the Center for Responsive Politics.
Companies fighting the lobbying proposals say they already are transparent about their political activity. But that defense didn’t work for Exxon and Sempra, which failed to persuade the Securities and Exchange Commission to block a vote on the proposals.
Exxon spokesperson Casey Norton pointed to a report the oil major released in February that listed trade groups to which it contributed $100,000 or more.
Exxon supports the goals of the Paris agreement and follows “a strict internal review and oversight process” to ensure its lobbying activity aligns with its policy positions, the report stated.
Sempra spokesperson Christina Ramirez, in response to questions, similarly referred to an annual report that includes the company’s political giving and trade memberships.
Sempra, which owns the country’s largest natural gas utility, Southern California Gas Co., said its lobbying aligns with the Paris agreement and California’s goal to become carbon neutral by 2045.
Unlike European rivals that are developing cleaner energy sources, Exxon and Sempra largely are sticking to business models that rely heavily on fossil fuels.
To compensate, Exxon plans to deploy carbon-capture technology and slash methane emissions. SoCalGas in March said it will achieve net-zero emissions by 2045 by using natural gas and biomethane with lower emissions, a goal climate advocates criticized as an empty pledge.
Regulators, investors and lawmakers want SoCalGas to explain its advocacy after state regulators learned the utility had used customer payments to promote fossil fuels. The utility funded Californians for Balanced Energy Solutions, a non-profit front group that fought electrification policies in 40 cities.
SoCalGas has called the findings “demonstrably wrong” and said it shouldn’t be discouraged from raising concerns about proposals that could increase costs for customers.
As You Sow said Sempra’s assertion that its lobbying aligns with U.S. climate goals is “false and misleading.” Exxon and Sempra don’t publicly evaluate how their climate policies compare to the positions of trade groups they pay to join, investors said.
“We are not asking any company to leave a trade association, but we would like more disclosure to understand where they stand on climate policy,” said Rhonda Brauer, associate program director of climate and environmental justice at the Interfaith Center on Corporate Responsibility.
ICCR’s members agreed to withdraw five climate lobbying proposals this year after companies agreed to study how their lobbying activity supports or undercuts the goals of the Paris agreement.
“Companies will say they don’t always agree with every policy of their trade association, and we understand that,” Brauer said. “But we’d like to know if and how they are speaking out in favor of Paris-aligned climate policy — both publicly and within those associations.”
Exxon and Sempra are members of the American Petroleum Institute and the U.S. Chamber of Commerce, both of which recently changed their positions on climate action after decades opposing policies to curb greenhouse gas emissions.
API supports the Paris agreement and policies to regulate methane leaks and encourage innovation, spokesperson Bethany Aronhalt said. The trade group endorsed a price on carbon in March for the first time. The shift drew rebukes from Democrats, Republicans and climate advocates who said the position was meaningless because carbon prices lack support in Congress.
French oil giant Total quit API this year, citing what it said was a lax commitment to reducing emissions and combating climate change.
The chamber supports the Paris agreement, spokesperson Matt Letourneau said. The group’s climate policy was amended this year to endorse market-based solutions such as carbon taxes or cap-and-trade schemes.
Colby Bermel contributed to this report.
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