This is not yet a massive movement, but it could become a strong trend in 2019. In recent months, several heavyweights in the mining and oil industry have left professional organisations deemed incompatible with their own climate ambitions. At the end of December 2017, the Australian mining giant BHP Billiton announced its departure from the World Coal Association because of its contrary positions to the Paris Agreement.
A year later, it is now Shell's turn to review its membership in certain lobbying groups for the same reasons. To be more transparent, the company even announced a report detailing all of its memberships and their climate positions, due to be released the first semester of 2019.
These blows may seem surprising for companies that are not particularly known for being at the forefront in the fight against climate change. In fact, they are largely due to the importance of lobbying issues in investor analysis grids.
Increasing pressure from investors
For a long time, the lack of coherence between corporate discourse and the public positions of their membership organisations were only scrutinised by NGOs. Since the signing of the Paris Agreement and the introduction of transparency regulations by countries such as France with article 173, as well as the TCFD recommendations (the working group on climate-related financial risks), investors are looking more closely at these issues.
Only under investor pressure did BHP Billiton and Shell take the plunge. Last October, the latter was questioned on the subject by a group of investors worth more than $2 trillion (1). In addition to Shell, the investors targeted about 50 other companies with high greenhouse gas emissions, such as BP, Total, Arcelor Mittal, BMW and Bayer, in an effort to confront their lobbying practices.
"We ask that your practices be aligned with the 'investors' expectations' document that we have sent to you, and that you are transparent about your own policy positions and how you ensure these are implemented in your direct and indirect lobbying activities”, wrote the investors. This lack of coherence represents several risks - economic, legal and reputational - that can weigh financially on companies and their investors.
A movement yet to be united
However, even if awareness is real, there is still a long road ahead. BHP Billiton left the World Coal Association and managed to win over the Mineral Council of Australia (2) but remained a member of the American Chamber of Commerce, which should face the same fate. It is difficult to slam the door on this very powerful organisation that offers "wider benefits", according to BHP. Other companies have already parted ways, such as Apple and PG&E. But in a public statement, BHP Billiton justified remaining a member "given the will of the House to engage more on climate and energy issues", including by inviting the group "to join its energy and environment commission”.
Investors are not absent of contradictions either. In a recent study, the NGO Influence Map, which specialises in lobbying issues, demonstrated investor ambiguity. As a whole, they are are certainly becoming more publicly engaged in these issues, while at the same time increasing their global investments in the most polluting fossil fuels, such as coal.
Béatrice Héraud @beatriceheraud
(1) The investor group is led by the Church of England Pensions Board and the Swedish pension fund, AP7. Their statement is available here. Targeted companies have been identified thanks to Influence Map.
(2) In March 2018, the Mineral Council of Australia published a review of its energy positions, including the termination of targeted support for coal.