Climate-Friendly Companies Can Still Be Polluters by Association

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It’s been more than a decade since Apple and a few other big companies left the U.S. Chamber of Commerce after the business lobby group campaigned for a “public trial of climate science.” What’s happened since? Well, not much. 

San Jose, U.S.Most polluted air today, in sensor range 66% Carbon-free net power in Germany, most recent data

50,​820 Million metric tons of greenhouse emissions, most recent annual data 0 4 3 2 1 0 ,0 1 0 9 8 7 0 3 2 1 0 9 0 9 8 7 6 5 Soccer pitches of forest lost this hour, most recent data

$69.​9B Renewable power investment worldwide in Q2 2020 0 6 5 4 3 2 0 3 2 1 0 9 0 5 4 3 2 1 .0 3 2 1 0 9 0 5 4 3 2 1 0 0 9 8 7 6 0 8 7 6 5 4 0 1 0 9 8 7 0 9 8 7 6 5 Parts per million CO2 in the atmosphere +0.​92° C Jul. 2020 increase in global temperature vs. 1900s average

In the last year, Royal Dutch Shell Plc and BP Plc both quit the American Fuel and Petrochemical Association. Two years ago, the world’s biggest coal miner BHP Groupleft the World Coal Association. But all three companies remain members of other organizations considered to be powerful opponents of national climate policy.

Despite having relatively ambitious climate strategies, BP and Shell are both still members of the U.S. Chamber of Commerce, which scores an E- grade fromInfluenceMap, an NGO that tracks climate-related lobbying and ranks groups on a scale from A to F. Both oil supermajors also participate in the American Petroleum Institute, or API, which gets an F. BHP, which has long proclaimed its leadership on climate change, continues to be one of the biggest fee-paying members of the Minerals Council of Australia, an E+.

Especially now, with customers, investors, and NGOs all banging on the C-suite doors demanding that companies take a stand on climate, and with corporations competing against each other to make the most emphatic emissions pledges, the number of companies that have quit—or even threatened to quit—industry associations for their climate policy stances seems strikingly low. 

These memberships are much more than symbolic. Industry associations wield major influence over policymakers. In countries with big fossil fuel industries or hefty industrial and automotive sectors—including the U.S., Canada, Germany, Australia, and Japan—industry lobbies have been known to stymie or weaken rules curbing greenhouse gas emissions. They also give companies cover. InfluenceMap reports that since the Paris Agreement was struck in late 2015, corporate efforts to block climate regulations have been “increasingly pushed behind the scenes as companies outsource them to powerful trade associations.”

So far, that’s mostly worked. Even when companies have faced pressure in the form of investor letters or shareholder resolutions calling for them either to decry or dissolve their memberships, they’ve generally been able to avoid taking any meaningful action.

Shell, for example, published an update in April of its association memberships, including a list of those organizations with which it has “misalignments” on climate policy. In every case, Shell said it intended to remain in the organization; one, the Western States Petroleum Association, it says it will “encourage” to advocate more on carbon pricing policies. It’s hardly the kind of tough talk that would keep an association’s management awake at night.

Companies themselves have two main arguments in defense of their unwillingness to leave industry associations. The first is that they enjoy benefits unrelated to policy advocacy: BP says the API “sets industry standards for engineering equipment that are referenced globally,” while BHP says the Minerals Council “makes an important contribution to Australian industry practice in areas including health and safety, water accounting, land use and workforce diversity.”  (BHP has been vocal about some of its disagreements with the Minerals Council, but hasn’t effected meaningful change in the group’s political activities.)

The other is that, by remaining in the tent, companies can influence their industry associations to change positions on climate. On its face, negotiating a change in a lobby group’s position should be one of the easier ways for a company to prove it takes climate change seriously. Compared to reorienting of their central business strategy entirely away from polluting activities, wielding influence in an organization that relies on them for membership fees should be simple.

Brynn O’Brien is executive director at the Australasian Centre for Corporate Responsibility, which has filed three shareholder resolutions on lobbying with BHP, including one just last week. She says these organizations are akin to service providers, like consultants or accountants. “I can’t think of any other kind of service provider or partner organization that would get this many chances to embarrass an iconic company in public, in front of their shareholders.” Unsurprisingly, BP and Shell’s opposition to the Trump administration rolling back methane regulations in the U.S. didn’t stop the API from supporting it.

Perhaps it feels awkward for companies to cause a scene among their industry peers over climate change, but it’s not an issue that will go away. Choosing not to take a stronger stance against climate-blocking lobbying is a decision in itself: to let the status quo of dangerously inadequate environmental protections continue.

Kate Mackenzie writes the Stranded Assets column for Bloomberg Green. She advises organizations working to limit climate change to the Paris Agreement goals. Follow her on Twitter: @kmac. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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