Investors to Biz: You Say You Support Climate Goals, but Your Lobbying Begs to Differ

(Credit: Mike Lawrence, Flickr Creative Commons)

by | Sep 16, 2019

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(Credit: Mike Lawrence, Flickr Creative Commons)

Two hundred investors with a combined $6.5 trillion in assets under management are calling on 47 of the largest US publicly traded corporations to align their climate lobbying with the goals of the Paris Agreement. In a letter sent to each of the companies, the investors warn that lobbying activities that are inconsistent with meeting climate goals are an investment risk. The letter also states that while many companies publicly state support for policies to stem global warming, some of them finance trade associations that lobby against those same policies.

“We are convinced that unabated climate change will negatively impact our clients, plan beneficiaries, and the value of our portfolios,” wrote the investors in a letter sent to each company.

Investors are accustomed to managing risk and measuring performance in terms of risk-adjusted returns, but climate change presents a very different challenge. Traditional techniques for managing these risks to investor portfolios “will only take us so far,” the letter continues.

What Risks, Exactly?

The letter outlines the specific risks the investors believe they are facing when it comes to climate change. These include:

  • Regulatory risks: Delay in action now will likely result in the need for stronger and more drastic regulatory interventions later, leading to much higher costs for companies.
  • Systemic economic risks: Delay in the implementation of the Paris Agreement increases the physical risks of climate change which elevates uncertainty and volatility in our portfolios and poses a systemic risk to global economic stability.
  • Reputational and legal risks: Companies may face backlash from their consumers, investors or other stakeholders if they, or the organizations they support, are seen to be delaying or blocking effective climate policy.

Not Walking the Talk…

Although many companies have publicly stated support for policies to stem global warming, some companies also finance trade associations that are “actively lobbying against those same policies,” says Bryan Pini, president and chief investment officer for Mercy Investment Services. Investors are concerned about this disconnect and want companies to ensure they’re not financially supporting organizations that contradict those policy changes that are critical to a transition to a low-carbon future.

“We need greater transparency and accountability from our portfolio companies. We need to know if they are lobbying – or supporting trade organizations that are lobbying – against the worldwide effort to rein in climate change,” adds New York State Comptroller Thomas P. DiNapoli, trustee of the New York State Common Retirement Fund.

To and From…

The letters were sent on behalf of a group of lead investors including BNP Paribas Asset Management, Boston Trust Walden Company, 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. It is supported by 192 other institutional investors that include large pension funds, mutual funds, asset management firms, religious investors, foundations and service providers.

Companies receiving the letter span the airline, electric power, auto manufacturing, oil refining, military equipment, chemical, beverage and retail industries. Ceres, a sustainability non-profit organization, coordinated outreach for the investor-led initiative in the US.

The following companies received the letter:

  • American Airlines Group
  • American electric Power Company
  • Berkshire Hathaway
  • Boeing Company
  • Bunge Limited
  • Caterpillar Inc.
  • Chevron Corporation
  • Colgate-Palmolive
  • ConocoPhillips
  • Cummins, Inc.
  • Delta Airlines
  • Devon Energy Corporation
  • Dominion Energy
  • DowDuPont
  • Duke Energy
  • Exelon Corporation
  • Exxon Mobil
  • FirstEnergy Corp.
  • Ford Motor Company
  • General Electric
  • General Motors
  • Ingersoll-Rand
  • International Paper Company
  • Kinder Morgan Inc.
  • Lockeed Martin
  • Marathon Petroleum
  • Martin Marietta Materials
  • NextEra Energy
  • NRG Energy
  • Occidental Petroleum Corporation
  • Paccar Inc.
  • PepsiCo
  • Phillips 66
  • PPL Corporation
  • Procter & Gamble
  • Southern Copper Corporation
  • The AES Corporation
  • The Coca-Cola Company
  • The Southern Company
  • United Continental Holdings Inc.
  • United Technologies Corporation
  • Valero Energy Corporation
  • Vistra Energy Corp.
  • Wal-Mart Stores
  • WEC Energy Group
  • Weyerhaeuser Company
  • Xcel Energy Inc.

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