Is the Tide Turning on Corporate Climate Lobbying?

This week more than 160 U.S. businesses, including Clif Bar and Numi Tea, joined together in a campaign to lobby their Congressional representatives in favor of strong climate policies and encourage their customers to do the same. Organized by the Climate Collaborative, a coalition of businesses pursuing climate action, the #Call4ClimateNOW campaign looks to combine the influence of brands with the collective power of the public to push ambitious policy forward. 

The effort comes on the heels of the latest assessment report from the Intergovernmental Panel on Climate Change (IPCC), which U.N. Secretary-General António Guterres called a “code red” for humanity.

The past couple of years have seen a significant uptick in corporate climate targets in parallel to government action. The intersection between businesses and policy is complicated, but it does not need to be.

A legacy of protectionist lobbying

Many people have a negative association with companies and climate lobbying. Public statements undermined by political donations raise the concern that some companies are talking out of both sides of their mouths. For example, earlier this year, Royal Dutch Shell, an oil company, released an environmental report touting its investments in renewable energy on the same day it released a report noting that its single largest political contribution was to the American Petroleum Institute, a lobbying group that has publicly stated it intends to fight the Biden administration’s climate policies. Further, earlier this month, the U.S. House of Representative Oversight Committee called on Exxon, Chevron, BP and Shell to testify about accusations of deliberately misleading the public on climate change.

While the oil companies make big headlines, the political pressure for industry-specific protections is common regardless of the size of the company’s purse. It is also understandable to a certain extent: Businesses need to protect their bottom lines. Just as lobbyists for big oil companies advocate for what they view as their companies’ best interests, so do all lobbyists, including those that advocate for issues such as improved health care and better labor protections.

The difference is that the kind of lobbying that has often been the norm may protect a bottom line but consequently threatens everything else. Setting aside big oil, which has a direct impact on the bulk of greenhouse gas emissions, in the past many companies in other sectors have also lobbied against their own long-term interests by a narrow vision of the bottom line. The triple bottom line — the environmental and social costs of operations in addition to the financial — is more important than ever. Consequently, as climate change has intensified, what may have looked like protectionism in the past now looks like heads in the sand. For many companies, the risks to their traditional bottom lines are now greater due to climate change.

Pushing for positive change

The World Economic Forum’s Global Risks Report 2021 put climate action failure as the second highest risk for both likelihood and impact (following extreme weather and infectious diseases, respectively). According to analysis by the Washington Post, 1 in 3 Americans live in a county that was affected by extreme weather at some point this summer. As those impacts mount, companies have to consider the physical risks to their operations as well as their employees. From grid failures in Texas to lack of water in the West, companies should consider these factors when determining where to locate and how to run their businesses, beyond just the traditional financial incentives.

The risk also now goes both ways — how operations are impacted by climate change and how a company’s way of doing business impacts the climate. The pressure has been building to get to this point, from both customers and investors. As awareness grows on the issue, so does the push to do something. Not having a climate plan is increasingly seen as a higher risk. Taking that one step further is to examine to what extent a company participates in policy.

For a company to directly lobby for climate policy, especially one that may depress returns in the short term, it is important to factor in the medium- to long-term risks of climate change. It is also in a company’s best longer-term interests to analyze future risks and manage for them by not only supporting certain climate polices, but also participating in their formulation. Pushing back without negotiation only means if a policy is approved, the company has had no say in its crafting.

A few industries have taken that tack, although some have done so grudgingly. Seen in a pragmatic light, companies can design legislation to even the playing field and provide regulatory certainty by working with policymakers. For example, as water resources continued to be stressed by increasing temperatures and other climatic changes, beverage companies like Coca-Cola became interested in policy solutions for strained water supplies, understanding that climate change had a direct impact on their essential operations.

Building cooperation

Companies have often been on the outside of climate policy-making, whether by their own efforts to thwart the process or by distrust from the political players. During the negotiations for the Paris Agreement at the COP21 climate talks in 2015, companies engaged more directly than they had previously in climate policy discussions. In the lead-up to COP21, the U.N. Global Compact, CDP, World Wildlife Fund and World Resources Institute launched the Science-Based Targets Initiative, which provides guidance for setting stringent emissions reduction plans. Since its launch, more than 1,000 companies have joined the initiative.

Corporate lobbying has historically taken the traditional route of campaign donations and corporate protection. More companies are now seeing the benefit of having a seat at the table as a collaborative partner to craft policies that could help their industries meet demands of customers, minimize risk from climate change, and help ensure they are active participants in decelerating its worst impacts. There remains a lot of progress to be made, but the 160 companies that signed up to #Call4ClimateNOW may indicate that companies finally understand what is at stake and what they can do about it.

Image credit: Samuel Schroth and Andy Feliciotti via Unsplash