Corporate Climate Policy Footprint

Measuring Corporate Climate Performance

Traditionally, corporate climate performance has been associated with an evaluation of climate-related risk inherent in company operations and accompanying risk management strategies, undertaken by ratings agencies such as MSCI. Voluntary disclosure initiatives, such as CDP and the Taskforce on Climate-Related Financial Disclosures (TCFD), have additionally sought to improve the quality of climate risk information disclosed by companies.

In the last couple of years, financial regulators have taken up this baton. For example, both the European Financial Reporting Advisory Group (EFRAG) and the US Securities and Exchange Commission (SEC) produced major proposals in March 2022 that would require registrants to disclose scope 1, 2 and 3 emissions, along with a range of other corporate climate indicators.

The risk-based approach to corporate climate performance focuses on the potential impact of climate change on the company but not on the impact of the company on the climate. Opponents of the US SEC’s proposal (e.g., the US Chamber of Commerce) have argued that the information it requires falls outside the scope of what is ‘materially’ relevant for investors to assess individual company climate risk. In Europe, regulators have pioneered the concept of ‘double materiality’, creating the precedent for information not only relevant for the impact of environmental factors on the company, but also the impact of the company on the environment.

Corporate Net-Zero Commitments and Plans

Following the Paris Agreement and the IPCC’s 2018 report which found that C02 emissions must go to ‘net zero’ by 2050 to limit global warming to 1.5C, countries have been setting their own net-zero targets. Net-zero targets and commitments have also become a popular way for corporate, financial, and other non-state actors to signal their alignment with the Paris Agreement’s goals. The UN’s Race to Zero campaign currently counts over 7000 companies and 500 financial organizations amongst the list of entities that are committed to achieving net zero carbon emissions by 2050 at the latest.

However, many corporate net-zero targets are facing criticism for not being backed by objective or verifiable plans and have thus become associated with accusations of ‘greenwash’. Such targets are increasingly coming to the attention of regulators, such as the European Commission and the UK Advertising Standards Authority (ASA), that have both sought to address the use of net-zero claims in advertising which are not appropriately evidenced. In March 2022, the UN Secretary General launched a High-Level Working Group to investigate how best to hold non-state actors accountable for net-zero commitments.

The Importance of Policy Impact

The UN’s climate science body, the Intergovernmental Panel on Climate Change (IPCC), has been increasingly clear on the need for strong and binding policy on climate from governments. The IPCC’s 2018 special report on 1.5C warming, noted that moving towards 1.5C pathways implies “stringent and integrated policy interventions” while the IPCC’s 2022 AR6 working group three report provides detailed, sector by sector guidance on the sorts of interventions needed to deliver the Paris Agreement’s goals.

Despite this clarity, firm government action remains insufficient, illustrated in Climate Action Tracker’s global analysis on the gap between government action and what needs to be done to limit warming to 1.5C. Concretely, the UN Environment Programme’s Emissions Gap Report (Oct 2022) found that, with current policies, warming is estimated to be 2.8C by 2100.

The IPCC's Mitigation of Climate Change report (April 2022) identified “opposition from status quo interests” and “incumbent” fossil fuel interests “exerting political influence” over the policymaking process as a key barrier to progress towards delivering the Paris Agreement's goals. This finding has also been identified by international organizations, such as the OECD in its 2021 report “Lobbying in the 21st Century”, and by political leaders, including Barack Obama, former Executive Secretary of the UNFCCC Christiana Figueres, and the current UN Secretary General, Antonio Guterres.

Despite this widespread recognition of the centrality of government climate policy, most mainstream assessments of corporate climate performance provide little to no understanding of whether companies are supporting or blocking Paris-aligned climate policy.

Such analysis, however, provides insight into a company’s approach to necessary climate-related regulatory shifts. It is also highly relevant from the perspective of ‘double materiality’, as the adverse impact a company can have on climate by blocking climate policy might significantly outweigh the impact of its direct emissions, or that of its products.

As net-zero is impossible without government policy, an analysis of a company’s policy engagement is a profound test of the authenticity of its net-zero targets. Any company with a net-zero target that is not constructively supporting Paris-aligned climate policy is arguably engaging in a form of greenwashing.

InfluenceMap first introduced the concept of the Climate Policy Footprint in 2017 to explain the impact that companies and their industry associations were having on climate change via their lobbying and messaging activities. This analysis provided a further dimension to measuring corporate impact on climate; a ‘Scope 4’ emissions assessment identifying the most influential companies and industry associations on climate change policy.

This analysis highlights the most negative and influential companies on Paris-aligned climate change policy globally. It combines InfluenceMap’s recognized system for assessing corporate climate policy engagement with additional indicators to the judge the relative political and economic clout of each company. Companies included in this analysis are drawn from InfluenceMap’s LobbyMap platform and database, which includes assessments of over 400 of the largest industrial companies globally, as measured by the Forbes 2000 list. A full explanation of this methodology can be found in the appendix for this report, available at this landing page. Hyperlinks in the table below go back to online LobbyMap profiles for each company.

Key Trends

Industry Associations

The use of third-party groups such as industry associations is a critical component to most corporate policy engagement strategies. They allow companies to pool resources and take advantage of well-resourced lobbying operations with specialist knowledge and proven tactical expertise in different regional, political, and legislative contexts. They also allow companies to maintain public distance from their most regressive policy positions, which are outsourced to such groups. Industry associations, in turn, can claim that their positions are representative of large parts of the economy, significantly strengthening arguments that highlight risks to “jobs and growth” to counter regulatory threats.

The table below list the ten most influential and negative industry associations in InfluenceMap’s database that have ties with the 25 most influential and negative companies listed above. Details of the methodology behind this assessment can be found in the appendix for this report, which can be downloaded here.

Comparison to Mainstream Climate and ESG Indicators

Despite the critical importance of corporate engagement with climate change policy, mainstream climate performance indicators do not appear to correlate with a company’s corporate climate policy footprint. The table below compares InfluenceMap’s assessment of the 25 most negative and influential companies on climate globally with mainstream climate and ESG indicators.

Wider analysis covering additional indicators and companies is needed. However, these findings suggest that such indicators and rankings are at risk of being used by corporate climate policy opponents to help maintain their ‘pro-climate’ images while such companies remain strategically opposed to Paris-aligned climate policy pathways. In addition, while not the focus of this report, it is likely that corporate climate policy leadership is not being picked up in these metrics – even though climate policy advocacy is arguably a good indicator of strategic alignment with Paris goals and a true indicator of net-zero authenticity.