The PSI Blog
1 April 2015
What can businesses do when their trade bodies undermine EU climate policy?
This article was first published on the Friends of the Earth Policy & Politics blog on 30 March 2015.
In our latest report, Lobbying by Trade Associations on EU Climate Policy, researchers from the Policy Studies Institute investigated how eight big, influential trade associations - which either represent particular industrial sectors or claim to represent all business interests in the EU - lobby on EU climate policy.
The report revealed that some trade associations are working to undermine effective climate policy, using an arsenal of tactics and a variety of arguments. This is worrying, as it seems that these lobby groups are winning short-term victories on issues including reforms to the EU Emissions Trading System and EU 2030 targets on energy efficiency and renewable power. These policy ‘wins’ come at the expense of the long-term interests of the economy and our climate. Companies with ambitious goals on climate change need to ensure their trade associations aren’t undermining their long-term interests.
The key findings
- Companies use trade associations to lobby on climate policy. An independent NGO called CDP surveyed thousands of companies, and found that 77% of Global 500 companies used trade associations to lobby on climate policy. That’s a huge percentage – and is even higher than the percentage of companies who said they directly lobbied on climate policy. Trade associations are clearly a key mechanism used by businesses to influence climate policy.
- The trade associations for energy intensive industries, the fossil fuels lobby and even BUSINESSEUROPE (which states that it represents all-sized businesses, and is “standing up for companies across the continent”) are lobbying against attempts to strengthen the EU Emissions Trading System and targets on energy efficiency and renewable power. They frequently argue that effective climate policy undermines competitiveness and will lead to ‘deindustrialisation’ and ‘carbon leakage’ as businesses move outside Europe.
- Many companies with very strong sustainability policies and statements are members of these trade associations.
- These lobby groups seem to have a lot of influence and power. They also have very large manpower and budgets. For instance, the European Chemical Industry Council (CEFIC) self-reported through the EU transparency register that they have 75 lobbyists working in Europe, 14 of whom have access to the European Parliament. They report that they spend €6,000,000 per year on lobbying.
So what can companies do about this?
I would argue that they need to make sure their trade associations are singing from the same hymn sheet on climate policy. Many investors and civil-society groups are concerned about the ‘misalignment’ between companies with strong sustainability statements and the actions of their trade associations. As part of its Green Light campaign to shine an environmental spotlight on pension investments, an NGO called ShareAction is launching a campaign targeting companies about their lobbying activities in the run-up to COP21 in Paris. ShareAction will be releasing more information soon.
Eight organisations (including three UN agencies) co-authored a report in 2013 - which I contributed to - called The Guide for Responsible Corporate Engagement in Climate Policy. It had three recommendations for companies:
- Identify – Co-ordinate with internal and external experts to inventory the company’s influence on climate policy processes, and their risks and opportunities.
- Align – Complete an internal audit to ensure that the company has consistent positions, strategies and investments that align to mitigate climate change.
- Report – Transparently disclose the company’s positions and actions on climate change – and the outcome of these.
Businesses could also go beyond ensuring internal consistency of positions and use a clear, consistent message to pro-actively advocate for progressive policies.
As Steve Howard, chief sustainability officer for IKEA, said in 2013: “There is an old expression which is that winners go to market and losers go to Washington. But we now need the winners to go to Washington and Brussels and Beijing to help unlock business innovation and investment to get this problem solved. We have seen there is a silent majority of businesses which want to see effective leadership from government on climate change but they have not known what to advocate for or may have felt it is not their responsibility to do something about. The key is now for business to find its voice ... We cannot defend the status quo and at the same time build a sustainable future at pace and scale. The strategic assets of the twenty-first century will be clean air and clean water and renewable energy; it is not about defending the right to pollute.”