Corporations must change climate obstructionist industry associations from within

Corporate leaders in tech, finance and beyond need to reform their own associations which are blocking progressive climate action

climate change policy

Dylan Tanner is the executive director and founder of InfluenceMap.

The window to take action on climate change is closing. The global scientific community now has the official backing of hundreds of government and business leaders who agree that we must transition to a net-zero-carbon economy, and yet getting strong climate regulations in place has proven a challenge.

While binding policy has been proposed by governments globally over the last decades (the European Union’s Emissions Trading System, the United States’ Clean Power Plan, etc.), it has invariably suffered dilution and outright opposition from powerful associations, including the U.S. Chamber of Commerce, BusinessEurope and the Japan Business Federation. The result is that 25 years after the Kyoto Protocol was adopted, scant climate regulations of the kind now needed are in place anywhere in the world.

This year, Corporate Knights launched the Earth Index, which measures the speed at which countries (by sector) are reducing greenhouse gas (GHG) emissions relative to the speed required to deliver on their commitments. The findings were damning: taking the G20 countries together, emissions actually went up in 2019, where they continue to sit now after a short-lived dip in 2020.

A central reason for this state of affairs is that industry associations have long played a detrimental role in blocking climate policy. This opposition persists, albeit with more nuanced language and tactics. Most recently, the climate elements of the Build Back Better budgetary package were strongly opposed by the U.S. Chamber of Commerce, and the EU’s Fit for 55 remains the target of dilutionary lobbying by European big business.

Perplexingly, the negative climate-policy engagement of many industry associations contrasts sharply with the current top-line messaging from the corporate sector, with more than a quarter of the world’s publicly traded companies (by market capitalization) now signed up to the Business Ambition for 1.5°C campaign. And more than a third have made net-zero commitments in line with climate science. Corporate sector leadership, both in the real economy and the financial sector, is needed to remedy the glaring disconnect between the activities of industry associations with their members’ own public statements and strategies.

Reforming the climate-policy stances of these powerful groups like the U.S. Chamber of Commerce would allow policy-makers the room to act on climate. Without the support of these groups (or at least cessation of opposition), governments will not be able to make progress on the binding policy the scientific community says is necessary. Powerful corporate forces in tech, finance, healthcare and clean energy, among others, need to lead the charge to reform their own associations.

Perplexingly, the negative climate-policy engagement of many industry associations contrasts sharply with the current top-line messaging from the corporate sector.

This is not a minority position limited to activist groups. Investors are also demanding reform of negative climate-policy influencing, and they expect corporations to drive that reform. InfluenceMap’s work tracking this policy-engagement activity (through the LobbyMap platform) informs the largest investor engagement program in history – the Climate Action 100+ process, whose signatories represent over 700 global investors who are responsible for more than US$68 trillion in assets under management across 33 markets. A key demand of this shareholder collective targeting the 160 most climate-important companies is reform of policy engagement. This message also applies to all major corporations outside of the fossil-fuel value chain.

With the right data-driven road map, the corporate sector can collectively lead and act as a matter of urgency to close the gap between industry associations’ climate-negative positioning and the many corporations’ positive support for addressing climate change. The question is: what is the right approach?

The power of industry associations relies on their ability to claim to represent their members. Public disagreements among members are proven to weaken industry association positions. However, efforts by individual companies to influence industry associations or to go it alone on their own climate-related government relations, while pioneering, have not led to the reform needed to advance climate policy at pace.

There are a few different paths for action now. Trailblazing companies could bring attention to the disconnect between their climate ambitions and their industry associations’ contrary positions. Or they might work together to develop and promote shared climate-positive government-relations strategies ahead of key policy decisions to counter industry associations’ blocking positions.

Another route might be to influence the thinking and positioning of industry associations from the inside, something that so far has not been visibly effective, but there are new developments that suggest this approach can have an impact. More collective and concerted effort in this direction could lead to shifts in power that open new opportunities for positive collaboration with industry associations.

At the heart of whatever route is taken is collective action. Our goal is to ensure that robust data is shared and understood, and to help facilitate that first step toward change by bringing corporate leaders together and enabling them to act together. Keep your eye out for forthcoming research from InfluenceMap and Corporate Knights that will help set the table for what comes next.

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