Climate Lobbying: Investor Interest and Corporate Disclosures

Climate lobbying – the alignment of a company’s climate commitment with its lobbying expenditures – has emerged as a trend in shareholder proposals in recent years. Often these proposals call for companies to “Review Public Policy Advocacy on Climate Change” or “Report on Corporate Climate Lobbying Aligned with [the] Paris Agreement.” This trend is part of a broader theme of shareholder expectations for companies to integrate climate considerations with other ESG matters (e.g., social justice – the “just transition”), rather than simply reporting on emissions reduction.

Outcomes of these proposals suggest that climate lobbying is a substantial concern among shareholders. Median support for voted proposals on this topic in the U.S. peaked at 64% in 2021 (as shown in the chart below), after which the proportion of withdrawn proposals on this topic expanded, perhaps indicating that companies reached agreements with filers to avoid undesirable voting outcomes. In 2024, 9 climate lobbying proposals went to a vote with a median support level of 28% of votes cast, indicating a continued interest in this topic among proponents and investors.

What seems to be driving these proposals? Across sectors, there tends to be a gap between the quality of corporate issuers’ climate commitments and their level of transparency on lobbying, potentially signaling risks for investors. A company could conceivably publish an ambitious greenhouse gas reduction target for its operations and value chain, while simultaneously funding public policy initiatives that may not align with progress towards reaching the goals of the Paris Agreement. The chart below illustrates the gap between corporate climate commitments and level of transparency on lobbying efforts, focusing on S&P 500 companies, and leveraging two Corporate Rating indicators:

• Greenhouse gas emission reduction targets and action plans – this indicator evaluates whether a company has a science-based target aimed at limiting the global temperature increase to 2°C compared to pre-industrial levels, accompanied by a comprehensive action plan to achieve said target;
• Transparency on participation in public policy making and lobbying activities – this indicator looks at the extent to which a company publicly discloses its lobbying positions, along with specific expenditures and channels used for lobbying (e.g., trade associations).

The contrast in performance between these two indicators is especially stark for sectors that have strong climate commitments but lack transparency on lobbying (e.g., Materials, Consumer Staples, Information Technology). While companies in these sectors have taken significant steps to manage their carbon footprint, there remain opportunities to enhance disclosures addressing the intersection of climate and lobbying. The gap is narrower for sectors that lag in both areas (e.g., Energy, Financials).

For companies that seek to establish strong positions on climate lobbying and potentially ease investors’ concerns, the Global Standard on Responsible Corporate Climate Lobbying provides guidance on best practices, including the following:

• Policy & Commitment – publicly pledge to align all lobbying with climate goals (limiting warming to 1.5°C above pre-industrial levels);
• Governance – assign responsibility for oversight, implementation, and monitoring, and develop a process for stakeholder engagement and a framework for assessing/escalating misalignment;
• Action – report annually on (a) climate lobbying and (b) action to address any misalignment, as well as forming coalitions on climate lobbying;
• Specific Disclosures – provide additional details, such as how much the company pays specific trade associations.