New action plan argues strong corporate governance on climate change will allow for alignment and create a policy environment that better positions companies and economies for growth
As the U.S. works to rebuild the economy, companies across the nation are being urged to align their action on climate change — including their direct and indirect lobbying activities — with the latest science that calls for limiting global temperature rise to no more than 1.5 degrees Celsius and reaching net-zero emissions by 2050 at the latest. Scientists say achieving these goals is necessary to avoid the worst impacts of climate change.
While hundreds of companies have set science-based targets to reduce greenhouse gas emissions within their enterprises, their efforts are undermined when their lobbying activities are not consistent with their climate action. In fact, this misalignment poses material, financial and reputational risks for companies and can lead to inefficient corporate spending. A new bold action plan, Ceres Blueprint for Responsible Policy Engagement on Climate Change, released today, calls on companies to establish a strong corporate governance system that addresses climate change as a systemic risk in order to allow for improved alignment on lobbying practices.
“While many companies continue to tackle climate change in their operations and supply chains, they have yet to set up corporate structures that address the issue as a systemic financial risk and ensure all corporate actions — including their direct lobbying or lobbying through their trade associations — are in step with the latest science,” said Veena Ramani, senior program director of the capital market systems at Ceres, and author of the Ceres Blueprint. “By aligning their climate lobbying to science, companies can reduce their overall risk exposure and begin to shape a policy agenda that will better position them and the economy for strong, resilient growth.”
In 2019, the chief executives of leading organizations, including Ceres, released an open letter to the corporate CEOs of America calling on all companies to adopt a science-based climate policy agenda in line with the 1.5 degree goal and achieve net-zero emissions by 2050. Â The Ceres Blueprint builds on this existing framework and details exactly how large U.S. companies should be structured to address climate change as a systemic financial risk and align their lobbying with these goals. It calls for engaging legal and corporate counsel and boards of directors who are charged with determining the appropriate governance structures to oversee and manage risks. Specifically, it calls on companies to:
Assess the climate-related risks to the company, and the ways in which its lobbying efforts serve to exacerbate or mitigate these risks
Govern to systematize decision-making on climate change across the company, including  in all direct and indirect lobbying
Act to align both direct and indirect lobbying with science-based climate policies
The Ceres Blueprint is an especially important and timely resource as companies look to direct their lobbying activities to ensure the U.S. builds back better from COVID-19. Ceres has been mobilizing companies around a science-based policy agenda through the Ceres BICEP Network for 11 years. In May, in the largest business-led advocacy day for climate action in the U.S., 330 companies were unified in calling on lawmakers to support a climate-smart economic recovery. Additionally, the CEOs of more than 150 companies — with a combined market capitalization of more than $2.4 trillion and representing over 5 million employees — recently signed a statement urging world leaders for a net-zero recovery.
“If companies are truly going to be advocates for change, they must use their voices inside and outside their walls to call for effective science-based public policy at the state and federal levels—policies that match their science-based climate goals,” said Anne Kelly, vice president of government affairs at Ceres. “We cannot get to a net-zero emissions future without changing the rules of the trade association game. First and foremost, companies must be aligned with the policy positions of the trade associations to which they belong. They can no longer stand for climate action and then support trade associations working against climate policy.”
“For companies that want to be true leaders on climate change, they must put in place strong internal governance systems that heed the latest climate science and address the misalignment of their lobbying practices. This is necessary to maintain credibility, minimize risk and avoid inadvertently supporting policies that are at odds with their corporate climate goals,” said Maria Mendiluce, CEO of the We Mean Business coalition. “I hope that companies representing all industries, regions and sizes will apply the recommendations of the Ceres Blueprint across their operations in short order.”
"The climate crisis has underscored that every company should immediately step up their ambition on science-based action, including lobbying on science-based climate policy,” said Hugh Welsh, President of DSM North America.  "The Ceres Blueprint is the resource for companies who are looking to align their climate leadership with their climate lobbying, and become authentic corporate advocates for a clean energy economy."
Investors agree, too. Last year, 200 investors with $6.5 trillion in assets called for lobbying activities consistent with the goals of the Paris Agreement. And in May, shareholders won the first-ever majority vote at Chevron on a climate-related proposal seeking a commitment to align its lobbying activities with the Paris accord.
About Ceres
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. For more information, visit ceres.org and follow @CeresNews.