It’s that time of the year. In Scotland we call it ‘guising’. In other places it’s called ‘trick or treating’. Collins dictionary describes it as, ‘the practice or custom of disguising oneself in fancy dress, often with a mask, and visiting people’s houses, especially at Halloween.’ At a stretch, you could also call it doorstep lobbying…..
But when it comes to the murky world of corporate lobbying, there’s a bit more at stake than a few Haribo or spending a night in with the curtains drawn and the lights off. Although US lobbying spend is actually down this year versus last, it’s not something we should ignore since it spans a multitude of sectors and its impacts are multi-faceted.
For instance, most readers will be familiar with the idea of a company’s direct (operational) and indirect (supply chain, product use) greenhouse gas emissions. But what about the impact of a corporates direct or indirect lobbying on climate? Not-for-profit InfluenceMap argue that at some companies, the dark forces of climate lobbying are in fact the largest component of their carbon footprint.
Source – InfluenceMap
And to an extent we would agree. We expect the highest ESG standards and we also want a level playing field for all the companies that we invest in. Which is why (in contrast to some of the world’s largest investment managers), we have consistently supported shareholder resolutions relating to climate lobbying. The most recent of which was at BHP Plc’s1 AGM.
BHP isn’t a bogey man. It is a reputable mining company with well-managed operations in relatively low political risk geographies. But alongside 20% of other shareholders, Kames recently voted for a resolution at the company’s AGM seeking the company take further steps to address the lobbying activities of the industry bodies it is a member of. TBH, given that 2.5% of BHP’s EBITDA is from thermal coal (one thermal coal mine in Australia), its associations with certain organisations and defending their anti-climate narrative (which is inconsistent with its own) struck us as an unnecessary distraction for management. But anyway, post the AGM, its pleasing to see that BHP appears keen to engage with investors further on the issue.
At the same time, we recently co-signed a letter to a number of other Australian-listed corporates on the issue of climate lobbying by industry associations. And elsewhere, Kames voted for similar resolutions at the AGM’s of ExxonMobil Corp1 and NextEra Energy, Inc.1 and a review of lobbying activity influenced our thinking when voting BP Plc’s1 AGM earlier this year.
In a previous soapbox, we described ourselves as ‘Capitalists with a conscience’. We have multiple investments on behalf of our clients across multiple industries. Climate change presents a risk for many companies and an opportunity for some that we need to understand and shady behaviours, industry obfuscation and lobbying prevents investors, customers and voters from making better informed decisions. Ghosts and ghouls need to be bought into the light; so does inconsistent corporate messaging and lobbying about climate change.
1 At the date of writing, Kames held BHP Plc, BHP Limited, ExxonMobil Corp, NextEra Energy Inc. and BP Plc across a number of investment strategies except Kames Global Sustainable Equity and Kames Ethical Equity, Ethical Corporate Bond and Ethical Cautious Managed.
About the author
Ryan Smith is Head of ESG Research. He joined Kames Capital in October 2000 as an SRI analyst and was appointed to his current position in September 2002. He has 18 years’ industry experience*. His role involves managing the team that conducts the ESG screening process for our Responsible Investing funds. Ryan’s team also provides corporate governance screening and research for all equity investments, and conducts research into environmental and social issues. Before joining us, he worked as an environmental chemist for Severn Trent Water. Ryan has an MSc in Environmental Chemistry from Nottingham Trent University and is a CFA charterholder. *As at 30 April 2019.