‘Profound’ secrecy in corporate climate lobbying exposed in AI-powered study

A new AI-powered study of more than 8,500 listed companies has revealed a “profound” lack of disclosure and governance around climate-related lobbying. One result of the secrecy, argue the report’s authors, is that companies often lobby in a way that undermines their own climate strategies.

The report, produced by climate-tech non-profit Danu Insight, used natural-language processing and AI to examine around 250,000 annual reports, disclosure statements, web pages and other documents. The report identified and rated evidence that each company disclosed specifics of its climate lobbying activity and implemented oversight of it.

Silent majority

A large majority were found to be completely silent: 78 percent provided no public disclosure about their climate lobbying, and 75 percent showed no evidence of a relevant governance process.

At the other end of the spectrum, just 6 percent achieved the top score — four points — on transparency, including disclosure of policies lobbied for or against, lobbying mechanisms used and outcomes sought. On governance, less than 1 percent earned four points on such issues as mechanisms for aligning lobbying with broader goals. 

Companies with top scores for both transparency and governance included BASF, BP, Delta Air Lines, Holcim, Nestlé and Toyota. 

Performance on the ratings varied significantly across industries.

“Companies operating in sectors generally understood to be highly exposed to climate-related policy and transition risks tend to demonstrate higher levels of disclosure,” the report noted. “This suggests that companies facing more climate pressure (e.g., from regulators, transition challenges, or stakeholder scrutiny) are more likely to disclose their lobbying activities and implement governance structures.”

The uncovered level of secrecy is possible in the U.S. because lobbying disclosure laws focus on the amount of money spent rather than on what it is used for, said Thomas O’Neill, founder of Danu Insight. The European Sustainability Reporting Standards, which are followed by companies that report under the region’s Corporate Sustainability Reporting Directive, require disclosure of lobbying that is material to sustainability efforts. Those rules, though, are in the process of being implemented, and the results are not reflected in the report’s data.

Lobbying the lobbyists

One target audience for the report is investors, who can use its information to assess and compare companies’ climate strategies, said O’Neill. 

The report also serves as a useful guide — and cautionary note — for sustainability professionals interested in shaping their company’s lobbying. Government relations units are often siloed, limiting the influence of sustainability teams and allies. One common result is that companies can be relatively passive members of trade groups, such as the U.S. Chamber of Commerce and the Business Roundtable, which have lobbied against climate legislation that is critical to the success of company sustainability goals.

“The government relations people have their agenda, and it’s usually to hold back regulations, to protect the company,” said O’Neill.

Like other advocates for climate lobbying reform, O’Neill argued that companies should work to change the trade groups they are members of rather than leave them. “There are lots of things they could be doing, conversations that could be had,” he said. One template for action is the attempts of Microsoft and others to influence Chamber of Commerce lobbying on climate legislation enacted under President Biden.