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Greater Expectations: 3 Actions for Companies to Take on Climate Policy

A region that collectively represents the fifth-largest economy in the world recently launched a new effort to address climate change—with the backing of business.

The premier of British Columbia and governors from California, Oregon, and Washington state announced a collaborative policy effort to: account for the costs of greenhouse gas (GHG) emissions; push for an international climate action agreement; and accelerate markets for clean technology. They did so with strong support from executives at major companies like Cisco, who hosted the launch event, and Skanska, who noted that:

“…a changing climate is a significant business risk. The more tools we have to address and mitigate the risks we know are coming, the more equipped we can be. Our leaders are setting smart policy, based on sound research.”

While this example showcases the positive role companies can play in policy, the climate policy debate as a whole has been dominated by obstructive business voices--particularly in the United States. The U.S. Chamber of Commerce, for example, has attacked climate change science and lobbied heavily against national climate action (prompting Apple and several others to leave the Chamber). Earlier this year, the Chamber’s efforts to weaken federal support for green building standards prompted Skanska to resign its membership in protest. (For more about business and trade group positions on climate change, see the Union of Concerned Scientists’ assessment of 14 major associations.)

Yet with the risks that climate change poses to business becoming ever clearer, corporate executives are increasingly recognizing that policy action is essential. Consider the 150-plus signatories to the Carbon Price Communiqué or the hundreds that have signed the Climate Declaration. These businesses are sending a clear message to government about the need for market signals that support investment in GHG-reducing technologies and innovative goods and services for a changing climate.

So how can companies help secure meaningful action on climate change in a consistent and transparent manner? What takes place before and after an event like the one mentioned above? How can businesses move climate policy forward, beyond just signing a CEO’s name on a supportive letter? Eight international organizations collaborated to answer these important questions. Their new guide details three essential steps businesses can take to effectively and responsibly engage in climate policy.

Addressing Climate Risks, Accelerating Opportunities

The Guide to Responsible Corporate Engagement in Climate Policy—from the U.N. Global Compact, U.N. Framework Convention on Climate Change, U.N. Environment Programme, World Resources Institute, CDP, WWF, Ceres, and The Climate Group—for the first time establishes a shared, practical definition of responsible corporate engagement. It is a synthesis of existing literature and input from more than 75 leaders from business, government, and civil society.

As the guide explains, responsible engagement means factoring climate risks into today’s business decisions and policy positions. It means being responsible to shareholders, customers, employees, communities, and other stakeholders. Many investors, for example, are increasingly concerned about stranded assets and a “carbon bubble” in financial markets where major extractive companies’ values are based on emissions-intensive resources like oil, gas, and coal. Continuing to burn these resources can push global temperature rise beyond 2 degrees Celsius, the internationally agreed-upon warming limit.

Ultimately, responsible engagement means catalyzing the development of policies that introduce or accelerate new market opportunities. The lighting industry, for example, chose to lobby for—not against—energy efficiency regulations in the European Union and the United States. Led initially by a few companies, the industry at large eventually championed policies to support a transition to next-generation lighting technologies that reduce GHG emissions and help consumers cut energy bills. Some business and policy leaders are subsequently taking further steps with the en.lighten initiative, which seeks to build policy platforms for high-efficiency lighting in emerging economies.

3 Actions for Business Influence on Climate Policy

The guide sets the foundation for business influence on climate policy with three simple, but powerful, actions:

  1. Identify all important issues and influences. Many companies today are getting smarter about climate change, measuring their GHG emissions and understanding the threats it poses across their value chains. But many corporate sustainability executives admit they struggle to connect those actions with the company’s overall influence on climate policy. It’s beneficial to take inventory of the company’s direct influences, like lobbying, or indirect influences, like trade group policy positions.

  2. Complete an internal assessment or audit to ensure influences are aligned. Misaligned influences can lead to public backlash. For example, companies like Google and Facebook faced scrutiny recently for supporting policymakers and policies that undermine efforts to reduce emissions. The guide includes a 10-question checklist companies can use, for example, with the support of an advisory firm. It can help determine whether a company’s lobbyist is saying the same thing as its Chief Sustainability Officer, or whether the company (and its trade group) is advocating for policies that are ambitious enough to keep global temperature increase below 2 degrees C.

  3. Publicly report climate policy positions, influences, and outcomes. Transparency is increasing as companies are being asked to share more information about their climate policy engagement. CDP, representing more than 700 investors with assets of $87 trillion, now includes a series of questions on climate policy in its annual questionnaire. Investors want to know if a company is engaging responsibly (or why a company is disengaged) and what happened as a result. The guide provides a framework to disclose information to investors and others interested in what a company is doing to advance climate policy.

While some companies are already emerging as leaders, the climate policy debate has largely been dominated by negative and resistant business voices. A critical mass of companies putting the guide’s actions into practice could shift the balance.

The alternative is to remain stuck in a policy “paralysis” and risk greater costs and disruptions as the world warms. It’s time to step up and create a better future—for the private sector and the planet.

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