Business Lobby Group Pushes Oil and Gas Industry Agenda on Climate

   

 The Equation Read More 

As if big, wealthy, powerful corporations weren’t big, wealthy, and powerful enough, they often join industry associations to concentrate their political leverage and lobby for their interests. If a company’s public positions clash with those associations, the conflict usually takes place behind the scenes. Recently, however, an influential association’s offensive against a federal climate policy that many of its members support pushed such a schism into the public eye, calling the influence of its fossil fuel industry members into question.

This particular example concerns the Business Roundtable (BRT), a nonprofit association of corporate CEOs that lobbies heavily on public policy. BRT reported spending nearly $20 million in 2023, making it one of the country’s top ten spenders on federal lobbying. BRT’s members head over 200 U.S. companies in sectors ranging from agriculture to utilities and include leaders of the largest oil and gas companies in the United States, such as ExxonMobil, Chevron, ConocoPhillips, and Phillips 66.

BRT believes that “the clean energy transition should be driven by the private sector with public sector support,” according to its website. The organization’s energy and environment policy was written by the CEO of Cummins Inc., an engine manufacturer fined nearly $2 billion last year for installing emission-dodging software in truck engines. The policy says that while, “Climate change is a real and serious issue,” its members address it by advocating for policies to “increase domestic energy production and exports,” among other goals. Watchdog group LobbyMap gave the organization a D grade on climate-aligned lobbying for opposing methane regulations and climate-related provisions in the Inflation Reduction Act.

In June, BRT filed an amicus brief to a lawsuit against the US Securities and Exchange Commission (SEC) aiming to stop the SEC from implementing a rule that would compel companies to disclose more details about how they manage climate-related risks and opportunities.  The rule was finalized last March after two years of debate, during which the SEC processed more than 15,000 comments from businesses, investors, and other stakeholders. Several opponents of the rule, including the U.S. Chamber of Commerce and Republican Attorneys General Association, filed lawsuits against the SEC, which were combined into a single suit currently before an appeals court in Missouri.

Analyses of comments filed with the SEC show not only that the vast majority of comments from investors supported the rule, but more than half from businesses did as well. Many of those businesses are BRT members: E&E News found that the companies of five of BRT’s 27 board members filed comments supporting the rule, including Cisco Systems and FedEx, while only four—Walmart, General Motors, Nasdaq, and ConocoPhillips—opposed it.

BRT itself filed a comment broadly supporting the concept of climate disclosure but criticizing elements of the rule such as disclosure of Scope 3 global warming emissions (which include emissions from corporate operations and the use of company products), which the organization said would increase liability risk. The final version of the rule dropped many of the elements that BRT and other corporate commenters took issue with, including Scope 3 disclosures and requirements about which part of the annual financial filings information had to appear in. Perhaps most importantly, the SEC inserted a “materiality” qualifier next to every requirement, effectively handing discretion about disclosure to companies.  Yet BRT’s amicus brief argues that the rule exceeds the SEC’s statutory authority—a challenge to the fundamental mandate of the SEC that did not appear in BRT’s earlier comments or meetings with SEC on the rule.

So why did BRT bother to beat a (nearly) dead horse? It may have something to do with the disproportionate amount of money the oil and gas industry contributes to the organization. All five board members that supported the rule disclose the amounts of money their companies gave to trade associations, as do the four oil and gas companies, which broadly opposed the rule. Supportive board members gave BRT at least $450,000 in 2023, a low figure since Citi and FedEx only name groups to which they support at $50,000 and up. That figure is still dwarfed by the $700,000 to $2 million the four oil and gas companies gave BRT (Chevron and Exxon disclose ranges rather than exact figures).

Though many of the issues the organization lobbies on—such as taxes, trade and labor—are important to a broad swath of their membership, BRT also spends millions lobbying on issues of particular interest to its oil and gas members. These issues include “increasing traditional domestic production” and “issues relating to climate change,” according to their 2023 lobbying disclosure filings. Firms hired by BRT lobbied on permitting reform, climate-related investments in renewable energy, EV infrastructure, and carbon capture. BRT also lobbied against a rule that would require large federal contractors to disclose emissions and other signifiers of climate-related risk—one endorsed by no less than the U.S. Department of Defense, the largest purchaser of goods and services in the world.

Obstructing climate policy via trade organizations while publicly committing to fight climate change is a longstanding pillar of the fossil fuel industry’s playbook because it’s easy to hide, unlike federal lobbying. One study found that trade associations engaged on climate change spent $3.4 billion over a decade on lobbying, advertising, and political contributions—influence-peddling that cannot be not directly connected to the companies that pay association membership dues. In its 2022 report on mitigating climate impacts, The United Nations’ Intergovernmental Panel on Climate Change cited the power of industries entrenched in the carbon economy to stop action on climate.

Investors say conflict between fossil fuel companies’ public stances and the anti-climate actions of trade associations put investors at risk, because the conflicts can impact a company’s reputation and increase the risk of liability. Concern about this risk has produced several shareholder resolutions requiring companies to report annually on how closely their positions and actions align. These evaluations have resulted in several companies leaving associations that diverge too strongly from corporate stances, a notable example being ExxonMobil’s recent departure from the Independent Petroleum Association of America.

Opposition to the SEC rule is a particularly glaring example of this misalignment, especially considering disclosure rules are already moving forward in jurisdictions such as California and the EU. Investors have taken notice and pushed BRT to represent all of its members in its lobbying.

“We view the BRT’s legal intervention in the U.S. Chamber’s lawsuit as an attempt to prevent the climate risk disclosures that investors widely have called for to fulfill their fiduciary interests,” states an August 22 letter to BRT from a coalition of over 300 values-based investors. The letter also points out that shareholder proposals requesting lobbying alignment with the goals of the Paris Climate Agreement regularly receive strong shareholder support.

The importance of lobbying alignment is a top issue at this month’s NYC Climate Week, where several groups are hosting events to help business leaders understand that allowing their membership organizations to counteract their climate positions puts companies at risk. These efforts include the rollout of new resources to help companies advocate effectively within trade organizations and guidelines such as the Global Standard on Responsible Climate Lobbying.

 According to the IPCC, dominant energy industries such as fossil fuels “are often more concentrated than those benefiting from climate policy and lobby more effectively to prevent losses than those who will gain”. Companies that recognize the reality of climate change and climate-related financial risk don’t have to be held hostage by vested interests. They should use the political leverage they gain from industry associations to advocate for their positions, both within the associations and without.