Climate Policy Advocacy Is a Major Blind Spot in Corporate Sustainability Rankings

Sustainability rankings that exclude climate policy advocacy give stakeholders an incomplete picture of companies’ sustainability ambitions and performance, finds a new analysis by Environmental Defense Fund. In order to improve the accuracy and utility of the rankings, the report calls for increased disclosure of corporate lobbying activities related to climate change.

The Blind Spot in Corporate Sustainability Rankings: Climate Policy Leadership is the first analysis of how corporate engagement in climate policy – including direct lobbying, financing think tanks, foundations, political action committees and more – is weighted in the development of the rankings

“It’s no longer enough to reduce, or even eliminate, the greenhouse gas emissions in one’s operations and supply chain,” noted Joel Makower, Chairman and Executive Editor, GreenBiz Group. “Today, leadership companies are those that speak up and speak out in favor of ambitious climate policies, and companies will increasingly be held accountable on that score.”

Alongside the rapid growth in corporate climate commitments and initiatives, numerous sustainability ratings and rankings, the focus of this analysis, have emerged to help stakeholders assess corporate environmental performance and identify leaders. The authors examined the most widely cited rankings and found:

• Only one of the eight rankings analyzed recognizes companies for lobbying or other activities in favor of public policies that protect the climate: InfluenceMap’s Climate Policy Engagement A-List.
• Only two rankings systems penalize or disqualify companies for lobbying or activities against public policies to protect the climate: InfuenceMap’s Climate Policy Engagement A-List and Corporate Knights Global 100.
• With the exception of InfluenceMap, none of the rankings analyzed in this report give weight to climate policy advocacy commensurate with its outsize impact on environmental outcomes.

“We created InfluenceMap to fill a clear gap in the way in which companies are assessed on climate change – that is, their impact on climate policy and narrative,” noted Dylan Tanner, executive director and co-founder of InfluenceMap. “Judging companies solely based on operational and product emissions is insufficient.”

The report recognizes the challenge of incorporating policy advocacy into sustainability rankings due to the lack of disclosure of corporate lobbying activities, and builds off previous reports examining issues such as consistency in methodology across sustainability rankings.

To address the omission of climate policy advocacy, the authors point to the U.N. Global Compact Guide for Responsible Corporate Engagement in Climate Policy, which recommends three actions companies can take to demonstrate responsible engagement in climate policy.:

1. IDENTIFY: Inventory influences, risks and opportunities with internal and external experts.
2. ALIGN: Complete internal audit to ensure consistent positions, strategies and investments.
3. REPORT: Disclose positions, actions and outcomes.

The same steps can be used by ranking entities in developing their disclosure guidelines.

“Sustainability rankings need to keep pace with what leadership looks like today,” said Victoria Mills, managing director of EDF+Business and co-author of the report. “The urgency and magnitude of the climate challenge demand a bigger response from business than reducing their own greenhouse gas emissions. Companies must also support policies that drive down emissions across the entire economy.”