Stakeholders Miss the Full Picture When Rankings Ignore Policy Advocacy

by | Mar 20, 2019

Sustainability rankings are missing a key ingredient, and therefore aren’t giving stakeholders the full picture of corporate sustainability, argues a new report from Environmental Defense Fund (EDF). Because sustainability rankings do not include information on a company’s involvement in climate policy advocacy, they are failing to actually measure leadership, according to the report.

The urgency and magnitude of the climate challenge demands a bigger response from businesses than cutting their greenhouse gas emissions; companies also need to support policies that drive down emissions across the entire economy, states the report, The Blind Spot in Corporate Sustainability Rankings: Climate Policy Leadership.

The authors analyzed eight of the top-tier corporate sustainability rankings and found that only one of the rankings – InfluenceMap’s Climate Policy Engagement A-List – recognizes companies for lobbying or other activities in favor of public policies that protect the climate.

While voluntary actions by companies to reduce greenhouse gas emissions are important, only public policy can deliver the pace and scale of reductions necessary to avoid the worst impacts of climate change, the report suggests.

Part of the problem in terms of rankings including information on the efforts of companies to influence public policy stems from the fact that companies do not consistently report on those efforts.

“While some rankings have attempted to incorporate policy engagement in the past, a sustained inclusion of these considerations has not materialized, in large part due to the lack of corporate disclosure of climate advocacy efforts,” the report states.

Steps for Companies

The EDF suggests that companies should consider five core elements when becoming involved in responsible corporate engagement in climate policy. These include legitimacy, opportunity, consistency, accountability and transparency. It suggests three actions companies can take today:

  • Identify: Inventory influences, risks and opportunities with internal and external experts
  • Align: Complete internal audit to ensure consistent positions, strategies and investments
  • Report: Disclose positions, actions and outcomes

Steps for Rankings

The report also provides insights into how sustainability rankings might incorporate a company’s climate policy engagement into its overall sustainability score.

Ranking entities could ask companies questions drawn from the UN Global Compact guidelines:

—Has a company identified risks and opportunities in climate policy and disclosed the ways it directly and indirectly influences public policy?

—Has a company demonstrably aligned its public policy engagement with its rhetoric on climate?

—Has a company disclosed its policy positions, policy influences and outcomes?

The element underpinning each of these considerations – disclosure – should be foundational to the rubrics that rankings employ, the report suggests. A company’s climate policy activities can be understood through its
lobbying expenditures, public testimonies, electoral contributions, trade association memberships, and funding of research, foundations, think tanks or front groups.

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