Working with the PRI to understand how responsible lobbying practices are factored into stewardship

Responsible Political Engagement and Investor Stewardship

Robert Black and Dr Rory Sullivan

In January 2022, the Principles for Responsible Investment (PRI) commissioned Chronos Sustainability to research how company political engagement (or lobbying) practices are being included in investor stewardship activity.  

The research comprised a detailed literature review – building on the research that underpinned the development of the Global Standard on Responsible Corporate Climate Lobbying, launched earlier this year – and detailed interviews with leading investors (asset owners and asset managers) and other stakeholders (civil society organisations, industry associations, and other experts).

What did we find? The research reaffirmed the importance of investors focusing on lobbying as part of their stewardship activities, given the critical role – positive and negative – such lobbying has on the shape and implementation of public policy.

Notwithstanding this, we also found that:

·       Most investor engagement on company lobbying activity has been through a thematic lens rather than treating political engagement as a standalone issue. Within this, climate change has been a key focus, due to the wide acceptance of the impact of political engagement on climate change, and underpinned by the availability of tools and research to enable investors to robustly assess company practices in this area.

·       Investors have tended to focus more on direct lobbying (i.e. direct contact between the company or its agents, in particular trade associations, and public policy decision-makers) rather than Indirect lobbying (where the company seeks to influence public policy indirectly by shaping and mobilising public opinion).

·       Despite the publication of the Global Responsible Climate Lobbying Standard and the work of organisations such as InfluenceMap , there is a general lack of consensus on what responsible lobbying looks like. This limits investors’ ability – and willingness - to challenge and hold companies to account for their lobbying practices.  

While the challenges are well documented, the research also demonstrated the catalytic role that can be played when the right research, and tools are available to investors. For example, in relation to climate change, interviewees discussed the importance of aligning their lobbying activities with clear goals  (e.g., the Paris Agreement goals on climate change), and the importance of having clear frameworks of company expectations (e.g. the Global Standard on Responsible Climate Lobbying), and the value of credible data and research resources (e.g., InfluenceMap’s research on companies actual lobbying activities).

To support investor action in this area, the PRI has indicated that it intends to:

·       Include corporate lobbying-related considerations in its collaborative stewardship initiative for human rights and social issues.

·       Explore opportunities to integrate corporate lobbying into other thematic engagements.

·       Support investor members of Climate Action 100+ to evaluate and engage portfolio companies on Paris-aligned climate lobbying practices.

Find out more, here.