Spending Against Change: Little Board Climate Oversight & Expertise, Substantial Influence Spending

Twenty-one of the biggest energy and utility companies in the United States have minimal board oversight of climate risk and almost no board members with relevant climate-related expertise. These companies spent $673 million dollars over six years to influence the political system, predominantly with shareholder money. Companies directed three-quarters of the spending to lobbying, but only six of the 21 corporations voluntarily disclose those expenditures to their investors. These are the key findings in Spending Against Change, a new report researched by the Sustainable Investments Institute (Si2) and published by The 50-50 Climate Project.

The report picks up the two dominant themes of proxy season—significant investor support for disclosure of both climate risk information and corporate influence spending and oversight. The 50-50 Project, a research and action center for institutional investors concerned about climate change, wanted to connect the dots between these issues and commissioned the report. The 21 companies chosen for the study had high 2017 votes on climate change and had relatively poor votes on influence spending disclosure, based on research from Si2 and the Center for Political Accountability.

The report finds:

Negligible board oversight of climate risk: 20 of the 21 companies do not mention climate change considerations in their corporate governance documents as a board obligation; Occidental Petroleum is the only firm to do so. 14 mention general environmental oversight, but six say nothing.
Paucity of climate expertise on boards: Just two board members out of 245 seats on these boards have expertise relevant to dealing with the business implications of climate change; at ConocoPhillips and ExxonMobil. Seven companies have board members with some environmental background; the rest do not.
$673 million spent on influence: This report unveils, for the first time, a total political activity footprint for these 21 energy and utility companies over the last three election cycles, on lobbying and election spending at the federal and state level.
Myriad ways to spend: Including newly available state lobbying data for 20 states, from the Institute on Money in State Politics, the report delineates the many ways companies spend shareholder dollars to influence elections and public policy. Three-quarters was spent on lobbying, most of it at the federal level. (Additional data in the study come from the Center for Responsive Politics and Political MoneyLine.)
Over $50 million to block clean energy in 7 states. In addition to spending to prevent climate action at the federal level, companies covered in this report spent heavily to prevent states from enacting clean energy standards, improve energy efficiency, and close fossil fuel tax loopholes. States affected include Alaska, California, Florida, Michigan, Ohio, Oregon and Washington.
Limited board oversight of lobbying: Only half the 21 companies mention any board oversight of lobbying, although three-quarters discuss election spending. Oversight for these companies is more robust than in the S&P 500 as a whole, yet most companies evince widespread reluctance to be fully transparent about their efforts to influence public policy through complete expenditure reporting.
Lots of lobbying, little disclosure: Using corporate treasury money, all firms lobby and in the study all but Kinder Morgan spend on elections. However, only six voluntarily report lobbying expenditures. Disclosure laws mean independent data are missing for more than half the states.
Dark dollars blocking climate action: The report explores behind-the-scenes spending by the 21 companies to influence climate policy, largely in ways not reported to investors or the public. The report compares companies’ public statements and their associations with non-profit groups that legally can obscure their donors while working against climate-friendly policies. The full extent of this “dark money” remains unknown but it appears to significantly shape public policy.

Heidi Welsh

Executive Director, Sustainable Investments Institute (Si2)