Financial think tank Planet Tracker has named Colgate-Palmolive, Procter & Gamble and Walmart as members of trade associations misaligned with the Paris Agreement.
The findings come from a new report urging corporations to avoid industry affiliations that diverge from their stated environmental objectives.
The report shows that companies’ memberships in trade associations appear to be at odds with the goals outlined in the Paris Agreement, particularly when corporate management teams claim to be lowering their carbon footprint.
Planet Tracker analysed the climate transition plans and strategies of major corporations in the consumer and chemical sectors, which are also members of the Climate Action 100+ benchmark and found that all companies – except Danone and Nestlé – are members of misaligned trade associations.
Severing ties with those at odds with climate goals is crucial, according to the report, as greenwashing claims are scrutinised, and financial markets call for transparency on climate strategies to align with the Paris Agreement and to facilitate more accurate financial forecasting.
Chemical manufacturer LyondellBasell is presented as an example of how to proactively address concerns over misaligned industry affiliations, as the company’s Climate Advocacy Report – released in May 2023 – appraises its memberships in key trade associations, categorising them based on alignment with climate policy positions.
Similarly, pharmacy company Bayer’s Industry Association Climate Review (2023) assesses 63 associations and reveals its method for assessing alignment as well as explaining each evaluation.
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The Planet Tracker report points to World Resources Institute’s (WRI) AAA Framework, introduced in October 2019, which advocates for companies to push for policies in line with the Paris Agreement and to align their trade associations accordingly.
Now part of the Global Standard on Responsible Climate Lobbying, WRI’s framework outlines a five-step process: conducting an audit; developing a strategy; publicly expressing disagreement; disassociating when necessary; and, being transparent.
In favour of making these changes promptly, Planet Tracker calls for decisive action to avoid perpetual membership in misaligned associations.
Planet Tracker transition research analyst Ion Visinovschi said: “Consistent messaging and diligent trade association oversight should be the norm, and where there is persistent misalignment, an exit from these trade associations should be planned.”
“Without clear transition plans and associated capex details, financial institutions face heightened uncertainty in cashflow forecasting, potentially impacting their assumptions on free cash flow and dividend cover.”
