Government Policy and Regulation

4 minutes read

As climate change becomes an ever more pressing issue, successful lobbying of policies that help combat it is becoming even more crucial. That is why there needs to be more attention payed to what kind of lobbying is being done for and against effective climate policies. Specifically, the lobbying that is being supported by corporations. Several companies have interests in climate legislation. They come from a wide range of industries, from utilities, to automobiles, to airlines, to manufacturing. As such, these companies often do not sit on the sidelines when new climate bills are being drafted. They try to lobby and influence the proposed legislation to suit their industry’s priorities, or try to defeat it. Since corporations play such an active role in the formation of climate policy, then there should be an understanding of the risks these companies take in participating in these activities and the possible opportunities for companies.

First, there is the bad news. In general, it is assumed that policies intended to address climate change have a negative impact on businesses. This is why several pro-business lobbying groups have worked to curb, and even stop, climate bills in the past. The US Chamber of Commerce spent around $90 million in 2014 on climate related legislation, mainly to limit the impact of these proposed regulations (Harvard Business Review, 2019). The fact that many pro-business lobbying groups are against strong climate legislation may impact how many firms are willing to go public about their pro-climate views. If these views differ from their lobbying group, these companies could lose their membership. With the Trump administration’s pro-business approach, there is possibly a lot for these companies to gain if they keep quiet about climate policy. Trump appointed Andrew Wheeler, a former coal lobbyist, as the head of the EPA (, 2019), which has meant a reduction in the amount of climate regulations that companies are mandated to follow. This has helped out several high-polluting industries continue with business-as-usual.

However, there are also risks associated with promoting policies at the expense of climate change. The number of Americans that believe in climate change now outnumber those who don’t in a 5 to 1 ratio (Yale Program on Climate Change Communication, 2019). The public backlash against being openly anti-climate could be huge, and would severely diminish a company’s consumer reputation and consequently, its bottom-line. Competitors could take advantage of the situation and use their own public image of being environmentally responsible to pillage environmentally conscious consumers. These consumers could also be environmentally conscious investors, putting an anti-climate company’s financing at risk. One investor group with 32 trillion assets, the Investor Agenda, has already warned companies to abide by the Paris Climate Agreement, or face review by the group (Taylor, 2019). The financial instability caused by this could be another competitive advantage for climate conscious firms.

These threats seem to have woken up several companies to the reality of being on the wrong side of the climate debate. Exxon Mobile, one of the largest emitters of greenhouse gases (Harvard Business Review, 2019), has spent over $50 million to change the public perception of it being against climate policies (Laville, 2019). This just seems to show that what companies say in public and what they actually do are completely different things. However, there are some companies that seem to take climate change seriously. Shell, another oil and gas company, left one of the largest oil lobbying groups due to differences in opinion on climate policy, and are on the process of review for the other groups that it is a member of (, 2019).  Pacific Gas & Electric, a utility company that is the second largest spender lobbying on climate policy, has been vocal about setting up a cap-and-trade system for carbon emissions, and have even left the US Chamber of Commerce over differences in climate regulation (Harvard Business Review, 2019). These companies may see the benefit of being active in combating climate change. By being pro-active, they do not need to face the backlash from investors and the general public, giving them a possible competitive advantage over their competitors. Additionally, these companies will be ahead of the curve when new climate regulations are put into place, leaving other less ambitious firms behind the curve. 

To many who advocate for tougher climate regulation, the idea of having business interests assist in crafting those same regulations may be sacrilege. These fears have some merit as business lobbying can lead to regulatory capture, which seems to be the case with the Trump administration (The Globe Post, 2019). However, the costs of climate policy on businesses are so high, that it is unreasonable to think that it is possible to block business lobbying all together. So, in order to ensure that effective climate policy is put into place, a broad coalition that includes businesses that take climate change seriously is needed. This will bring two things to the table. The first is that this broad coalition has the best chance to pass effective climate legislation and prevent the gutting of climate regulations by the Fossil-Fuel industry. The second, is that the perspective of these companies will help ensure a smooth transition to a low-carbon economy, by crafting regulations that reward businesses that take climate change into consideration within their business models. This will create buy-in from the wide range of stakeholders that is needed to tackle the complex issue of climate change.