Methodology for Assessing Corporate Climate Policy Engagement

The IPCC’s October 2018 Special Report on Global Warming of 1.5° C outlined the urgency to act on climate change and the role of governments in driving this process forward. However, worldwide efforts are lagging on introducing meaningful policy designed to accelerate this transition.

The influence of vested corporate interests is widely understood to play a significant role. A 2020 survey of over 900 climate experts from the IPCC and the United Nations Framework Convention on Climate Change (UNFCCC) found that experts from North America, Europe and Oceania all considered opposition from special interest groups to be the most important obstacle to climate change mitigation² . The last decade has also documented many examples in the media of corporate influence within climate policy streams, such as the barrage of industry-backed lawsuits that halted the US Clean Power Plan in 2015 to 2016 and the removal of the Australian Carbon Tax in 2014.

Prior to InfluenceMap’s conception in 2015, various studies had identified the significance of corporate policy engagement on climate change. These include:

• A 2011 paper from Harvard Business School arguing that a broad measure of corporate impact on the climate change agenda should consider the company’s impact on climate policy.³

• Studies conducted by The Union of Concerned Scientists in 2012 and 2014 which highlighted the role of US corporates⁴ and their industry groups⁵ in blocking US climate policy.

• A 2015 study by the University of Westminster⁶ that found a core group of EU industry groups to have held key roles in preventing the progression of climate policy in Europe.

The academic literature has further investigated different strands of this issue which includes defining and classifying different strategies and tactics used by companies to influence the climate change public policy agenda.⁷ Another area of academic enquiry has centered on assessing the impact that certain industry or corporate lobbying campaigns have had. ⁸

InfluenceMap’s response has been to develop a systematic approach to tracking, assessing and scoring companies and industry groups on their climate policy engagement. The aim has been to produce a detailed analysis of corporate climate policy engagement at the company level. The platform covers nearly 300 of the world’s largest industrial companies and provides a unique insight into the broader corporate climate policy engagement landscape.

This is used to inform the global institutional investor community on how entities are impacting climate change. InfluenceMap is part of the Technical Advisory Group for the Climate Action 100+ investor engagement process made up of 450 investors who collectively manage over $40 trillion in assets. This analysis has featured in over 1,500 media articles, particularly in the financial and business press.

This document summarizes and updates InfluenceMap's methodology for assessing companies and industry groups on their climate policy engagement for the benefit of our users and stakeholders. The InfluenceMap methodology adheres to key features of sound corporate assessment metrics: objectivity, transparency, ease of comprehension and use, and allowing for like-for-like comparisons across and within sectors.

The process is summarized as follows:

Table 1. InfluenceMap’s methodology for assessing companies and industry groups on their climate policy engagement.

Our Advisory Group

We would like to thank the following individuals for their guidance and assistance in evolving our methodology as members of our advisory group:

• Rachel Ward, Policy Director, the Institutional Investors Group on Climate Change (IIGCC)

• Bill Weihl, Director, Climate Voices and formerly Director of Sustainability, Facebook

• Yusuke Matsuo, Institute for Global Environmental Strategies (IGES), Japan

• Paul Dickinson, Founder and Executive Chair, CDP

• Daniel Abbasi, Managing Director, Douglass Winthrop Advisors LLC

• Colin Melvin, Managing Partner, Arkadiko Partners

• Alice Garton, Director of Strategy, File Foundation

• The UN's Intergovernmental Panel on Climate Change’s (IPCC) October 2018 Special Report on Global Warming of 1.5° C outlined the urgency to act on climate change and the role of governments in driving this process forward. However, worldwide efforts are lagging on introducing meaningful policy designed to accelerate this transition. A key reason for this gap is opposition by corporate vested interests.

• InfluenceMap maintains the world's leading platform to track and score companies and industry groups on their climate policy engagement. This analysis informs the global institutional investor community on how entities are impacting climate change.

• This document summarizes and updates InfluenceMap's methodology for assessing companies and industry groups on their climate policy engagement for the benefit of our users and stakeholders.

• The methodology adheres to key features of sound corporate assessment metrics: objectivity, transparency, ease of comprehension and use, and allowing for like-for-like comparisons across and within sectors. The system is designed to generate results which are identical and replicable regardless of who engages in the scoring process.

• The methodology assesses corporate climate policy engagement against external climate benchmarks. These relate to the existing, evolving, and likely future policies and regulations of government bodies mandated to implement the Paris Agreement.

• This also includes key benchmarks highlighting the increasing specificity of the IPCC on matters that may relate to or impact policy development. These are referred to as Science-Based Policy (SBP) benchmarks.

• Investor expectation statements are being published in response to the increasing number of companies that are self-assessing and disclosing their climate policy engagements. InfluenceMap uses these to further assess corporate disclosure and governance processes related to direct and indirect climate change policy engagement activities. See examples from the UN PRI and the IIGCC.

• Assessing corporate performance against SBP and investor expectation benchmarks are new and evolving features of the InfluenceMap system. Stakeholder comments on this and other areas of our processes are being sought before finalization in mid-2020.

2.1 An Evidence-Based Assessment of Corporate Climate Policy Engagement

InfluenceMap scores and ranks companies on their activities influencing climate change policy. The process facilitates the systematic collection and rigorous inspection of data points already in the public domain.⁹ It does not require additional disclosures from the entities covered or their cooperation.

Academic study has recognized that voluntary disclosures via corporate sustainability reporting can often present a misleading ‘top-line’ or ‘front-stage’ picture of a company’s activities on sensitive issues such as public policy engagement.¹⁰ InfluenceMap utilizes a clearly defined range of publicly available data sources to enable deeper investigation of corporate climate policy engagement. The criteria for selecting data sources are that they must exist in the public domain, they must nominally apply to all entities in our scored universe and that they must be reliable representations of corporate activity and behavior.

InfluenceMap’s analysis of an organization relies on hundreds of items of scored evidence taken from these sources that are statistically representative of organizational behavior, making it far more representative than top-line organizational statements. The system generates analysis and metrics which are objective, transparent and allow for like-for-like comparisons between the companies and industry groups being assessed. This provides:

• A full picture of a company’s behavior towards climate policy, including tracking changes and reforms over time.

• An insight into the broader corporate and industry landscape on climate change policy engagement by identifying key trends and areas of concern, as well as progress.

InfluenceMap recognizes the limitations of this research that might provide an evidence basis for further study into:

• Proving the impact that a single company or industry group has had on a particular policy stream.

• Providing insight into internal corporate decision-making processes and practices that govern climate policy engagement, including an analysis of best-practice in this area

2.2 A Methodology Based on Internationally Recognized Benchmarks and Criteria

InfluenceMap examines the existing, evolving and likely future policies and regulations of government bodies mandated to implement the Paris Agreement. The term “corporate engagement with climate policy” refers to the range of corporate activities defined as engagement by the Guide for Responsible Corporate Engagement in Climate Policy.

InfluenceMap's scoring process is policy neutral. It does not assess the quality of governmental policy implementing the Paris Agreement but rather the positions of companies and industry groups relative to this policy. The policy statements and ambitions from government bodies provide Paris Agreement- aligned benchmarks against which corporate policy engagement is assessed.

The methodology also includes benchmarks highlighting the increasing specificity of the IPCC on matters that may relate to or impact policy development. These are referred to as SBP benchmarks. A more detailed explanation of this benchmarking process is given in Appendix A.

2.3 Fact-checking of Corporate Disclosures on Climate Policy Engagement

Higher quality corporate disclosure on climate policy engagement practices has become a key demand of the investment community, with “investor expectations” on this issue emerging from institutional investors and their convenors. InfluenceMap provides an insight into the robustness of corporate direct disclosure on climate policy engagement activities by using investor expectations to structure its assessments.

This section develops the ideas and concepts introduced in the previous chapter to define the main parameters of the research process.

3.1 Definition of Corporate Climate Policy Engagement

Corporate climate policy engagement can be associated with words including “lobbying”, “advocacy” and “political activity” that carry different connotations depending on the context in which they are used. There are two sets of important concepts to consider when defining “corporate climate policy engagement”:

• Inside vs Outside: Academic literature has highlighted different types of tactic used by companies to influence public policy outcomes.¹¹ “Inside” here refers to efforts to influence policy via explicit interaction with formal policy decision makers (e.g. policymakers and politicians). “Outside” refers to tactics that focus on influencing public opinion as a means towards ensuring certain political and policy outcomes.

• Direct vs Indirect: This distinction is particular to the entity enacting the climate policy engagement. “Direct” refers to climate policy engagement carried out by the company itself. “Indirect” refers to climate policy engagement carried out on a company’s behalf by third-party groups including industry associations, think-tanks or PR agencies. It is possible that both direct or indirect climate policy engagement may make use of either inside or outside tactics.

To avoid confusion, InfluenceMap relies on the 2013 Guide for Responsible Corporate Engagement in Climate Policy issued by the secretariat of the UNFCCC and the United Nations Environment Programme (UNEP) under the UN's Caring for Climate collaboration of the United Nations Global Compact (UN Global Compact). This document defines a list of corporate activities that constitute corporate climate engagement, covering inside, outside, direct and indirect tactics. These range from advertising, social media, public relations, sponsoring research, direct contact with regulators and elected officials, funding of campaigns and political parties, and participation in policy advisory committees. They are generally coordinated by the regulatory affairs functions within the company but may also rely on PR, communications and marketing/advertising functions. InfluenceMap gathers the output of these activities that refer to climate policy and regulations as and when they are made publicly available.

3.2 Selection of Data Sources

InfluenceMap's methodology looks for evidence of corporate climate policy engagement that is scored against governmental and SBP benchmarks. The criteria for selecting data sources are that they must exist in the public domain, they must nominally apply to all entities in our scored universe and they must be reliable representations of corporate activity and behavior. These are mostly relevant and accessible in the public domain for all large companies and, with the exception of CDP and financial disclosures, for all large industry groups. The methodology divides the data sources into the following categories:

Table 2. The InfluenceMap data sources that are used to define corporate climate policy engagement.

These data sources define the different facets of corporate climate policy engagement overviewed above. For example, regulatory consultations (D4) capture certain ‘internal” lobbying tactics and are a necessary means by which corporates and industry groups communicate positions on policy matters and desired outcomes. These comments are available in the public domain, such as within the regulations.gov portal at the US Federal level. InfluenceMap maintains an active Freedom of Information request process to gain access to others.

Evidence of top management messaging (D6) under a variety of circumstances is indicative of potential efforts to sway policy via high-level communications aimed at key influencers. The use of social media channels (D2) and increasingly paid-for targeted social-media advertising (* new D8) * is a hugely important “external” lobbying tools for companies and their industry groups to capture the public narrative on climate change.

Inconsistencies across the data sources on key climate policy benchmarks can be captured in InfluenceMap's system. Recognition that the full extent of corporate climate policy engagement may not be evident in data sources available in the public domain is reflected in Figure 3.

Figure 1. Iceberg graphic depicting the known and unknown lobbying activities of the corporate sector.

3.3 Defining and Categorizing Climate Policy

The UNFCCC process (including IPCC guidance) has triggered climate motivated policy and regulatory processes from government regulators. The Paris Agreement commits signatories to produce Nationally Determined Contributions (NDCs), whereby nations outline their implementation plans to meet its goals. InfluenceMap's system considers existing, evolving and likely future policy measures issued by mandated bodies. "Mandated bodies" are defined here as various levels of government or government-authorized bodies that are currently tasked with NDC implementation in their regions.

Table 3. The subcategories of the climate policy engagement agenda that InfluenceMap has broken down into queries.

These measures cover high-level statements of intent through to detailed and prescriptive legislation, including setting targets and implementing standards, fiscal interventions and other binding regulatory requirements. Climate considerations also increasingly impact on non-climate motivated policy streams, such as building codes, land use and fiscal regulations. The climate components of these policies fall under InfluenceMap’s definition of Climate Policy.

InfluenceMap breaks down the climate policy engagement agenda into a series of subcategories that are referred to as "queries" (Q1-Q12). The evidence gathering and analysis in response to these queries builds a full picture of corporate interaction across the climate policy agenda.

Q1-4 and Q6-11 identify a company’s actual engagement with climate policy. Q1-Q4 relate to high-level climate policy issues while Q6-Q11 relate to legislative and regulatory strand categories that may be present at a regional-level. For example, Q6 as the Carbon Tax query would archive corporate engagement with global carbon taxation regulatory strands. Q1-Q11 related evidence pieces are scored against benchmarks related to the Paris Agreement and its implementation by nations. InfluenceMap has devised Government-related policy benchmarks and Science-Based Policy Benchmarks (SBP), which are described in detail in Appendix A.

Two additional queries (Q5 and Q12) are then used to test the clarity, accuracy and scope of corporate governance and disclosures on their climate policy engagement activities. These queries are benchmarked against investor expectations as detailed above.

3.4 Investor Expectations on Corporate Climate Policy Engagement

Shareholders are highly concerned about negative corporate climate policy engagement within their portfolios. This covers both policy engagement by companies and those of external bodies, such as industry groups representing companies in different jurisdictions. It has led to an increase in shareholder pressure on corporate management to address this issue. These investors are often long-term, ‘universal’ holders of the entire market who are concerned with the impact that delays to climate policy will have on the wider economy. The lack of transparency surrounding corporate climate policy engagement may also be obscuring corporate strategy on the energy transition, exposing investors with a range of time horizons to significant regulatory risk. Engagement with corporate climate policy engagement is now a strategic element within the framework of the Climate Action 100+ investor engagement process made up of 450 investors who collectively manage over $40 trillion in assets. Similar engagement is likely to extend into the corporate sector.

The Europe-based Institutional Investors Group on Climate Change (IIGCC) and the United Nations-supported Principles for Responsible Investment (PRI) network have set out expectations stating how companies should manage their climate policy engagement processes.

These documents broadly outline the need for companies to:

• Paris-Aligned Policy: To adopt climate policy positions in line with the Paris Agreement and to engage with climate policy and regulations accordingly.

• Governance: To ensure good governance of climate policy engagement, such as board oversight, auditing of climate policy engagement activities and industry group links, as well as consistent policy engagement with corporate climate goals.

• Misalignments: To correct any misalignments between policy engagement and corporate goals, such as industry group disconnects, in a timely and transparent manner.

• Disclosure: To ensure full transparency regarding climate change policy, policy engagement, industry groups, misalignments and any remedial plans.

An increasing number of companies now self-assess and disclose their climate policy engagements as a result of this pressure. InfluenceMap relies on the structure of investor expectations to provide a unique perspective into the robustness of these disclosures. Full Details of the overall assessment method are in Appendix B. A new, investor-backed research and consultation process is now underway in Europe to consolidate the various communications from investors on corporate climate lobbying into an authoritative, best-practice framework. InfluenceMap will continue to review its methodology in-line with the developing investor-consensus on this Issue.

3.5 Scored Universe Selection

As of June 2020, InfluenceMap's corporate climate policy engagement process covers around 250 industrial companies and around 100 leading industry groups, while also tracking the links between the two. It has been necessary to select the entire population of entities in advance and to avoid "cherry picking" which would result in an inability to compare in a like-for-like manner.

The system prioritizes the largest companies as measured by the Forbes Global 2000 process which aggregates a range of indicators relevant to economic size and political influence. An assessment of the entire corporate universe is not yet possible with there being, for example, more than 1,600 companies in the MSCI World Index. Based on the results of this scoring and on user need, companies within sectors most heavily engaged in climate policy are also included which are oil, gas, coal, power, shipping and aviation, automotive and energy intensive manufacturing. InfluenceMap also carries out assessments based on more specific groups of entities, such as scoring the leading companies in a particular region or sector, with careful attention being paid to selection based on economic size as an initial criterion.

As explained above, the academic literature has highlighted the role of direct and indirect corporate climate policy engagement. Indeed, the role of industry groups and other corporate representatives in the climate policy engagement process are a key issue for InfluenceMap’s users.

InfluenceMap captures the additional influence that companies have via third- party groups where possible. This analysis currently focuses on the role of industry groups for the following reasons:

• InfluenceMap’s analysis is focused at the company level and only captures third-party groups where their relationships with companies can be accurately and consistently tracked. While this is the case for most industry groups, many professional policy engagement consultancies and think-tanks exist under limited disclosure regimes which restrict such an analysis.

• Industry policy engagement groups act on behalf of entire sectors, or in some cases entire economies. They therefore have particular leverage to impact the passage of climate policy in the regions in which they operate. InfluenceMap’s analysis of these groups found them to be largely opposed to the Paris Agreement and so represent one of the most significant blockages to its implementation.

In selecting the scoring universe for industry groups, the following criteria are used:

• The Relative Ranking of an industry group is an estimation of the power it has in its jurisdiction, such as in the US, the EU, Japan or at the international level. This is assessed with reference to the size of the group, and the size and importance of the companies or sectors that it is mandated to speak for. This is done by surveying and aggregating the opinions of businesspeople, policy makers and civil society groups familiar with the jurisdiction and the group’s political influence.

• The Jurisdiction Weighting accounts for the size of the economy, and the contribution of the industry group’s jurisdiction to global greenhouse gas emissions and exported fossil fuels.

A group of around 100 industry groups are updated and additional ones are added to the InfluenceMap system based on these factors.

InfluenceMap refers to industry groups, business federations and other similar groups representing corporate interests as "influencers". This category will be expanded upon when enhanced data-collection techniques and disclosure regimes enable a rigorous and consistent approach to tracking links between companies and other types of third-party policy engagement groups.

4.1 Matrix Based Data Platform

The following section describes the practical details of the assessment process and its implementation.

InfluenceMap sources, scores and archives large volumes of data in PDF documents, text comments and links to external URLs. As of April 2020, the system has archived over 200,000 evidence pieces online. Bespoke software has been designed based on a MySQL database system with both operator content management systems (CMS) and user-friendly displays to communicate the results.

Unilever’s profile shown in Figure 2 provides an example of both the CMS and user displays for an identical part of the platform. It shows the matrix feature of the assessment software that allows for efficient archiving and clear communication of large amounts of data.

Figure 2. The public-facing and CMS displays of Unilever’s profiles on the InfluenceMap site.

The matrix in the public facing graphic splits the climate agenda into InfluenceMap’s queries in the far-left column, with the data sources labelled along the top row. The scores within the table hyperlink to archived evidence pieces and scoring details that are set out hierarchically. The ‘Summary of InfluenceMap Scoring’ explains the entity's score and the resulting high metrics are noted under ‘InfluenceMap Score’ in the top left corner of the page.

This matrix structure and hierarchical organization of data allows for a flexible and scalable platform, making the information clearly available for a range of users.

4.2 The Scoring System

American Petroleum Institute’s profile shown in Figure 3 provides an example of an InfluenceMap scoring matrix in detail.

Figure 3. An example of InfluenceMap’s scoring matrix using American Petroleum Institute’s profile as an example.

Each cell in the matrix holds evidence of corporate policy engagement gathered from the chosen data source that is relevant to its identified query. Each cell holds up to 10-20 evidence items.

Each piece of evidence is analyzed by InfluenceMap’s team to determine the company’s level of support or opposition to the relevant strand of climate policy. To ensure objectivity and consistency, this assessment is carried out in line with a strict framework of benchmarks (see Appendix A for examples of scoring against policy benchmarks). The system also captures data points relating to each piece of evidence that covers information such as date, region and specific legislation.

Figure 4 shows the inside of a cell within the matrix of the American Petroleum Institute’s profile. Each cell in the matrix has its own score which is computed from the evidence contained within it and is weighted for factors such as the date and significance of the evidence. Public users may view this cell by clicking on the relevant matrix cell online.

Figure 4. A detailed view of the public-facing display of the cell content within American Petroleum Institute’s matrix.

Weblinks to the evidence source are provided in the bottom left of the screen, as well as time-stamped downloaded PDF files in case the page has been removed. "Extract from Source" gives an exact quote from the document that InfluenceMap is scoring, with “InfluenceMap Comment” giving a human-generated comment above it.

Figure 5. The CMS display of the intermediate tags and metrics within a cell in American Petroleum Institute’s profile.

The range of tags and "intermediate metrics" (metrics used by InfluenceMap to calculate the entity’s final top-line metrics) can be seen by switching to the operator CMS screen view of this same matrix cell.

The following intermediate tags and metrics are recorded by the process:

• Score assesses the evidence relative to InfluenceMap’s benchmarks. It does so on a numerical five-point scale ranging from + 2 to -2 which descends from ‘strongly supporting’, ‘supporting’, ‘no position/mixed position’, ‘not supporting’ or ‘opposing’ the policy strand in question. Real world scoring examples can be found in Appendix B.

• Importance assesses the significance of the evidence piece relative to others in the cell on a 0 to 10 scale.

• Flag or Star tags positive and negative evidence pieces of high significance to the system’s users. These appear in the user interface as red or blue cells (there are three in the American Petroleum Institute's matrix above).

• Region, law and year are three tags that allow the dataset to be analyzed from various angles, such as variation over time and regional or policy deep dives.

• Cell Score is an intermediate metric that is based on the individual scores of the evidence pieces in the cell, their importance and their year. Older evidence pieces carry less weight in the system, and so only those from the last two years contribute to the current cell score. Other evidence pieces remain archived for context.

4.3 Assessment of Industry Group Links

InfluenceMap maintains a database of over 100 industry groups, federations and advocacy groups (collectively referred to as "influencers'' in the system) which are scored in the same way as companies. A key innovation of InfluenceMap's system is to track links between the two groups via their direct disclosures. Figure 6 shows ExxonMobil’s profile with the "Details of Relationship Score" tab selected.

Figure 6. An example of the “Details of Relationship” tab using ExxonMobil’s profile.

This shows an output of the database of relationships between companies and their key industry groups. This database is updated on a continuous basis by InfluenceMap. The top-line metric for each company is captured based on its own policy engagement ("Organization Score") and separately for the aggregate of its industry groups ("Relationship Score"). Misalignments can then clearly be seen. To capture the nuances that exist within the Relationship Score, InfluenceMap uses two further intermediate metrics related to the company- industry group linkage:

• Relationship Strength between companies and industry groups on a 1-10 scale from weak to strong. For consistency, InfluenceMap has devised precise guidelines on how to rate the strength of a variety of relationships.

• Relative Ranking of an industry group is an estimation on a 0-10 scale of the power it has in its jurisdiction, such as in the US, the EU, Japan or at the international level. This is assessed with reference to the size of the group and the size and importance of the companies or sectors that it is mandated to speak for. This is done by surveying and aggregating the opinions of businesspeople, policy makers and civil society groups familiar with the jurisdiction and the group’s political influence.

To ensure complete transparency, the Relationship Scores for all links that a company has with its industry groups are available for users to view via a simple light box display over the profile page as shown in Figure 7.

Figure 7. The light box in ExxonMobil’s profile that outlines the Relationships Scores for all links that it has with its industry groups.

4.4 Weightings and Algorithms

The previous section outlined how intermediate metrics are arrived at for evidence pieces, industry groups and company-industry group linkages. This transparent system is designed to generate results which are identical and replicable regardless of who is engaged in the scoring process. The following are the key intermediate metrics that are used to compute the final top-line metrics:

• Cell Scores for the matrices of company and industry groups.

• Relationship Strengths for the links between companies and industry groups.

• Relative Rankings of the industry groups that a company is linked to.

This is done by applying weightings to the cells in the matrices to recognize the relative importance of the data sources and queries and to allow for sector variation. For example, the automotive sector will have a stronger weighting assigned to Q11/GHG Emissions Standards as this category includes vehicle emissions standards.

To achieve this, an algorithm is used to assign weightings to the individual cells based on stakeholder and advisory group consultations. The data sources are weighted first which is automatically followed by the weighting of the queries. The terms NS and NA seen in the table below refer to "Not Scored" and "Not Applicable" respectively. Not Scored is given when no evidence is found for that cell. Not Applicable is given when certain data sources do not apply, such as when industry groups do not disclose to CDP or financial regulators. When NS and NA can be applied to one cell, the weighting for that cell is redistributed equally by the algorithm among the remaining cells in that query. The weightings then always total to 100% and the lack of information or non-relevance of the data source has no net impact on the organization's top- line metrics.

Table 4. The table shows the weightings in the scoring matrix

InfluenceMap recognizes that different users have varying needs in terms of levels of detail required. The system is designed for a variety of user needs in a single, interconnected platform. The contents are presented in the form of metrics, narrative text, investor notes and thematic reports.

5.1 Metrics

Table 5 shows the top-line numerical metrics generated by the system for each organization:

Table 5. The top-line numerical metrics generated by the InfluenceMap system for each organization.

The Performance Bands shown in Figure 8 relate to a 0 to 100 scale and are linked to color coding frequently used within the InfluenceMap portal and publications.

Figure 8. The color coding used to show the Performance Bands of companies on their InfluenceMap profile.

5.2 Organizational Profiles, Investor Notes and Reports

The metrics above combine to provide an accurate picture of the organization's behavior towards Paris-aligned climate policy. Users can navigate InfluenceMap’s portal to explore why an organization has been assessed in a certain way. Unilever’s profile provides an example where toggling between Organization Score and Relationship Score offers full details and documentation on how these metrics are determined.

InfluenceMap also generates brief narrative summaries and more detailed notes for each organization designed for engaging with the companies or industry groups concerned. Institutional investors who use InfluenceMap’s content for engagement activities find these to be particularly useful. The narrative profiles can be found on each organization’s profile page and contain hyperlinks to evidence pieces in its scoring matrix.

Unilever appears to actively support multiple strands of climate change- related regulations and policies.

• Former CEO Paul Polman has been a notable supporter of climate legislation and has frequently supported ambition towards the UN treaty on climate change.

• Paul Polman signed a Mission 20:20 statement in 2017 calling for immediate action on transitioning the global energy mix, including phasing out coal and implementing a large uptake in electric vehicles.

• In the same year, Unilever became a signatory to the 'We Are Still In’ initiative that supports leadership within the US on accelerating a clean energy transition.

• The company has actively supported legislative measures to drive an energy transition in the UK and Canada .

• Unilever supported a higher renewable energy target of 35% across Europe in 2017 and called on policymakers to support measures such as corporate renewable PPAs to ensure that this ambition is met.

• Unilever appears to support a price on carbon, including progressive reform of the European emissions trading scheme.

• In 2018, Unilever supported a proposed carbon tax policy in the US, although seemingly over “less efficient regulations” such as the US Clean Power Plan.

• Unilever called for ambitious CO2 targets for heavy-duty vehicles in Europe during the same year.

• Unilever's current CEO Alan Jope wrote an open letter in 2019 to the company's industry groups asking them to confirm alignment of their climate positions with those of Unilever and the 1.5-degree ambition set out in the Paris Agreement.

Public facing profiles of companies and industry groups assessed by InfluenceMap as shown in Figure 9 can be found here .

Figure 9. An example of the investor notes on Daimler’s profile from late 2018.

InfluenceMap regularly publishes reports on themes around climate policy engagement by sector, country and policy. The website contains an overall account of this and a full list of downloadable reports.

Figure 10. InfluenceMap frequently uses this quadrant chart to measure support for climate policy against Policy Engagement Intensity.

InfluenceMap uses the quadrant chart shown in Figure 10 to communicate results for the corporate sector. Performance Band is plotted along the horizontal axis from F through to A+ against Policy Engagement Intensity along the vertical axis.

A company with a Performance Band towards F and a high Policy Engagement Intensity actively opposes climate policy and can be found in the upper left quadrant. The companies in the upper right quadrant are active advocates for more ambitious climate policy. The companies in the lower quadrants are in between these extremes and are largely inactive when it comes to meaningful climate policy engagement.

The following defines terms used in this document and the InfluenceMap system. They are presented in alphabetical order.

Table 6. The glossary of InfluenceMap terms.

A.1 Introduction

The main body of this report details InfluenceMap’s processes for assessing corporates on their climate change policy engagement activities and disclosures. To remove subjectivity and value-judgements, all evaluations made under InfluenceMap’s system are done according to strict processes comparing the subject matter to external standards. InfluenceMap refers to this process as “benchmarking”.

Different benchmarks are used across the InfluenceMap system. Table 7 breaks this down with reference to the climate policy subcategorizations or “queries” introduced in Chapter 3. This appendix addresses the benchmarks used or proposed to assess actual corporate climate policy engagement activities (Q1-4 and Q6-11). Appendix B details the benchmarks used for assessing direct corporate disclosure and governance of their climate lobbying activities (Q5 and Q12).

Table 7. Descriptions of the InfluenceMap subcategorizations broken down into queries.

A.2 Scoring corporate lobbying against benchmarks

InfluenceMap assesses each item of evidence against a company’s engagement with climate change policy to determine levels of support or opposition. This relies on a systematized process of discourse analysis¹² that results in each evidence piece being coded as: ‘Strongly supporting’; ‘Supporting’; ‘No position/Mixed position’; ‘Not supporting’; or ‘Opposing’. These codes correspond to a numerical five-point scale between +2 and -2, where +2 indicates full support for Paris and IPCC-aligned policy and -2 indicates active opposition. Using a five-point scale enables a more nuanced analysis of the grey-areas within corporate positioning on climate policy. To determine how an evidence piece is coded, InfluenceMap uses benchmarks against which evidence of corporate policy engagement is compared. The level of support or opposition is thus determined by the extent to which there is alignment between the corporate’s position and the benchmark.

A.3 Governmental Policy Benchmarks

As shown in the table above, InfluenceMap’s system for scoring climate policy engagement activities primarily relies on Governmental Policy benchmarks which are drawn from the statements and ambitions of governmental bodies mandated to implement the Paris Agreement. It should be noted that Q1, which specifically assesses the extent to which a company is transparently communicating on the science of climate change, relies on the reporting and guidance of the IPCC.

Governmental Policy benchmarks are chosen with respect to the content and context of the evidence item being examined. For example, if a company is communicating on the Cap and Trade system in California, the statements and ambitions of the Californian Air Resources Board would be used as the benchmark to score this evidence. This process therefore relies on what the closest applicable governmental climate authority has said about the policy in question. Two important factors must be accounted for in the benchmark selection process:

• The statements must best reflect the government bodies’ original intent with regards to a specific policy that were likely communicated at the start of the policy-making process. This mitigates against using benchmarks that have already been influenced by corporate lobbying.

• Statements from governments (or government bodies) that have clearly rejected the goals of the Paris Agreement are excluded, such as the current US EPA. In such a case and if possible, we revert to a time when the government bodies did accept the Paris Agreement (e.g. the US EPA prior to 2016), or we draw from the nearest applicable authority. An example of this might be a state-based climate regulator such as The California Air Resources Board.

Table 8 illustrates how this system works using the example of the US CO2 Vehicles Standards. Table 9 lists some other examples of key policy benchmarks used to assess company climate policy engagement along with evidence pieces.

Table 8. An InfluenceMap Governmental Policy Benchmark used to score the US CO2 Vehicle Standards.

Table 9. Examples of InfluenceMap’s policy benchmarks used to assess company climate policy engagement along with evidence pieces.

A.4 Science Based Policy (SBP) benchmarks

InfluenceMap’s Governmental Policy Benchmarks are founded in their “policy neutrality”. This means that the system does not evaluate the quality of governmental policy measures, but instead rests on the assumption that the policy proposals and ambitions from government bodies mandated to implement the Paris Agreement constitute the most authoritative, real-world set of standards for benchmarking corporate policy engagement.

The Paris Agreement commits signatories to emission reductions consistent with a world well-below 2°C and to pursue efforts to limit temperature increase to 1.5°C. However, as was highlighted in the IPCC’s special report on Global Warming of 1.5°C in October 2018 and again in the November http://imd.crimmond-associates.co.uk/evoke/2019 UNEP's Emissions Gap Report, countries are falling short of these goals. This highlights a gap between InfluenceMap’s analysis using Governmental Policy Benchmarks and actual Paris-Aligned climate change lobbying.

The IPCC’s October 2018 Special Report on Global Warming of 1.5° C advises on the need for “stringent and integrated policy interventions” in order to achieve 1.5 °C mitigation pathways. The report provides detailed and policy orientated information on various issues such as the energy mix, a price on carbon, required uptake of renewable energy and electric vehicles, and the viability of negative emission technologies like carbon capture and storage. To help account for the gap identified above, InfluenceMap will be supplementing its Governmental Policy Benchmarks with SBP Benchmarks derived from this report.

In doing so, it is important for InfluenceMap to avoid inadvertent and premature judgements of governmental climate-motivated policy streams, which in many areas are still evolving, and which must account for a range of political and economic conditions.

The application of these benchmarks will therefore focus on:

• Corporate engagement with broader climate and energy policy issues that is not directly relevant to a specific item of current, climate-focused governmental policy or regulation, such as corporate advocacy on the role and importance of different energy types in the future energy mix. InfluenceMap considers this form of corporate and industry influencing to be systemically important in the broader process of setting government policy priorities on climate and energy.

• Engagement with specific policy and regulatory streams emanating from governmental bodies that have rejected the Paris Agreement, such as Environmental Protection Agency at the US Federal level as of November 2019.

A.5 Using the IPCC's Guidance as a basis for Climate Policy Benchmarks

At COP21 in 2015, the International Panel on Climate Change (IPCC) was invited by the UNFCCC to produce the Special Report on Global Warming of 1.5° C to support the adoption of the Paris Agreement. Its aim was to present global greenhouse gas (GHG) emission reduction pathways consistent with meeting the Paris Agreement’s aims of “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels”, while also achieving sustainable development. The 2018 report overviews a set of potential pathways and systematic transition options that could lead to a transformation of the global energy system in line with the 1.5°C goal. Building on the remit of previous studies by the IPCC, the report was specifically designed to give policymakers the information needed to tackle climate change while also considering regional and socioeconomic contexts.

The report concludes that “robust, stringent and urgent transformative policy interventions” are needed to achieve systematic change, entailing radically different conditions under which companies will have to operate and sell their products. The IPCC provides a framework for understanding 1.5°C-aligned policy positions through its assessment of the role of various energy sources, technologies and policy options across the different 1.5°C mitigation pathways (Chapter 2), as well as its further discussion of the feasibility of the mitigation options available for energy, transport and industrial system transformations (Chapter 4). InfluenceMap proposes that, from these science- based assessments, a new series of benchmarks can be developed to assess “science-based” corporate climate policy engagement.

As there is a multitude of potential and sometimes competing pathways for addressing climate change, the IPCC use Integrated Assessment Models (IAMs) to assess the technological, socio-economic and political feasibility of the different GHG emission reduction options. In their 2018 report, the IPCC used IAMs to explore the different decarbonization pathways available to stay within a 1.5°C or 2.0°C warming scenario. It covers 90 pathways consistent with 1.5°C warming and 132 pathways consistent with 2.0°C warming. The findings presented in the 1.5°C Special Report are based on analysis of this ensemble. The results of an IAM are highly dependent on the assumptions built into the code, such as the assumed relationship between population growth on food demand and GDP increases in diet.

Most IAMs tend towards the goal of minimizing economic costs of achieving mitigation outcomes and are thus designed to be used to inform policymaking processes through testing the implications of different policy decisions. While an individual IAM modelling approach does not lend itself to inform a specific course of action or to follow a mitigation pathway, consensus can be found through the areas of agreement in the results of the overall IAM ensemble. This consensus driven approach produces the key findings present in the 1.5°C Special Report on a range of climate policy issues including carbon taxes, energy efficiency and the role of different energy types that can be used to inform policymaking. The IPCC’s analysis of these climate policy issues covers not only the hypothetical climate contribution of different energy types, technologies and policy pathways, but also includes analysis of the technical, political and economic feasibility challenges associated with these options. InfluenceMap’s use of the IPCC’s 1.5°C Special Report is designed to consider both aspects of this analysis.

InfluenceMap’s process for deriving scoring benchmarks from the IPCC’s Special Report on 1.5°C warming therefore relies on the following principles:

• Policy guidance statements within the IPCC report that are associated with the greatest confidence and backed by the most evidence are relied on the most. Corporate or industry group alignment or contradiction to these statements illicit the strongest scores. Further findings summarized in the IPCC report are used to guide the scoring framework where greater nuance is required.

• Corporate and industry group alignment with the science is analyzed while considering the specificity of the positions communicated by these entities. It also considers how these positions are communicated. Evidence demonstrating that active engagement and advocacy on a particular climate policy issue is more clearly understood to be aligned or misaligned with a given science-based benchmark than more passive or banal statements. Thus, evidence of detailed advocacy on a specific climate policy issue is likely to receive stronger alignment or misalignment scores than generalized or high-level statements on the issue.

The section below overviews an initial five new science-based benchmarks for corporate and industry group advocacy on the role of coal, natural gas, oil, nuclear and renewable energy in the energy mix. These benchmarks focus on the broader role of these energy types in a global energy transition, with coal, natural gas, nuclear and renewables covering the power sector in particular. These will be followed in due course with more explicit benchmarks covering low-carbon transitions for the transport and industrial sectors, along with benchmarks covering various other policy issues, fuel types and technologies.

For each benchmark below there are two tables. The first table summarizes the benchmark and provides the key IPCC findings and statements upon which it is based. The second table develops this into a +2 to -2 scoring framework, with potential applications and examples illustrating how the benchmark might be used to assess corporate engagement with these issues.

A.6 Coal

Summary of Science Based Policy Benchmark on Coal Lobbying

An assessment signifying alignment with IPCC on the role for coal in the future energy mix is attained via strong support for governmental intervention to ensure swift removal of unabated coal from the energy mix. Such positions must be communicated with reference to timelines that align with IPCC guidance between 2020-2050. Entities can also score positively for advocacy that sees a prolonged, although significantly reduced, role for coal. However, this can only be achieved under strict, communicated conditions around the deployment of CCS. Entities must be transparent on the IPCC described risks and uncertainties associated with this approach. Any other advocacy for a prolonged role for coal scores negatively. This includes advocacy based on the use of High Efficiency Low Emissions Technologies. It also includes advocacy for a longer-term role for coal which references CCS but is ambiguous with regards to the plan to ensure its scale up and deployment or one that fails to transparently disclose on the risks associated with this pathway, as explained by IPCC. Due to the lifetimes of coal power plants and uncertainties around scale up and deployment of CCS for coal, any advocacy for expanded coal capacity, including new coal power installations, also scores negatively regardless of communications around CCS.

Table 10. Summary of science-based benchmark and key IPCC findings for coal.

Table 11. The scoring framework for coal alongside examples of how the benchmark is used to assess corporate engagement with these issues.

*This includes advocacy that references CCS technology but either does not make it a condition for the future use of coal or does not accompany this with support for regulation to ensure CCS scale up and deployment. Similarly, it also includes any advocacy for coal based on the HELE technologies.

A.7 Natural Gas

Summary of Science Based Policy Benchmark on Natural Gas

A positive assessment of alignment with the IPCC on the role for natural gas in the energy mix can be achieved by entities supporting stringent intervention to remove unabated natural gas from the energy mix. Such positions must be communicated with reference to timelines that align with IPCC guidance between 2020-2050. Entities can also score positively for advocacy that sees a longer role for natural gas in the energy mix, as long as this is communicated with reference to strict conditions on the deployment of CCS, methane abatement measures and is clearly aligned with IPCC guidance on the corresponding ramp up of renewables in the energy mix. The relative risk and uncertainties related to this approach, as described by the IPCC, should also be communicated. Stated support for a transition towards a low-carbon energy mix that includes ambiguity concerning the timelines and extent of the reduction of unabated fossil fuels will result in comparatively reduced scores. The suggestion that government intervention is unnecessary to transition away from unabated fossil fuels such as natural gas scores negatively, as does advocacy in favor of natural gas on the basis that it is "low carbon" without clear conditions regarding CCS deployment and methane abatement attached. Advocacy in favor of measures that risk locking in GHG emission intensive energy systems on the basis of supporting natural gas, or opposition to the need for mandates on CCS deployment, likewise score highly negatively.

Table 12. Summary of science-based benchmark and key IPCC findings for natural gas.

Table 13. The scoring framework for natural gas alongside examples of how the benchmark is used to assess corporate engagement with these issues.

A.8 Oil

Summary of Science Based Policy Benchmark on Oil Lobbying

A positive assessment of alignment with the IPCC on the role for oil in the future energy mix can be achieved by entities supporting stringent intervention to reduce oil from the energy mix, communicated with reference to timelines that align with IPCC guidance between 2020-2050. Statements of support for a transition towards a low-carbon energy mix that include ambiguity concerning the timelines and extent of the reduction of unabated fossil fuels will result in comparatively reduced scores. The suggestion that oil is desirable in a long-term energy mix or that government intervention is unnecessary to transition away from GHG emission intense energy source scores negatively. Advocacy in favor of measures that risk the locking in of a greater or extended role for oil in the energy mix score the most negatively.

Key IPCC Findings:

Table 14. Summary of science-based benchmark and key IPCC findings for oil.

Table 15. The scoring framework for oil alongside examples of how the benchmark is used to assess corporate engagement with these issues.

A.9 Nuclear

Summary of Science Based Policy Benchmark on Nuclear Lobbying

The assessment of alignment with IPCC on the role for nuclear in the future energy mix takes into account an entity's position on nuclear power as well as the entity’s broader position on the future energy mix. Scores for the strongest alignment to IPCC guidance are achieved when support for nuclear is communicated as part of a broader position in support of phasing out unabated fossil fuels and transitioning to a predominately renewables-based energy system, in line with IPCC guidance for 2020-2050. Communication in support for nuclear that includes ambiguity regarding a broader transition towards a zero- emissions results in comparatively reduced scores. Due to the current time lag between decision date and the commissioning of new nuclear plants, advocacy supporting a delayed transition that is dependent on a scale up of nuclear energy scores negatively. So too does advocacy that appears to see nuclear power as an alternative to renewable energy, or a partner for unabated fossil fuels e.g. coal and natural gas. Opposition to a transition towards a zero- carbon energy mix, covering renewables and nuclear, also scores negatively.

Key IPCC Findings:

Table 16. Summary of science-based benchmark and key IPCC findings for nuclear.

Table 17. The scoring framework for nuclear alongside examples of how the benchmark is used to assess corporate engagement with these issues.

A.10 Renewables

Summary of Science Based Policy Benchmark on Renewables Lobbying

A positive assessment of alignment with the IPCC on the role for renewables in the future energy mix can be achieved by entities supporting stringent intervention to ensure a significant ramp up in renewables in the energy mix, communicated with reference to timelines that align with IPCC guidance between 2020-2050. Stated support of an increase in renewables that includes ambiguity concerning the timelines and the extent of this will result in comparatively reduced scores. Advocacy suggesting that the transition towards renewables should be slower, should be left to market forces, or should be limited so that other energy sources e.g. fossil fuels continue to play a dominant role in the energy mix score negatively. Advocacy in opposition of measures to ensure an immediate ramp up in renewables score highly negatively.

Key IPCC Findings:

Table 18. Summary of science-based benchmark and key IPCC findings for renewables.

Table 19. The scoring framework for renewables alongside examples of how the benchmark is used to assess corporate engagement with these issues.

B.1 Introduction

Corporate climate policy engagement is a strategic element of the Climate Action 100+ investor engagement process made up of 450 investors who collectively manage over $40 trillion in assets. Similar engagement is likely to extend to the corporate sector more broadly.

Several investor-representative groups, such as the UN PRI, theIIGCC and CERES , have formalized their expectations of how companies should manage their climate policy engagement processes. These investor expectations broadly align in their requests of companies and are summarized as follows:

• Paris-Aligned Advocacy: To adopt climate policy positions in line with the Paris Agreement and to engage accordingly.

• Policy Alignment Processes: To ensure good governance of climate policy engagement processes and industry group links, and consistency between the company’s stated climate goals and its policy engagement activities.

• Disclosure: To ensure full transparency regarding positions on climate change policy, policy engagement, industry groups, misalignments and any remedial plans.

An increasing number of companies now self-assess and disclose their climate policy engagements as a result of this pressure, with a particular focus on reviewing industry groups’ alignments with climate policy. Since BHP published its industry group review in 2017, around 15 major global corporates such as Anglo American, Shell, RWE, BASF and BP have delivered or committed to similar disclosures of their industry group links in response to investor pressure, with many more expected in 2020. This positive momentum will be undermined if these disclosures do not meet investor expectations.

In response to this emerging trend, InfluenceMap has developed a new framework to assess company disclosures on their links to industry groups and how these relationships are governed. This is benchmarked against the Disclosures and Policy Alignment Processes aspects of investor expectations on climate policy engagement.

B.2 Assessing Disclosures

The UN PRI’s ‘Investor Expectations on Corporate Climate Lobbying’ report highlights the need for companies to disclose their positions and activities on climate change policy engagement, as well as the positions and activities of the industry groups that they support. The governance processes implemented, and actions taken to ensure alignment with these activities and stated climate goals, should also be disclosed. The IIGCC and CERES articulate similar expectations, while also requiring companies to disclose a material impact assessment of policy engagement by an organization that opposes their public position. InfluenceMap has developed the following assessment criteria to test the clarity, accuracy and scope of information provided by companies against four key issues based on these expectations.

Table 20. InfluenceMap’s assessment criteria for disclosures in line with investor expectations.

B.3 Assessing Progress on Policy Alignment

In addition to transparent disclosures, the IIGCC, CERES and the UN PRI’s investor expectations also outline the need for robust processes to align a company’s stated policy position and the positions and policy engagement activities of its industry groups.

These processes are described as follows:

• Initial processes to identify an industry group’s climate policy engagement activities and to assess alignment with the company’s own climate positions.

• Ongoing processes to monitor and review an industry group’s climate policy engagement activities.

• Processes to act in situations where policy engagement is not aligned.

InfluenceMap assesses a company’s progress towards reforming their industry groups according to the following framework:

Table 21. InfluenceMap’s framework used to assess a company’s progress towards reforming their industry groups.

InfluenceMap is using its database on corporate and industry group climate change policy engagement to track the evolution of their positions over time. This will be compared against the company’s own reviews of these industry groups over the same period. The following section uses BHP as an example of this.

B.4 InfluenceMap’s Assessment of BHP

Assessment of BHP's Disclosure

The following summarizes InfluenceMap’s assessment of BHP’s 2019 Industry Association Review.

B.5 Assessment of BHP’s Progress on Policy Alignment

Table 22 assesses BHP’s broader processes for addressing the misalignment of its industry groups against investor expectations on climate.

Table 22. InfluenceMap’s assessment of BHP’s processes for addressing misalignments with its industry groups.

As a measure of BHP’s progress towards reforming its industry groups, InfluenceMap’s assessment of the climate policy engagement of BHP’s key industry groups since 2017 is shown in Table 23. The hyperlinks go back to the profile of each group on InfluenceMap’s website.