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Businesses are using trade associations to undermine EU climate policy, says report

27 March 2015

New research has found that many major multinational companies with strong sustainability policies are at the same time members of trade associations which are lobbying against EU climate policy. These EU policies include attempts to strengthen the EU Emissions Trading Scheme through ‘backloading’, and targets on energy efficiency and renewable power.

Analysing eight prominent trade associations operating in the EU, the report, ‘Lobbying by Trade Associations on EU Climate Policy’, prepared by the Policy Studies Institute (PSI) at the University of Westminster, found that 61 per cent of all companies surveyed and 77 per cent of the largest 500 companies in the world said that they utilised trade associations to lobby on climate policy.

The report profiles trade associations including BUSINESSEUROPE, which has argued that EU climate targets undermine industrial competitiveness. Another example is Cefic (the European Chemical Industry Council), which has argued that strengthening the EU Emissions Trading System would ‘directly worsen the measures against carbon leakage without any environmental need’.

The report questions whether this lobbying by trade associations is aligned with the stated sustainability policies of the companies that are their members. The researchers found that investors have concerns about misalignment between companies and their trade associations on climate policy in both the EU and the US.

Commenting on the report, Ben Fagan-Watson, lead researcher and Research Fellow at PSI, said: “Companies which are making strong commitments to deal with climate change need to ensure that their trade associations are singing from the same hymn sheet. The EU has been an international leader in taking policy measures to combat climate change. In the run-up to COP21 in Paris, this leadership should not be undermined by trade associations lobbying to protect narrow, short-term industrial interests at the expense of the EU economy and the global climate in the long term.”

The main findings of the report include:

  • Climate policy presents both opportunities and threats to business.
  • Businesses use trade associations to lobby on climate policy more than any other approach – even more than direct contact with policymakers.
  • Trade associations use a variety of tools to exert influence over EU climate policy, including pushing new policy initiatives, providing technical information and advice, and utilising companies and other stakeholders to drive messages home – for example, through organising meetings and dinners between CEOs of large companies and EU Commissioners.
  • Trade associations for energy-intensive sectors and the fossil fuel industry utilise a variety of arguments to shape climate policy. They frequently argue that effective climate policy undermines competitiveness and will lead to deindustrialisation.
  • Member companies need to assess if the positions of their trade associations are undermining their own stance on climate change.

Some companies have recently taken action when their trade associations have lobbied against effective climate policy. On 22 August 2014, consumer products giant Unilever ended its membership of EU trade association BUSINESSEUROPE, hinting at tensions with the lobby group’s stance on environmental policies. On 22 September 2014, Google left US Trade Association the American Legislative Exchange Council (ALEC). Google Chairman Eric Schmidt clarified that this was because of ALEC’s opposition to action on climate change. “The people who oppose it are really hurting our children and grandchildren and making the world a much worse place,” Schmidt said “We should not be aligned with such people. They are just literally lying.”

This is the first academic report to focus on how and why trade associations representing industrial sectors or broader business interests have lobbied on EU climate policy, and the impact that they have had on the policymaking process.

PSI is one of the United Kingdom’s leading research institutes, enjoying a reputation for the rigorous and impartial evaluation of policy in the UK and Europe since 1931. PSI’s mission is to inform a sustainable future. Based in central London, PSI is part of the University of Westminster’s Faculty of Architecture and the Built Environment.


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