What seems to be driving these proposals? Across sectors, there tends to be a gap between the quality of corporate issuers’ climate commitments and their level of transparency on lobbying, potentially signaling risks for investors. A company could conceivably publish an ambitious greenhouse gas reduction target for its operations and value chain, while simultaneously funding public policy initiatives that may not align with progress towards reaching the goals of the Paris Agreement. The chart below illustrates the gap between corporate climate commitments and level of transparency on lobbying efforts, focusing on S&P 500 companies, and leveraging two Corporate Rating indicators:

• Greenhouse gas emission reduction targets and action plans – this indicator evaluates whether a company has a science-based target aimed at limiting the global temperature increase to 2°C compared to pre-industrial levels, accompanied by a comprehensive action plan to achieve said target;
• Transparency on participation in public policy making and lobbying activities – this indicator looks at the extent to which a company publicly discloses its lobbying positions, along with specific expenditures and channels used for lobbying (e.g., trade associations).

The contrast in performance between these two indicators is especially stark for sectors that have strong climate commitments but lack transparency on lobbying (e.g., Materials, Consumer Staples, Information Technology). While companies in these sectors have taken significant steps to manage their carbon footprint, there remain opportunities to enhance disclosures addressing the intersection of climate and lobbying. The gap is narrower for sectors that lag in both areas (e.g., Energy, Financials).