Sustainable Finance Policy Engagement - An Analysis of Lobbying on EU Sustainable Finance Policy September 2020 - Politico.eu
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Sustainable Finance Policy Engagement An Analysis of Lobbying on EU Sustainable Finance Policy September 2020
Sustainable Finance Policy Engagement An Analysis of Lobbying on EU Sustainable Finance Policy September 2020 Table of Contents Executive Summary 2 Glossary 4 Introduction 5 Methodology 7 Results 9 Ranking Tables 21 Sustainable Finance Policy Engagement. September 2020 1
Executive Summary
This research has mapped out intensive lobbying on European sustainable finance policy, led by industry
groups representing the finance and corporate (real economy) sectors. Whilst a small number of financial
institutions have pushed for ambitious policy, the majority have remained silent or stated only high-level
support. Meanwhile, all but one of the 20 powerful industry associations analyzed have lobbied to dilute
and delay key regulations designed to align Europe's financial system with the Paris Agreement.
The lobbying comes at a critical moment with the European Commission currently deciding a Renewed
Sustainable Finance Strategy, considering both the European Green Deal and the need to recover from the
impact of COVID-19. Having consulted on possible next steps over the summer, a proposal is expected
from the Department for Financial Stability and Capital Markets (DG FISMA) in the fourth quarter of 2020.
This will build on the current EU's Action Plan on Sustainable Finance, originally launched in 2018, to
deliver on a High-Level Expert Group on Sustainable Finance (HLEG) recommendation for “no less than a
transformation of the entire financial system”.
InfluenceMap's research covers 75 financial companies belonging to 63 of the largest financial institutions
in Europe, 12 finance sector industry associations and 8 corporate industry associations. The methodology
drew on InfluenceMap's established methodology for assessing corporate influence on key policy areas,
scoring over 2000 evidence pieces across the 83 entities involved to derive metrics indicative of policy
engagement behavior towards sustainable finance policy. InfluenceMap consulted extensively with these
industry groups and individual financial institutions on the methodology and their scores prior to release.
BNP Paribas, Aviva and Groupe BPCE stand out as being actively engaged in promoting progressive
sustainable finance policy. However, there is also a small group of individual financial institutions including
BlackRock, BNY Mellon, Invesco and UBS that appear to be resistant towards stringent regulation.
The quadrant chart below plots the results of InfluenceMap's analysis for the financial institutions and
industry associations included in the analysis. Engagement Intensity refers to how actively the entity is
engaging, while Organization Score measures the degree of support/opposition to policy.
Most financial institutions (bottom-right quadrant, in blue) have shown caution and, despite having made
some high-level supportive comments, have tended not to engage in a detailed or intensive manner. A
small number of financial institutions (top-right quadrant, blue) have been actively engaged in promoting
sustainable finance policy. A few financial institutions (center-left of the diagram, blue) appear to be more
cautious about sustainable finance policy. See section on Key Finding 1 for more detail.
Finance industry associations (center-left of the diagram, yellow) appear to have positions that are
misaligned from most of their members and have tended to state high-level support for policies whilst
lobbying on detailed regulation to weaken their stringency. See section on Key Finding 2 for more detail.
The research highlights the importance for active progressive lobbying by finance, with a battle emerging
with corporate industry associations (bottom-left quadrant, green) that have been highly engaged on
certain strands of sustainable finance regulation and appear to be a significant barrier to progressive
sustainable finance policy. See section on Key Finding 3 for more detail.
Sustainable Finance Policy Engagement. September 2020 2
The chart below plots the results of InfluenceMap's analysis for the financial institutions and industry associations included in the analysis. Engagement Intensity refers to how actively the entity is engaging, while Organization Score measures the degree of support/opposition to policy. Sustainable Finance Policy Engagement. September 2020 3
Glossary AFME Association for Financial Markets in Europe AIMA Alternative Investment Management Association CEFIC European Chemical Industry Council EBF European Banking Federation EFAMA European Fund and Asset Management Association HLEG High-Level Expert Group IDD Insurance Distribution Directive IIGCC The Institutional Investors Group on Climate Change IOGP International Association of Oil & Gas Producers MiFID Markets in Financial Instruments Directive SFDR Regulation on sustainability-related disclosures in the financial services sector TEG Technical Expert Group Sustainable Finance Policy Engagement. September 2020 4
Introduction
The EU's Sustainable Finance Action Plan
Launched in March 2018, the EU's Action Plan on Sustainable Finance is seen as critically important in
achieving the EU's climate goals, through reorienting capital flows towards a more sustainable economy and
mainstreaming sustainability issues into financial decision-making. The Action Plan followed the
recommendations of the High-Level Expert Group on Sustainable Finance (HLEG) which highlighted the need
for “no less than a transformation of the entire financial system” to deal with the challenges raised by climate
change.
Since 2018, the European Commission has made progress on many of the policies under the Action Plan,
visualized below. The Action Plan includes new regulations and directives as well as amendments to existing
legislation. Although the framework legislation is now in place for some of the policies, such as the taxonomy,
climate benchmarks and investors' ESG disclosure, in most cases the technical details are still under
consideration. Other policy areas, such as incorporating sustainability into prudential requirements and
investors' duty to integrate ESG are yet to be meaningfully progressed.
Source: European Commission
The Commission also set up the Technical Expert Group on Sustainable Finance (TEG) to assist in developing a
number of these policies, including the taxonomy, an EU Green Bond Standard and climate benchmarks.
In 2020, in light of both the agreement on the European Green Deal and the need to recover from the impact
of COVID-19, the Commission announced a Renewed Sustainable Finance Strategy which will build on the
current workstream and is expected to be launched in the fourth quarter of 2020.
Sustainable Finance Policy Engagement. September 2020 5
Influencing of the EU’s Sustainable Finance Plan Research has shown the scale of lobbying apparatus the financial sector has in play in Europe. In 2012, UK- based investigative researchers The Bureau of Investigative Journalism found 129 finance sector organizations actively engaged in the UK policymaking processes. In 2014, Corporate European Observatory (CEO) found that the post-financial-crisis EU regulatory framework had been lobbied by over 700 organizations linked to the financial sector. Subsequent research by CEO has tracked a string of European policy outcomes that have been shaped by EU financial industry association lobbying. InfluenceMap's research on the lobbying of the EU’s Sustainable Finance Taxonomy, published in December 2019, found intense lobbying activity on this key policy by both the financial and corporate sectors, including engagement from the fossil fuel value chain. Although many important aspects of the taxonomy were maintained against external pressure (at least partially due to positive lobbying forces), coverage of environmentally damaging activities was excluded due to significant negative lobbying. Lobbying to weaken the technical thresholds to be defined 'green' under the taxonomy is still ongoing. Based on existing studies of finance sector lobbying, and InfluenceMap's research on the taxonomy, finance and corporate sector influencing is likely to play a crucial role in determining the success of the wider action plan and other sustainable finance policies across Europe. In 2015, InfluenceMap established a systematic platform for tracking, assessing and scoring corporate and industry engagement on climate change policy. In 2019-2020, InfluenceMap expanded this platform to assess the financial sector’s influence over emerging sustainable finance policy streams. This report is companied by the release of an online platform detailing the positions and engagement of 63 of the largest financial institutions in Europe, along with their key industry associations and relevant corporate industry associations. Many of the links in this report lead to evidence pieces stored in InfluenceMap’s online platform. This research covers the period from 2017 to July 2020, following the High-Level Expert Group on Sustainable Finance and the first stage of the EU's Action Plan on Sustainable Finance. Although most of the engagement found focuses on the EU's Action Plan, this analysis also contains engagement on other relevant developments in Europe, including the UK Department for Work and Pension's update to trustees' investment duties and the development of the UK's 2020 Stewardship Code. InfluenceMap's platform provides a snapshot of policy engagement so far and will be continually updated to cover future engagement, including on the EU's Renewed Strategy on Sustainable Finance. Additionally, InfluenceMap plans to expand this analysis to cover relevant sustainable finance policy streams globally. Sustainable Finance Policy Engagement. September 2020 6
Methodology InfluenceMap’s methodology covers seven publicly available data sources, searching for evidence of engagement and corporate positioning since 2017. To determine the policy issues within the scope of the analysis, InfluenceMap breaks down sustainable finance policy engagement into a series of subcategories, or 'queries'. These are designed to cover high-level issues relating to the importance of sustainable finance, as well as more specific areas of sustainable finance policy making. InfluenceMap’s research process searches for evidence of an organization's engagement with each sustainable finance policy issue, across each of the data sources. This process can generate hundreds of evidence pieces which are stored in InfluenceMap’s data-content management system, shown in the image below. InfluenceMap's scoring process is policy neutral. It does not assess the quality of governmental policy but rather the positions of companies and industry groups relative to this policy. This is achieved by using the statements and ambitions of government-mandated bodies tasked to propose or implement sustainable finance policy as the benchmarks against which corporate and industry association policy positions are scored. For this analysis, the recommendations of the European Commission’s High-Level Expert Group and its Action Plan on Sustainable Finance were relied on heavily as benchmarks. This was supplemented in places with the statements and recommendations of UN-backed scientific enquiry, such as the findings of the Intergovernmental Panel on Climate Change (IPCC). InfluenceMap recognizes that while some areas of EU sustainable finance policy are well-developed, others are less so. This is the case for integrating ESG into prudential regulation, for example. InfluenceMap has therefore taken a cautious approach to benchmarking positions on this policy stream. While InfluenceMap’s system continues to search for and log evidence of engagement with ESG integration with prudential regulation, this evidence is not currently scored and will therefore not contribute to the overall analysis of an organization. As this policy stream develops, InfluenceMap will update its analysis. Scored evidence is coded by InfluenceMap as: ‘strongly supporting’, ‘supporting’, ‘no position/mixed position’, ‘not supporting/supporting with exceptions’, or ‘opposing’ with reference to the benchmarks explained above. These categories correspond to a numerical five-point scale between +2 and -2, where +2 indicates strong Sustainable Finance Policy Engagement. September 2020 7
support and -2 indicates opposition. InfluenceMap’s data-content management system then calculates four
core metrics from the scored evidence with weightings to factor in the relative importance of the different
data sources and queries. These metrics are:
Organization Score: A measure of an organization’s engagement with policy. Above 75 indicates support,
below 50 indicates increasing opposition towards 0.
Relationship Score: A measure of a financial institution’s industry association's sustainable finance policy
engagement. Above 75 indicates broad support, below 50 indicates increasing opposition towards 0
(financial institutions only).
Performance Band: A full measure of a financial institution's sustainable finance policy engagement
accounting for both its and its own industry associations' activity on an A through to F scale. For industry
associations, the performance band is based on the organization score only.
Engagement Intensity: Describes the level of engagement on sustainable finance policy, whether positive
or negative. Above 12 indicates active engagement, above 25 indicates highly active or strategic
engagement. In this research, financial institutions with an engagement below 8 were excluded from
most of the analysis as a clear position could not be determined.
This methodology is closely based on InfluenceMap’s existing methodology for assessing lobbying on climate
change policy, the results of which are used by numerous partners including the Climate Action 100+ investor
engagement process.
Sustainable Finance Policy Engagement. September 2020 8Results Key Finding 1: Most financial institutions are not strategically engaged Individual financial institutions mostly limit their support to top line statements Most financial institutions do not appear to be strategically engaged on sustainable finance policy, keeping largely to high-level statements in their own policy engagement and communications. More than 50% of the financial institutions researched have had such limited engagement that a clear position on sustainable finance policy could not be ascertained. These financial institutions are therefore not given scores and do not feature at an individual level in the remainder of the analysis. The individual scores for the 30 financial institutions who do have at least some significant policy engagement can be found in the ranking tables at the end of this report, with links to their profiles in InfluenceMap's online platform. Although most financial institutions have been enthusiastic in their support for the Paris Agreement and the need to scale up green investments, they appear to be reluctant to discuss curtailing damaging activities. Of more than 500 comments InfluenceMap found relating to action on climate change, only 3% referred to the need to reduce finance to environmentally harmful activities. Sustainable Finance Policy Engagement. September 2020 9
A small number of financial institutions have actively supported progressive sustainable
finance policy
BNP Paribas, Aviva and Groupe BPCE (primarily through subsidiaries Mirova and Natixis) stand out as being
very positively engaged on sustainable finance policy, as seen in the quadrant diagram. A larger group have
taken similarly supportive positions but do not appear to be as strategically engaged. This includes Legal &
General, who rank at the top of the overall scoring (see ranking tables) and have been engaged on UK policy
but do not appear to be as engaged as the leading three financial institutions on EU policy, where the majority
of evidence has been found. Other very supportive financial institutions include Nordea, Rabobank, Unipol and
Aegon.
The three leading financial institutions have all been consistent in their support for key sustainable finance
policies and have gone beyond high-level supportive statements to engage on regulations in detail. All three
have been members of one of the European Commission's expert groups - representatives of Aviva Investors
and Mirova were on the HLEG and representatives of BNP Paribas Asset Management and Mirova were on the
TEG. All three are also active in promoting and supporting policies in the media. The table below provides
some examples of engagement from leading financial institutions. To view all evidence for the financial
institutions, follow the links in the ranking tables to the profiles on InfluenceMap's online platform.
Based on their own individual policy engagement as financial institutions, BNP Paribas, Aviva, and Groupe BPCE
stand out as being both highly active and highly positive (all scoring over 80 on a 0 to 100 scale) on ambitious
sustainable finance policy for Europe. Under InfluenceMap's scoring system, their overall Performance Bands
are lower due to their memberships in negatively positioned industry associations which appear to be
misaligned with these financial institutions' sustainable finance policy positions.
Financial Institution Examples of engagement
Advocated for regulation on sustainable finance since at least 2014,
regularly putting out position papers with policy suggestions, many
of which have since been taken up by the European Commission
Vocal in its support for clarifying that fiduciary duty should cover
ESG issues and for policies to mandate engagement
with clients and beneficiaries about their ESG preferences. Aviva
further advocated for ambitious policy in this area in consultation
Performance
B- responses to the European Commission and the UK's Department for
Band
Work and Pensions in 2018
Organization Supportive of the creation of an EU Green Bond Standard,
84
Score advocating for a stringent approach to verification and suggesting
Engagement that policymakers should "expedite plans"
35
Intensity
Sustainable Finance Policy Engagement. September 2020 10 Mirova and Natixis have been particularly engaged in promoting the
taxonomy, with Mirova supporting the policy in newsletters,
on social media, and in consultations. Natixis has also supported the
policy on its website, in consultations and in media interviews,
including clear support for rigorous science-based criteria and
support for the expansion of the taxonomy to cover environmentally
harmful activities
Actively supporting incorporating ESG factors into fiduciary duty and
Performance
C+ has strongly supported related policies including the investors'
Band
disclosures regulation, on social media and in interviews, and the
Organization integration of ESG preferences in the advice investment firms give to
82
Score clients, in consultation responses
Engagement
40
Intensity
BNP Paribas Asset Management has been actively engaged on
promoting the taxonomy on its website, in social media posts
and media interviews. According to minutes accessed through a
Freedom of Information request, BNP Paribas advocated for a
rigorous science-based taxonomy in a meeting with the European
Commission, expressing concern that a Member-State-based expert
group could open the taxonomy to undue political influence
Performance BNP Paribas Asset Management has supported clarifying investor
C+ duties to include ESG issues and has also strongly advocated for
Band
policies which would implement this including ESG investor
Organization
81 disclosure and integrating ESG preferences into suitability
Score
assessments
Engagement
40
Intensity
A small number of financial institutions appear to have pushed for less stringent
regulatory intervention
A few financial institutions appear to be more resistant towards sustainable finance regulation and have
pushed back against more stringent requirements. This includes BlackRock, Invesco, UBS and BNY Mellon.
These groups have tended towards arguing in favor of policy focused on transparency rather than regulatory
mandates for the financial sector. The positions of these financial institutions most closely resemble the
positions of finance sector industry associations, discussed in the next section. Within this group, BlackRock
appears to be the most strategically engaged.
The table below provides some examples of engagement from these more skeptical financial institutions. To
view all evidence for the financial institutions, follow the links in the ranking tables to the profiles on
InfluenceMap's online platform.
Sustainable Finance Policy Engagement. September 2020 11Financial Institution Examples of engagement
Stated broad support for the taxonomy whilst arguing for an less
rigorous approach based on facilitating investor choice over strict
science-based thresholds
Argued against the creation of green labels at the EU level in 2017
and since has pushed for a weaker approach to the EU's Ecolabel, for
example arguing in January 2019 for unambitious thresholds of 25%
green activities to be considered green at portfolio or company level
(this position was revised in May 2019 to 70%, in line with the EU
Joint Research Centre's suggested threshold)
Opposed updating fiduciary duties to include ESG issues in 2017 and
Performance since has argued for a weaker approach to related updates to MiFID
D
Band II to integrate ESG preferences into the advice investment firms give
Organization to clients and, in response to a Financial Conduct Authority
48 consultation on the UK's Stewardship Code, appeared to push for a
Score
Engagement definition of stewardship with less emphasis on long-term benefits
22 for society and economy
Intensity
UBS Asset Management appears to be cautious about stringent,
science-based regulatory intervention on sustainable
finance, emphasizing in a 2019 whitepaper that the EU's Sustainable
Finance Action Plan "must serve investors’ needs" and be
“compatible with clients’ investment objectives”.
Performance UBS Asset Management appears to support a less stringent
D approach to the EU's taxonomy, raising concerns that the taxonomy
Band
Organization was too narrow and possibly supporting the inclusion of certain oil
49 and gas activities in a green taxonomy
Score
Engagement
10
Intensity
In consultations in 2017-18, BNY Mellon appeared to take a
cautious positions on the taxonomy and green labelling and updates
Performance to investor duties
D More recently BNY Mellon has expressed more positive positions on
Band
Organization these policy streams in articles on its website but does not appear to
44 have continued to engage with policymakers through more recent
Score
consultations
Engagement
15
Intensity
Released a report with Danske Bank in 2018 which argued that
transparency and choice were more likely to achieve long-term
benefits than mandatory requirements
Commented on the taxonomy to argue that the proposed 'green'
thresholds were too stringent in a media article in 2019 and
in feedback to the European Commission in 2020
Performance In feedback to the TEG in 2019, supported the EU Green Bond
D
Band Standard with a number of exceptions including arguing against
Organization mandatory external review and alignment with the taxonomy and
44 argued against the TEG's proposed criteria for climate benchmarks,
Score
suggesting that minimum requirements should be "principles-based"
Engagement
15
Intensity
Sustainable Finance Policy Engagement. September 2020 12Key Finding 2: Finance industry associations are misaligned from their members Finance industry associations are more engaged on detailed regulation The finance industry associations considered in this analysis are: Alternative Investment Management Association (AIMA), Association for Financial Markets in Europe (AFME), European Federation of Insurance Intermediaries (BIPAR), European Fund and Asset Management Association (EFAMA), European Association of Co-operative Banks (EACB), European Banking Federation (EBF), Institutional Investors Group on Climate Change (IIGCC), Insurance Europe, Invest Europe, Managed Funds Association (MFA), PensionsEurope and The Institute of International Finance (IIF). In contrast to the financial institutions they represent, finance sector industry association engagement has focused on commenting on detailed regulation through position papers and consultation responses. More than 50% of engagement from finance industry associations focused on specific policies, compared to a third of engagement from financial institutions themselves. Finance industry associations are misaligned from most of their members Most finance industry associations have stated broad support for sustainable finance policy whilst lobbying to weaken the details of key regulatory strands. As a result, their organization scores are significantly lower than the financial institutions they represent. This analysis highlights at least two potential causes of this misalignment: Sustainable Finance Policy Engagement. September 2020 13
'Lowest common denominator': Industry associations may be adopting the most cautious positions
amongst their members when there are conflicting positions within the association
Public vs private positions of financial institutions: Financial institutions may be issuing positive high-level
statements on sustainable finance policy whilst channelling their concerns around the details of
regulations through finance industry associations, potentially to avoid public scrutiny of less positive
positions
61 of the 63 (97%) financial institutions analyzed in this research have links to industry associations that have
lobbied to weaken regulation. The following graphic represents the misalignment between finance industry
associations and most of their members, with the industry association's organization score indicated by a
yellow circle and its members by blue circles. The exception to the trend is IIGCC which, whilst having a very
similar set of members to other industry associations, appears to promote the most positive positions of its
membership.
Sustainable Finance Policy Engagement. September 2020 14Finance industry associations appear to be supportive of green finance incentives but
skeptical of the regulation of harmful activities
Finance industry associations have taken the most positive positions on policies which focus solely on scaling
up green finance, for example the EU Green Bond Standard. In line with the finding on high-level messaging
from financial institutions avoiding focus on the need to curtail damaging activities, the greatest pushback
from finance industry associations appears to be in areas that would either increase transparency of financing
of damaging activities (e.g. the expansion of the taxonomy to cover environmentally harmful activities) or
require consideration of ESG factors in mainstream financial decision-making (e.g. updating investor duties to
incorporate ESG issues). These are also the areas where the least progress has been made in the Action Plan.
The following table highlights some examples of pushback from finance industry associations. To see all
evidence for industry associations, follow the links in the ranking tables to the profiles on InfluenceMap's
online platform.
Policy Themes of Engagement Examples
AFME, EBF, EFAMA, Insurance Europe, PensionsEurope
have pushed back against the expansion of the taxonomy
to cover environmentally harmful activities
AFME, EBF, EFAMA, AIMA all argued for the taxonomy to
be restricted to financial products marketed as
Lobbying to restrict the sustainable, rather than applicable to all financial
scope of the taxonomy; products
arguing against a IIF, EFAMA, Invest Europe, AIMA have argued that
Taxonomy 1 rigorous approach to disclosure in line with the taxonomy should be voluntary
classification or to IIF, EACB, EBF have all suggested that a simpler or less
weaken specific 'green' rigorous approach to classification would be preferable to
thresholds the proposed science-based thresholds
AFME, EBF, EACB, EFAMA, IIF have argued for weaker
thresholds for specific economic activities to be
considered 'green', for example the relaxing of the
electricity generation threshold to accommodate
unabated natural gas
EFAMA has argued for weaker green criteria and weaker
exclusion thresholds for environmentally harmful
Lobbying for weaker activities
EU Ecolabel 'green' thresholds and EACB supported the Ecolabel with a number of exceptions
for Financial exclusion criteria based including arguing for some criteria to be weakened and
Products on expanding the suggesting that some of the compliance and verification
investment universe requirements were too onerous
Insurance Europe has argued that the criteria are too
stringent
Broad support but some Insurance Europe has supported the EU Green Bond
disagreement over Standard including legislation to introduce a centralized
EU Green
whether legislation to accreditation regime for external green bond verifiers
Bond
introduce a centralized EBF has supported the EU Green Bond Standard but not
Standard
accreditation scheme is an ESMA-led supervision of external review providers that
required would require a legislative approach
1 For more detail on lobbying on the taxonomy, please see InfluenceMap's December 2019 report The EU’s Sustainable Finance Taxonomy
Sustainable Finance Policy Engagement. September 2020 15 AFME argued for weaker requirements including
suggesting consideration of scope 3 emissions should be
Lobbying on exclusion
optional and supporting flexibility in choice of exclusion
thresholds for
Benchmarks criteria and supported weaker ESG disclosure for all
environmentally harmful
benchmarks
activities
EFAMA argued for weaker exclusion thresholds for fossil
fuels
EBF, PensionsEurope, BIPAR and AIMA have all argued for
the regulation to be restricted to financial products
marketed as sustainable, rather than apply to all financial
Lobbying to restrict the products
scope to products Insurance Europe, AFME, AIMA, EACB, EBF, EFAMA and
SFDR marketed as sustainable; PensionsEurope signed a joint letter calling for the
lobbying to delay timeline of the regulation to be changed over concerns
implementation the technical details would not be in place before the
regulation came into force
PensionsEurope pushed for a delay again in April 2020,
citing disruption caused by the COVID-19 pandemic
Updates to AFME, BIPAR, EFAMA, Invest Europe, AIMA have argued
MiFID II and for phrases such as "where relevant" and "if any" to be
IDD to Lobbying for weaker inserted into the regulation, reducing the stringency of
integrate ESG wording in the the requirement to take into account all clients' ESG
preferences regulation which would preferences when giving investment advice
into deprioritise ESG
suitability preferences
assessments
for clients
EFAMA, EACB, MFA, AIMA, Invest Europe have all opposed
the idea of updating the legal frameworks for investor
Clarifying Opposition to clarifying duties to incorporate ESG factors
investor investor duties regarding PensionsEurope opposed measures to incorporate ESG
duties 2 sustainability issues into the 'prudent person rule' in IORP II
2 Not a currently active policy area, although the above two regulations are relevant, but it is instructive to recognize that this has faced
significant opposition when proposed in the past. The Commission has indicated that it may be included in the Renewed Sustainable
Finance Strategy
Sustainable Finance Policy Engagement. September 2020 16Disclosure of Indirect Policy Engagement Activities is Generally Poor
Investors are increasingly demanding that the companies they invest in disclose and address misalignments
between their lobbying practices and those of the industry associations through initiatives such as CERES and
CA100+. Despite this, most financial institutions analyzed have either no or limited transparency on their
indirect policy engagement through industry associations
Description Examples of disclosure
Has clearly described industry association memberships, with
Fully transparent positions taken by company within the industry associations and
ability to shape policy positions
Has disclosed memberships to third party organisations with
details of on these organisations sustainable finance lobbying
Partially transparent
positions and has indicated whether they are consistent with
own.
Has described how it is able to shape a industry association's
Mixed transparency policy positions on sustainable finance, but not what outcomes it
is seeking
Has disclosed memberships to third party organisations but has
Limited transparency not given details on the sustainable finance policy positions of
these organisations, or actions taken to address misalignments
InfluenceMap has not been able to find any disclosures from
No transparency company on their third-party memberships, or related
governance
Sustainable Finance Policy Engagement. September 2020 17Key Finding 3: Corporate industry associations are an obstacle to progressive sustainable finance policy Corporate (real economy) industry associations have been highly engaged on some streams of sustainable finance policy The corporate (real economy) industry associations considered in this analysis are: BusinessEurope, Eurelectric, European Chemical Industry Council (CEFIC), European Steel Association (Eurofer), EuropeanIssuers, FORATOM, FuelsEurope and International Association of Oil and Gas Producers (IOGP). Industry associations representing the corporate sector have been highly engaged on certain sustainable finance policy streams that directly impact their activities and their engagement has been more overtly oppositional to progressive policy than that from financial institutions and finance industry associations. Over 80% of all engagement from corporate industry associations has focused on the taxonomy, reflecting the potential ramifications of this policy for powerful vested interests who have sought to either restrict the taxonomy's coverage of their activities or to ensure their inclusion in what is defined as 'green'. 3 3 For more detail on lobbying on the taxonomy, please see InfluenceMap's December 2019 report The EU’s Sustainable Finance Taxonomy Sustainable Finance Policy Engagement. September 2020 18
Groups Involved Theme of engagement Examples of engagement
BusinessEurope and EuropeanIssuers both argued for a
less stringent approach to determining what can be
considered 'green' under the taxonomy, opposed the
application of the taxonomy beyond products explicitly
marketed as sustainable, opposed the expansion of the
Lobbying to weaken the
Cross-sector taxonomy to cover environmentally harmful activities
framework of the
groups and opposed disclosure requirements for investee
taxonomy
companies.
BusinessEurope and EuropeanIssuers were reportedly
successful in blocking "any ambitious proposals" when
the taxonomy regulation was debated at the European
Parliament.
IOGP and FuelsEurope have argued for the threshold for
electricity generation to be weakened to accommodate
natural gas and for a more lenient approach to blended
fuels, in line with RED II.
Eurofer has pushed back against the use of strict
thresholds, arguing instead for a qualitative approach
based on relative improvement. Eurofer has argued
against the proposed used of EU ETS benchmarks for
steel production.
Lobbying to weaken
CEFIC has suggested that the thresholds proposed by
Sector-specific specific ‘green’
the TEG risk undermining transitional efforts and has
groups thresholds to include
argued for the reconsideration of plastics in the
sector’s activities
taxonomy based on their use in products that can
facilitate the transition to a low-carbon economy.
FORATOM pushed back against the initial exclusion of
nuclear energy by the TEG under the 'do no significant
harm' criteria.
Eurelectric called for weaker thresholds for electricity
generation to include natural gas, supported the
inclusion of nuclear energy and a more lenient
approach to bioenergy in line with RED II.
There is an emerging battle between the finance and corporate sectors on non-financial
reporting
With the upcoming revision of the EU's Non-Financial Reporting Directive (NFRD), corporate industry
associations are becoming increasingly engaged on this policy stream and have strongly contrasting demands
to the financial sector.
Parts of the financial sector were cautious on proposals for improved regulated corporate reporting when
responding to the 2019 TEG consultation on updating the non-binding guidelines on reporting climate-related
information. However, in the June 2020 consultation on the update to the NFRD, the financial sector was
almost universally supportive of increased ambition, at least partially reflecting the increased reporting
requirements on the sector brought on by the taxonomy and the SFDR which will require increased disclosure
from investee companies.
Sustainable Finance Policy Engagement. September 2020 19Issue Finance sector demands Corporate sector demands
The 'Joint Statement on the Revision of BusinessEurope has argued against
the Non-Financial Reporting Directive in expansion of the scope to a wider set of
the Context of Covid-19' 4 called for the companies including SMEs, non-listed
expansion of companies falling under companies and companies not established
Which companies the scope of the NFRD. AFME, in the EU that are listed in EU markets.
should disclose Insurance Europe, PensionsEurope, EuropeanIssuers has opposed expansion to
EACB, EFAMA and IIGCC have all argued SMEs but supported expansion to non-EU
for the expansion of applicability of the companies operating in the EU.
NFRD to SMEs (in a simplified manner)
and/or unlisted companies.
The Joint Statement called for minimum BusinessEurope has argued that the lack of
mandatory reporting requirements. comparability and relevance of non-financial
Standardization AFME, Insurance Europe, EBF, EFAMA, information is not a problem.
of non-financial IIGCC, PensionsEurope have all called BusinessEurope has opposed a possible
information and for at least some mandatory requirement for companies reporting under
how companies standardized reporting requirements the NFRD to disclose their materiality
determine what and materiality assessments. assessment process. EuropeanIssuers has
is 'material' also opposed this requirement. IOGP has
also called for corporates to be able to
decide what is 'material'.
AFME, Insurance Europe, EBF and IIGCC BusinessEurope has opposed greater
Assurance and
have all supported the need for greater assurance and verification of non-financial
verification of
assurance and verification of non- information. EuropeanIssuers, however,
non-financial
financial information. appears to be more supportive of phasing in
information
verification requirements.
AFME, EACB, EBF and EFAMA have all EuropeanIssuers has argued against the
Digitalization of emphasized the importance of the digitalization of ESG data on the basis that
non-financial digitalization of non-financial non-financial information is not "mature
information information. enough to be processed in an automated
way".
The Joint Statement supports the BusinessEurope has argued against possible
inclusion of material non-financial requirements to publish non-financial
Location of non- information in the management report. information in the management report.
financial EACB and PensionsEurope have also EuropeanIssuers has argued for flexibility
information suggested that ideally non-financial over the location of non-financial
information should be included in the information.
management report.
Some of the financial institutions have links to powerful cross-sector corporate industry
associations opposing sustainable finance policy
Some of the financial institutions analyzed are represented by EuropeanIssuers in their corporate functions.
This includes Aegon, BNP Paribas, Generali, Santander and Intesa Sanpaolo. The positions taken by
EuropeanIssuers are clearly highly misaligned from the individual positions of these financial institutions and
even from their finance sector industry associations.
4 The Joint Statement was issued by European Fund and Asset Management Association (EFAMA), Association of Chartered Certified
Accountants (ACCA), Accountancy Europe, Association of German Banks (BdB), Climate Disclosure Standards Board (CDSB), Frank Bold,
Institutional Investors Group on Climate Change (IIGCC), Schroders, ShareAction and World Wide Fund for Nature (WWF), with confirmed
support from BNP Paribas Asset Management and Candriam.
Sustainable Finance Policy Engagement. September 2020 20Ranking Tables
The metrics given in the following ranking tables are noted below.
Organization Score: A measure of an organization’s engagement with policy. Above 75 indicates support,
below 50 indicates increasing opposition towards 0.
Relationship Score: A measure of a financial institution’s industry association's sustainable finance policy
engagement. Above 75 indicates support, below 50 indicates increasing opposition towards 0 (financial
institutions only).
Performance Band: A full measure of a financial institution's sustainable finance policy engagement
accounting for both its and its own industry associations' activity on an A through to F scale. For industry
associations, the performance band is based on the organization score only. The performance bands are
measured against absolute benchmarks, as described in the methodology.
Engagement Intensity: Describes the level of engagement on sustainable finance policy, whether positive
or negative. Above 12 indicates active engagement, above 25 indicates highly active or strategic
engagement. In this research, financial institutions with an engagement below 8 were excluded from
most of the analysis as a clear position could not be determined.
Performance Organization Relationship Engagement
Financial institution
Band Score Score Intensity
Aviva B- 84 51 35
Legal & General B- 79 55 19
Groupe BPCE C+ 82 46 40
BNP Paribas C+ 81 49 40
Rabobank C+ 77 47 9
Unipol C+ 74 41 15
Nordea C+ 74 54 22
Aegon C+ 73 47 13
Deutsche Bank C 70 52 19
AXA C 70 50 18
Barclays C 69 47 8
BBVA C 67 48 19
Swiss Re C 67 49 11
Royal Bank of Scotland Group C 66 48 8
Danske Bank C 65 55 11
ABN AMRO C- 63 49 12
Allianz C- 63 51 29
Société Generale C- 63 47 13
Commerzbank C- 61 50 8
Zurich Insurance C- 59 48 11
Sustainable Finance Policy Engagement. September 2020 21HSBC D+ 59 50 24
Standard Life Aberdeen D+ 58 47 17
Standard Chartered D+ 54 49 10
Credit Agricole D+ 51 50 20
State Street D 52 43 13
Schroders D 51 43 25
UBS D 49 49 10
BlackRock D 48 51 22
BNY Mellon D 44 51 15
Invesco D 44 54 15
Performance Organization Engagement
Finance Industry Association
Band Score Intensity
Institutional Investors Group on Climate
B 80 27
Change (IIGCC)
The Institute of International Finance (IIF) D+ 51 15
PensionsEurope D+ 51 28
Association for Financial Markets in
D+ 51 29
Europe (AFME)
Insurance Europe D 49 24
European Banking Federation (EBF) D 47 24
BIPAR D 46 13
Managed Funds Association (MFA) D 45 8
European Association of Co-operative Banks
D- 43 24
(EACB)
European Fund and Asset Management
E+ 39 34
Association (EFAMA)
Invest Europe E+ 37 14
Alternative Investment Management
E 33 17
Association (AIMA)
Performance Organization Engagement
Corporate Industry Association
Band Score Intensity
Eurelectric D 50 17
European Chemical Industry Council (CEFIC) D- 41 6
European Steel Association (Eurofer) E+ 37 7
FORATOM E 34 12
EuropeanIssuers E- 27 27
BusinessEurope E- 25 18
FuelsEurope F 18 12
International Association of Oil and Gas
Producers (IOGP) F 18 16
Sustainable Finance Policy Engagement. September 2020 22You can also read
