A company leaving a trade association doesn’t generally portend major changes in an industry, but when one of the world’s largest oil companies leaves one of the most powerful trade associations in America, changes are afoot.
French oil company Total announced on January 15 that it would not renew its membership in the American Petroleum Institute (API). API is the largest fossil fuel industry group in the U.S., with a mission to “influence public policy in support of a strong, viable U.S. oil and natural gas industry.” The organization spends millions each year—more than $6 million in 2019 alone—lobbying Congress and the White House on oil and gas-related issues. Like many multinational oil companies, Total maintains a presence in Washington D.C. through its API membership.
API has a long history of voicing uncertainty about the science behind climate change and has collaborated with various conservative groups such as Americans for Tax Reform and the George C. Marshall Institute to lobby against environmental reforms like the 2009 Waxman-Markey climate bill.
Total’s decision resulted from an “alignment review” to make sure its industry associations are consistent with the company’s positions on climate change, outlined in its 2020 report “Getting to Net Zero.” These positions include support for renewable energy technologies, Paris Climate Agreement objectives such as reducing methane emissions, and carbon pricing. In contrast, API opposes subsidies for electric cars, opposes regulation of methane emissions, and many elements of carbon pricing.
“We are committed to ensuring…that the industry associations of which we are a member adopt positions and messages that are aligned with those of the Group in the fight against climate change,” said Total CEO Patrick Pouyanné. “This transparency responds to our stakeholders’ expectations, as well as being an essential guarantee of the credibility of our strategy.”
The announcement marks a major win for financial and environmental policy advocates who have called on companies to keep their public statements on climate change consistent with their lobbying activities, whether directly or through industry associations like API. The incentives aren’t only ethical: Inconsistencies pose “material, financial and reputational risks for companies,” argued Ceres, a nonprofit organization that works with investors and companies to promote sustainability. The organization released an action plan in July 2020 calling for companies to look at how their lobbying helped or hurt their climate goals.
“We cannot get to a net-zero emissions future without changing the rules of the trade association game,” said Anne Kelly, vice president of government affairs at Ceres.
Investors are listening. In September 2019, a coalition of investors sent letters to 47 publicly-traded companies identified as the biggest greenhouse gas emitters in America asking them to align their lobbying with the Paris accord target of keeping global temperatures below 2 degrees Celsius. Earlier that year, Chevron shareholders voted to make the company align its lobbying with Paris accord targets.
Pledging a commitment to environmental stewardship while spending money to undermine those commitments amounts to misleading investors and can constitute fraud under federal securities regulations. Anyone who reveals such fraud can find protection under the whistleblower provisions of the 2010 Dodd-Frank act, which was passed to protect investors by strengthening the accuracy and reliability of financial disclosures. As pressure on fossil fuel companies to support climate targets increases, we may see more whistleblowers exposing green double-talk.