National Grid pledges to publish trade body review after investor escalation

AP7 and CofE reverse plans to vote against CEO and chair following promise by UK energy giant to disclose lobbying activities on climate change.

A boardroom

The Church of England Pension Board (CEPB) and Swedish government fund AP7 have reversed their opposition to the chair and CEO of National Grid, following the pledge from the UK energy firm to review the alignment of its trade associations with its own decarbonisation goals.  

Last week, CEPB announced its intention to vote against National Grid’s chair Paula Rosput Reynolds, and CEO John Pettigrew “due to a failure to produce disclosure on the company’s lobbying activities on climate change”.

“The company is now one of only two European utilities engaged by Climate Action 100+ to have failed to provide its investors with this disclosure,” Laura Hillis, CEPB’s director, climate and environment, said at the time.

AP7 also pre-declared its plans to vote against the duo via the PRI’s resolution database. The Swedish fund updated its voting policy this year to target board members and other core agenda items at companies making insufficient progress on climate, including around lobbying. 

CEPB and AP7 have been engaging with National Grid since early this year on the issue. CEPB is one of the leads on the firm as part of CA100+, the multi-trillion-dollar investor engagement initiative. 

National Grid’s change of heart was revealed in a recent update to its global policy on lobbying and political engagement, in which it committed to “undertaking a review of the membership of all our trade associations and their alignment with our decarbonisation targets by the end of 2023″.

The firm said it will publish its findings “by the end of the 23/24 financial year in line with our Responsible Business Report”.  

“Following our announcement of our intention to vote against the chair and CEO over the lack of disclosure of their lobbying activities, we are pleased that National Grid has now made this commitment,” Hillis said in response. 

The move was also welcomed by AP7’s manager, active ownership, Emma Henningsson.

“Corporate lobbying, directly and via trade associations, has historically been a powerful obstruction to legislative reform for an orderly low-carbon transition,” she said. “That’s why companies need to have strong governance of their climate-related lobbying and to identify and act on any misalignment between their own goals and trade association lobbying.” 

Climate lobbying has been a key focus area for AP7 and CEPB in recent years. The duo collaborated with BNP Paribas Asset Management on the creation of the Global Standard on Responsible Climate Lobbying, which was released last year. 

They were also part of a group of six investors who took Volkswagen to court in October for repeatedly failing to table their climate lobbying shareholder proposal. While that case provided unsuccessful, with the German regional court dismissing it earlier this month, the carmaker did publish its first review of its trade associations in May.      

National Grid’s decision was also welcomed by Peter Taylor, corporate programme director at the Institutional Investors Group on Climate Change (IIGCC), one of the investor networks underpinning CA100+. 

“The decision by National Grid to commit to publishing a comprehensive review of their lobbying activities on climate change is a clear reminder of the value of corporate engagement and evidence that it can and does deliver tangible results,” he said.