Organizational Governance Regulation & Public Policy

Analysis of US Utilities Reveals Inconsistent Climate-Policy Advocacy

A new benchmark analysis of 12 of the largest US electric utility companies finds significant inconsistencies between utilities’ public climate commitments and their direct and indirect climate lobbying practices.

Published 10 months ago | About a 4 minute read

Image: Kendall Hoopes

A new report from Ceres shows that US utility companies are heavily involved in climate-policy engagement and are taking steps to reach their climate commitments by advocating in support of certain climate policies — but this progress is being undermined by simultaneous advocacy against other climate policies.

Toward Consistency: Assessing the Power Sector's Climate Policy Advocacy is a follow-up to the second Responsible Policy Engagement benchmark Ceres released in November 2022, which assessed the climate-policy lobbying of the S&P 100, and to the recent benchmark on the policy engagement of the US’s 13 largest banks.

Every company in this assessment publicly agrees with the scientific consensus concerning the causes of climate change, and all companies have lobbied either individually or as part of a coalition for Paris–aligned climate policies in the last three years. Yet, at the same time, every company assessed lobbied in opposition to Paris-aligned climate policies — illustrating the hypocrisy of some utilities’ advocacy efforts.

“Utility companies are vital partners in the journey to achieving net zero emissions by 2050,” said Steven Rothstein, managing director of the Ceres Accelerator for Sustainable Capital Markets. “To meet these goals, it is critical that power utilities align their lobbying and embrace the enormous financial and investment opportunities presented by resources like the Inflation Reduction Act.

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“While the largest utility companies have set goals to reduce emissions and move away from coal, more work is urgently needed if we hope to mitigate the catastrophic effects of global warming.”

Other findings show that compared to the 2022 Benchmark, in which only 50 percent of S&P 100 companies had lobbied in favor of climate policies, the electric utilities sector is significantly more active in voicing its support compared to other sectors. In addition, the utilities sector has a better track record than S&P 100 companies in terms of conducting trade association-alignment assessments — with 33 percent of utilities having completed an alignment assessment, compared to only 8 percent of companies overall in the S&P 100.

“Policy engagement is an incredibly powerful tool in the fight against climate change,” said Dan Bakal, Senior Program Director, Climate and Energy at Ceres. “If utility companies are serious about meeting their climate commitments, then their advocacy must align with their ambitions.”

While the sector is ahead of the curve in its advocacy in favor of climate policies, many of the utilities have failed to acknowledge the obstructive nature of the trade associations in which they are members. While engaging with a trade association to encourage it to take a more favorable stance on climate policy is preferred, some companies have found themselves with no other option than to leave the association when all other efforts have failed. For example, in 2009, PG&E left the US Chamber of Commerce due to “fundamental differences” around climate change — stating the association was not reflecting the full range of views of its members. Last year, Eversource withdrew its membership from the American Gas Association (AGA) in the wake of AGA’s attacks against electrification — to instead “redirect costs to more targeted associations and memberships with a focus on decarbonization to support our company-wide operations.”

The benchmark analysis recommends that utilities:

Consistently lobby in favor of policies that will lead to the achievement of net-zero emissions. It is in the best interest of utilities to be supportive of clean energy, given that the sector will play a central role in economy-wide decarbonization.
Collaborate with state and federal officials on policy design and engage more consistently with state and federal policymakers.
Create a synchronized approach to climate-policy advocacy by actively engaging with industry associations and take meaningful steps towards addressing misalignment with their trade associations

“The new guidance from Ceres takes responsible policy engagement to a deeper level for US utilities,” said Dominic Gogol, Deputy Director of Policy for the We Mean Business Coalition. “It highlights the inconsistency of the utilities’ climate advocacy through direct lobbying and trade associations, why this is problematic, and steps to improve climate-advocacy practices. US utilities are an essential player in the US economy’s transition to clean energy, and they can wield their influence more effectively to ensure the passage and implementation of ambitious and market-orientated policies at the federal and state level.”

Aligned with these recommendations, Ceres' Ambition 2030 initiative aims to decarbonize the six highest-emitting industries by driving greater corporate climate action. These sectors — electric power, banking, food, agriculture, oil and gas, steel and transportation — contribute to about 80 percent of total US emissions, based on 2019 EPA data. Responsible policy engagement consistent with climate science is an essential expectation of companies in these sectors.