20th October 2022
Big companies hold huge sway with governments. Conversations between business leaders and major decision-makers shape national policies – for example, on climate change.
This means that companies can lobby, or advocate, for policy changes that they want to see, that benefit them and their profits.
This influence happens formally, and often egregiously, through membership to trade associations – involving vast amounts of money. These organisations exist to represent the interests of member companies to major policymakers. Examples in the EU include CEFIC, which represents the sprawling chemicals industry, or Copa Cogeca, for agriculture.
Companies also lobby directly. The top 10 EU companies with the deepest pockets when it comes to lobbying devoted between €3 million and €6 million each to influencing policy in the last year.
And then there’s the potential for backroom chats – conversations, lunches and casual phonecalls between corporate leaders, lobbyists and officials that the general public will never know about.
The problem is, the investors that give a company the financial backing it needs to survive don’t have sight of any of these interactions. That’s a problem for them – they have a material interest in the climate transition taking place at speed, to keep their money and our world safe. In Germany, Volkswagen is a mega-influencer in the auto sector. It is a member of multiple trade associations in Germany and at the EU level and has strong links to German national and regional governments. That means they have huge capacity to influence policy – like how quickly a country phases out diesel and petrol vehicles. But while they’ll share info on which associations they’re members of, they won’t tell their investors what they do with that influencing power – despite years of effort.
We're supporting six institutional investors – with tens of billions of assets under management – who are suing Volkswagen. Left with no choice, they want to force transparency across the corporate world by securing a court judgment in their favour.
Anders Schelde from Danish pension fund AkademikerPension, one of the claimants in the case, said:
"As an investor, we require full transparency on companies' lobbying activities, because in our experience far too many of the world's largest companies talk green but try to stall and water down climate policies behind the scenes.
“The best way for companies to address these concerns from investors and citizens is to publicly disclose lobbying activities, thereby also protecting their brand and social licence to operate. We are disappointed that Volkswagen has chosen to fight this transparency, which is why we have now taken legal action."
A positive judgment would confirm that minority shareholders in Germany – who hold many millions of Euros in the company – have a right to place items on AGM agendas so that the issue can be voted on by all shareholders. This would prevent systematic pushback against demands for transparency and information – including on a wide range of issues such as corporate lobbying, diversity and inclusion, discrimination, and conflicts of interest. It’s a vital right for responsible investment and would help to ensure good corporate governance in all German public companies.