Debate over including lobbying in ESG reporting heats up

illuminem summarizes for you the essential news of the day. Read the full piece on Euractiv or enjoy below:

🗞️ Driving the news: NGO The Good Lobby claims that excluding lobbying activities from ESG (Environmental, Social, and Governance) reporting creates a misleading image of corporate sustainability
• A new report highlights that while companies may score high on ESG metrics, their lobbying against environmental policies undermines sustainability progress
• The debate grows as the European Commission pushes for a mandatory lobbying register, facing resistance from EU member states

🔭 The context: ESG ratings are a critical tool for investors seeking sustainable companies, but gaps in lobbying disclosures mean these ratings may lack transparency
• The Good Lobby argues that lobbying should be a mandatory element in ESG reporting to reflect a company’s true environmental impact
• Critics, however, contend that regulatory overreach could backfire, advocating instead for stronger anti-greenwashing rules to improve transparency

🌍 Why it matters for the planet: Corporate lobbying against environmental policies hinders progress on climate action and undermines the transition to a sustainable economy
• Including lobbying in ESG reporting would hold companies accountable for their influence on public policy, encouraging alignment between their sustainability goals and advocacy efforts
• Transparency in lobbying could enhance investor trust and accelerate systemic climate solutions

⏭️ What's next: The EU’s negotiations over anti-greenwashing rules and a mandatory lobbying register will determine the future of ESG transparency
• Companies and regulators will need to strike a balance between fostering transparency and avoiding burdensome reporting obligations
• Broader adoption of lobbying disclosures could reshape corporate behavior and align policies with environmental goals

💬 One quote: “While companies may score well on environmental and social measures, they may also boycott progress on the same issues at a legislative level.” — Alberto Alemanno, founder of The Good Lobby

📈 One stat: A study by Cambridge University analyzing U.S. companies from 1999 to 2017 found that the average likelihood of issuing ESG reports in a given year was 33% for non-lobbying companies and 42% for those engaged in lobbying activities.

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