Investors are paying increasing attention to whether companies’ lobbying activities support or impede climate policy. Beginning in September 2019, 200 institutional investors with $6.5 trillion in assets-under-management called on some of the largest public companies to align their lobbying with the Paris Climate Agreement’s 1.5 degree Celsius goal. The human and economic impact of exceeding the Paris goal are conservatively projected to be in the tens to hundreds of trillions of dollars by 2100. Investors view achieving this goal as an imperative to protecting the long-term value of their portfolios.

In particular, the electricity and gas utility sectors’ role in climate action has garnered heightened investor attention. Since technologies to decarbonize the power sector are readily available and cost-competitive, and since greater electrification and a cleaner grid will enable the decarbonization of other sectors, investors are pushing utilities to embrace the clean energy transition as quickly as possible. Many utilities have set ambitious, long-term climate targets, but the sector remains slow-moving and risk-averse in its short-term progress; its lobbying (direct and in-direct through trade associations) reflects a desire to maintain that traditionally sedate pace of change by promoting the status quo and opposing progressive climate policy.

This lack of ambition is compounded by the fact that many state-level and public utility commission policies are outdated, insular, and severely misaligned with climate change goals. Local and state leaders are easily encouraged to support large fossil fuel infrastructure projects and maintain uneconomic coal assets to the detriment of investing in innovative clean energy portfolios. Regressive utility lobbying tactics only serve to continue this shortsighted course of action.

For example in Ohio, FirstEnergy recently grabbed headlines after federal agents arrested Ohio Republican state representative Larry Householder and several lobbyists in connection with a $60 million bribery scandal over legislation dubbed the ‘worst energy bill of the 21st century.’ The legislation, HB 6, would bail out uneconomic nuclear and coal plants connected to FirstEnergy, weaken renewable energy and energy efficiency standards, and cost ratepayers $300 million a year in additional charges. FirstEnergy has donated handsomely and provided favors for many Ohio politicians, including Larry Householder, for supporting HB 6. It also aided a campaign opposing a ballot initiative to overturn HB 6 using misleading ads and other shady tactics. Since the news broke, FirstEnergy’s stock price plummeted, the company is facing various lawsuits, and its CEO was ousted.

Another ongoing lobbying debacle is being led by Sempra, parent company of Southern California Gas (SoCalGas), San Diego Gas and Electric (SDG&E), and various other subsidiaries throughout North America. Sempra has rejected building electrification and dug in its heels to protect and maintain natural gas as the primary heating and cooking energy source in new buildings. Sempra recently brought the California Energy Commission to court for failing to promote natural gas and is attempting to overturn an ‘advanced clean trucks’ rule designed move 300,000 zero-emission trucks onto roads by 2035. Meanwhile, the utility is funding astroturf, pro-natural gas groups, pushing local officials to join an anti-electrification campaign, and is being investigated by the California Public Utilities Commission’s Public Advocates Office for using ratepayers’ funds to fight climate policy. That same Public Advocates Office has recently recommended SoCalGas be fined $255 million for using consumer funds to undermine energy efficiency codes and standards. The California Utilities Commission has been widely criticized for yielding to the abuse of ratepayer funds by not enforcing the fine and making SoCalGas only return misused funds to ratepayers. Concern regarding Sempra’s anti-climate lobbying has prompted scrutiny from federal legislators and investors including a shareholder resolution filed by As You Sow. While Sempra has recently set net-zero targets for two subsidiaries, investors are worried about ‘greenwashing’ as proposed plans are vague and undeveloped and due to the Company’s anti-climate lobbying stance.

These examples of anti-climate lobbying are two of the most prominent, but the practice is widespread. In 2018, APS spent $38 million in Arizona to defeat a policy to generate 50% of energy from wind and solar by 2030 and it has been criticized for its significant spending to get regulators appointed to the Arizona Corporation Commission. In 2017, Entergy used paid actors to fake support for a gas-fired power plant in front of the New Orleans City Council. Recently, in the Southeast, ads have attacked the development of a regional transmission organization with the potential to save billions of dollars and enable significant emissions reductions. Local utilities are instead proposing a likely less effective version called the Southeast Energy Exchange Market. The issue of anti-climate lobbying is so deeply embedded within the utility sector that the Edison Electric Institute (EEI), the principle electric utility industry group, ran a lobbying training camp in December 2019 in which it highlighted anti-climate efforts as good examples. Only just in May 2021 have various major utilities such as Eversource, Atmos Energy, DTE Energy, Exelon, Fortis BC, Enbridge, SoCalGas, Summit Utilities, UGI Corp., and Washington Gas been uncovered as being part of an anti-electrification lobbying group called “Consortium to Combat Electrification.”

Power utilities are at a juncture where they can continue to slow climate action with regressive lobbying or instead support Paris aligned policy and take advantage of opportunities inherent in the clean energy transition. If they choose to continue along the business-as-usual route, they will find themselves on the wrong side of history pushing against a net-zero transition permeating every corner of the global economy. Instead, utilities have the chance the proactively align their lobbying activities with Paris goals,  innovate and transition their business models, grow returns, promote customer savings and improved health, and become more flexible and resilient companies. Utilities can stop being an impediment to the clean energy transition and instead embrace being a force for positive change. The sooner they do, the better for all.