Revealed: Parliament’s ESG group bankrolled by firms who paid out billions for fraud, tax and environmental breaches

Green MP Caroline Lucas says she quit after learning about APPG's funding from arms makers and ‘law-breaking accountancy firms’

A Parliamentary group which promotes sustainable and ethical business practices is funded by companies that have paid out billions in fines and compensation for fraud, tax and environmental failings, Democracy for Sale can reveal.

The all-party parliamentary group (APPG) on environmental, social and governance (ESG) has received hundreds of thousands of pounds from funders including accounting giant KPMG, arms company BAE Systems, and Bayer, a pharma multinational.

Between them these companies have paid out billions of pounds for a host of regulatory breaches and to settle legal claims around the world in recent years.

This month, KPMG was hit with a record £21 million fine by Britain’s accounting watchdog for its auditing work on the failed government contractor Carillion. 

The APPG on ESG, which is chaired by Conservative MP Alexander Stafford,  published a report earlier this year that cited KPMG and BAE Systems as case studies of good business practice.

Caroline Lucas, the Green Party MP, said that she resigned from the ESG APPG earlier this year, after a few months as an officer, after learning about the group’s funders. 

“I wrote to the chairman of the APPG to raise my concerns, and left when I didn’t receive sufficient reassurance in response,” Lucas said. 

“Funding arrangements with organisations like arms companies and law-breaking accounting firms risk undermining the important work of APPGs seeking to transition to a greener economy. I’d urge the ESG APPG to review its sponsorships immediately,” Lucas added.

ESG has become a popular but contentious topic in business in recent years. Earlier this year, investors were warned of the risk of “greenwashing” by ESG funds that also invest in fossil fuels. 

The ESG APPG was set up in 2021. Since its inception it has been coordinated by College Green Group, a political consultancy run by Thomas Borwick, who worked on the Vote Leave campaign ahead of the Brexit referendum and was accused of spreading ‘disinformation’ through proxy groups on Facebook ahead of the 2019 general election.

Borwick is the son of Baroness Victoria Borwick, a former Conservative MP, and Lord Jamie Borwick.

College Green, which provides the secretariat for a number of APPGs, is named as having provided £147,000 in benefits-in-kind to the APPG on ESG for this year, but the ultimate sponsors include a number of blue chip companies that have paid out huge sums in fines and compensation.

KPMG chief executive Jon Holt has apologised for the company’s “very bad” audit work on failed outsourcer Carillion. 

The firm was previously fined £14m after “providing false and misleading documents and information” to the Financial Reporting Council over its audits of Carillion and Regenesis.

When asked about KMPG’s funding of the ESG parliamentary group, a spokeswoman for the firm said: “ESG is a complex issue for business, with rapidly evolving regulations that impact our clients: the APPG provides a cross political party and industry forum to collaborate and share expertise.”

Another funder, BAE Systems, pleaded guilty to conspiracy to defraud the U.S. government and was ordered to pay a $400 million criminal fine in 2010 and is involved in long-running legal battles over alleged failure to pay workers for overtime and missed meal breaks at its San Diego yard. 

A spokeswoman for BAE Systems said that the company is “committed to ethical and responsible behaviour.” 

Another funder of the ESG APPG, Bayer, agreed to pay $9.6billion to settle tens of thousands of claims that a weedkiller produced by its subsidiary Monsanto causes non-Hodgkin’s lymphoma in 2020. A jury in California had previously found that RoundUp caused cancer. 

A spokeswoman for Bayer said the settlements contained no admission of liability or wrongdoing by the company, adding that Bayer’s membership of the APPG “allows us to share our experience of different countries’ approaches with UK stakeholders and to understand what future ESG requirements from the UK might look like.”

Transparency campaigners warned that there is insufficient regulation of the influence of private interests on parliamentary activity. 

“When a group accepts funding from outside sources, there is a danger that it will become – and be perceived as having become – too closely aligned with their interests,”  said Rose Whiffen, senior research officer at Transparency International. 

“MPs should ask themselves what those funding their APPG might be expecting in return.”

College Green Group and Alexander Stafford did not respond to requests for comment.

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Caroline Lucas MP’s email to Alexander Stafford resigning from the ESG APPG