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Corporate lobbying - Rising up the CSR Agenda

Date: 7 Jul 2005

Anyone with an eye towards where are the emerging issues in corporate social responsibility will have registered the question of corporate lobbying of governments. Indeed, it wasn't that long ago that we last dealt with the question here. Since then things have continued to move significantly.

One of the growing messages within Corporate Social Responsibility over the last couple of years has been that CSR is about how you create wealth, not just how you spend it. Of course, there are already a lot of rules that govern how companies are, and are not, allowed to create wealth. There is no such thing as a really free market. Legislation to ensure minimum standards of protection for the consumer, and good conduct on the part of companies, has been a part of the landscape for centuries.

Equally, companies have always sought to influence governments in the nature of these rules. This is entirely legitimate. After all, any stakeholders in a piece of legislation ought to be able to make representation. That's how you get good legislation.

Now, the issue about how companies lobby, and for what, is increasingly being drawn into the CSR microscope. Recently for instance, the Institute of Business Ethics produced a report laying out some of the challenges that exist.

Such challenges appear in a number of areas. The easiest target for campaigners is where a company's stated values or CSR positions are directly contravened by the objectives and conduct of its lobbying activity. Environmental campaigners recently slammed BP for opposing a piece of legislation in the US related to climate change, a position that totally contradicts its stated commitment to action on climate.

Charges of hypocrisy aimed at CSR leaders is the easiest news copy there is. As the business editor of the Uk's Sunday Times said at a recent CSR event, "when you get a company that proclaims its environmental credentials getting caught out polluting - it doesn't get much better than that for people like me".

Of course, it's not often as simple as that when it comes to lobbying. Just because there's a piece of proposed legislation, it doesn't make it necessarily a good piece of legislation that would actually achieve its desired aims. BP would draw attention, for instance, to the fact that there were three different versions of legislation on offer on climate change in that instance - they supported the one that they thought would work with business, and opposed the one that was basically anti-business. One has to beware of campaigners whose argument follows the "something must be done, and this is something, therefore this must be done" line. BP, after all, has probably done more in terms of effective pro-active action than most others.

But it is one of the biggest no-win propositions for a company to be faced with legislation the aims of which are unarguably desirable but the quality of which falls far short of its aspirations, and which would damage the company for no real societal gain. The company is obliged to oppose the legislation, and the campaigners have a field day suggesting that company X is showing it is against human rights / environmental sustainability or whatever the issue is.

There are some companies that are hearing the message that this is now an area that calls for disclosure. The UK's Co-operative Bank won the ACCA best sustainability reporting award, with commendation for the Bank's approach to disclosure on lobbying.

There are also certainly some leading businesses who have aimed to lobby the political process in order to help achieve socially beneficial solutions. BP's endorsement of the climate change levy, for instance. Electrolux supporting producer responsibility on electrical goods is another example, as is Marks & Spencer's call for more legislation on the use of chemicals.

But a friend of mine who works with one of the largest PR firms carrying out corporate lobbying services is very clear about the nature of the beast - at least in the UK. Companies lobby on matters affecting the bottom line. Ultimately, every piece of legislation that could hurt is scrutinised, and positions formed accordingly. Many of his colleagues, he said, saw the Institute of Business Ethics document and dismissed it as being generally naive and unrealistic.

This should not be a big surprise. The corporate communications people who deal with corporate lobbying will follow the logic of their calling, just the same as so many others do. Purchasing managers, for instance, have very rarely been able to square the CSR aspirations of their companies with the on-the-ground pressure to get the best possible price and terms from suppliers. The best companies have to find a way to strike a balance - still putting pressure on their buyers (after all, without good prices they will become uncompetitive, and the company which goes bust in the pursuit of CSR is really not very responsible at all) but also letting them know that there is a red line they should stay the right side of.

There hasn't been much of a debate where that red line is in regard to corporate lobbying. After all, there is nothing wrong with companies lobbying to benefit the bottom line. Unless, of course, by so doing they are resisting some effective and necessary piece of legislation enforcing good principles. But then it's a judgement as to whether that's the case.

At the very least, it seems fair enough to say that businesses should expect that their attempts to influence legislation should be in line with their corporate values and CSR positions. It is also fair to say that companies should disclose the aims and objectives of their lobbying.

It is unrealistic to expect companies to disclose each occasion when representations have been made. Some companies will feel that disclosing such information might give advantage to competitors in certain situations. Others will feel that the burden of documentation would far outweigh any public or business benefit.

The truth is that there is no way to really audit or confirm whether what a company said about its lobbying was correct. Of course, when companies send in formal written submissions on legislation it is on the record. But the quiet word at a charity event, the brief conversation in the Wimbledon enclosure, these will always take place and be unrecorded. Indeed, a burdensome process of formalising lobbying activity would only drive more of it into such informal arenas.

And attitudes to certain aspects of lobbying differ enormously in different countries. In the UK, payments associated with lobbying would be seen as corruption. In the US, they have been part of the price of doing business. Even after the McCain-Feingold campaign finance reform bill banning corporate donations to political parties became law two years ago, major loopholes have ensured that the expectation that companies will 'pay to play' is finding other avenues of expression.

We shouldn't be expecting the introduction of a regime whereby corporations can be audited or policed on how they seek to exercise influence. It is, however, seeking to join up in the mind of the CEO, the CSR department and the corporate communications department, the realisation that lobbying, like every other aspect of corporate behaviour, should accord with values and responsible business practice. And that if it doesn't, at some point the disparity will be exposed. And for the companies that aspire to be leaders in social responsibility, that could be one of the most damaging incidents of all.

This issue is now already advanced enough in perceptions on CSR that it is beginning to enter the benchmarks. Canada's Corporate Knights Top 50 responsible businesses list, for instance, includes transparency and progressive intent in corporate lobbying amongst its criteria.

But lobbying is big business, and we shouldn't expect that the edifice will be easy to reshape. There are, for instance, something like 15,000 lobbyists in Brussels, goodness knows how many in Washington. You can even study for an MBA certificate in corporate lobbying covering areas such as 'principles of successful lobbying', 'lobbying/campaigning for business today', 'interest representation and public policy', 'corporate lobbying strategies' and 'negotiation skills and practice'. Not yet a module on lobbying and social responsibility.

Equally, we should be clear sighted about the lobbying that is carried out one stage removed from the individual businesses. Companies that don't lobby on an issue that would not be seen as socially responsible, but which tacitly supports its industry association to do it on their behalf should expect to be found out. Increasingly, the campaign groups are focusing on such associations. The socially responsible corporation should be able to show real leadership in the positions it promotes, both to legislators and to its respective trade bodies. It is an area that is due to get increasing scrutiny.

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