26/11/2024
Ongoing debates about Europe’s Green Deal reveal new evidence of business lobbying’s hidden influence on environmental policies.
As debates continue over the future of Europe’s Green Deal and other environmental policies, new evidence sheds light on the often hidden role of business lobbying in shaping these regulations. The gap between companies that publicly promote their sustainability credentials while lobbying behind the scenes against environmental regulation has long been identified. However, solid evidence to support this assertion has been difficult to find—until now.
EU business lobbying and the CSDDD
A new report reveals how business lobbying contributed to excluding financial services companies from Europe’s responsible supply chain law, the Corporate Sustainability Due Diligence Directive (CSDDD).
The United Nations Working Group on Business and Human Rights has strongly condemned the exclusion of investors from the EU law. The Italian stock exchange Borsa Italiana and the French association of insurers, the Association des Assureurs Mutualistes (AAM), are highlighted in the report for their strong opposition to the proposals. This is despite Borsa Italiana being a member of the UN Sustainable Stock Exchanges Initiative and AAM positioning itself as part of the ‘social and solidarity economy’ under French law.
The Role of Trade Associations
The ‘Social LobbyMap’ methodology was used to analyze company lobbying based on published information, freedom-of-information requests, and media reports in the two years leading up to the agreement that removed finance from the scope of the EU Directive. Detailed analysis of positions adopted by nine companies and ten trade associations in France, Italy, and Spain also reveals how companies often rely on their associations to deliver negative messages.
Eight out of ten trade associations analyzed opposed including the finance sector in the regulation, with only France’s responsible investor association, l’Association AFR, speaking in favor. Although European-wide business associations are typically the most influential in lobbying, the report highlights disparities within France, where half of business responses favored the regulation, but six out of seven associations lobbied against it. None of the Italian companies studied supported the proposals, which sheds light on Italy’s dramatic but ultimately unsuccessful attempts to block the Directive in the European Council, alongside Germany.
Not All Companies Oppose Regulation
However, the research challenges the assumption that companies are always anti-regulation. Prominent Spanish firms, including insurer Seguros RGA, actively supported the regulation, not only through public statements but also through detailed lobbying. The ‘Social LobbyMap’ project encourages companies to align their sustainability and purpose statements with their public policy activities and those of their trade associations. Investors are seen as crucial to achieving this goal, holding a mirror up to businesses that are usually the ones scrutinizing the companies they invest in.
The ‘Social LobbyMap’ methodology builds on the work of the ‘Influence Map’ project, which originated in the United States and prompted several US corporations to leave trade associations with regressive climate change positions. Whether this new research on social and human rights lobbying will have a similar impact in Europe remains to be seen.
Future Scrutiny for Lobbying Activities
With a new European Commission consultation on guidance for the CSDDD, upcoming lobbying around the Directive’s transposition in member states, and a scheduled review within two years on whether finance might be brought back into its scope, companies will face immediate scrutiny for their positions on this legislation. A key tenet of responsible business is ensuring alignment between a company’s values and its actions—including its lobbying activities. The ‘Social LobbyMap’ aims to hold businesses accountable, ensuring their government relations and trade association memberships align with their stated commitments to sustainability.
You can read the full report “Financial Sector Lobbying of the EU Corporate Sustainability Due Diligence Directive: a Social LobbyMap Analysis” by Eiris Foundation here.