13-08-2024
Executive Summary
Businesses should reimagine their political engagement by putting respect for human rights at its center.
Every large company has a political footprint that it needs to take responsibility for. A new approach to corporate political engagement –building on existing frameworks and based on the familiar experience of developing human rights due diligence – is required. This will enable companies to align their political engagement with the protection of human rights, delivery of ambitious environmental goals, support for civic institutions and the needs of society.
This briefing provides a roadmap for how businesses can make the change to responsible political engagement. It is intended for senior leaders and colleagues working in government affairs, sustainability and other departments involved in any business that performs political engagement, particularly multinational companies that invest large resources in influencing political outcomes. While it has a strong US focus, it is applicable in every geography where companies are engaging with governments.
Inequality in political influence is driving inequality in society
Businesses dominate the policymaking process, mostly prioritize short-term financial interests and provide minimal transparency, creating an inherent risk of corporate policy capture.
For example, in 1992, ‘more than 55 business representatives lobbied UN negotiators who met in New York … to draft a global warming treaty to be signed in Rio.’11 M. Dolan. (30 May 1992). U.S. Business Woos Delegates to Earth Summit. Los Angeles Times. Accessed 3 June 2024. https://www.latimes.com/archives/la-xpm-1992-05-30-mn-224-story.html By 2023, at least 2,456 fossil fuel lobbyists alone were given official access to the COP28 summit in Dubai,2Kick Big Polluters Out. (5 December 2023). Record number of fossil fuel lobbyists at COP28. Press release. Accessed 3 June 2024. https://kickbigpollutersout.org/articles/release-record-number-fossil-fuel-lobbyists-attend-cop28 including at least 166 ‘industry trade groups, think tanks and public relations agencies with a track record in climate denialism and misleading the public.’3N. Lakhani. (11 December 2023). Revealed: more than 160 representatives with climate-denying track records got COP28 access. The Guardian. Accessed 3 June 2024. https://www.theguardian.com/environment/2023/dec/11/climate-deniers-attend-cop28-talks
These risks have been exacerbated by practices across lobbying, advocacy and political spending.
Extensive research by civil society, investors and others shows that the current approach to corporate political engagement doesn’t work for
anyone. Outcomes include:
- Negative human rights and environmental impacts for society;
- Damage to public institutions and civic space;
- Increased costs to business through:
– A heightened risk of corruption;
– Misalignment with stated values and sustainability commitments;
– Government inaction to address market failures.
‘An analysis of 300 academic studies showed that such abuse [of political engagement] has led, for example, to negative health outcomes, inaction on climate policies, excessive regulation to protect incumbents, or insufficient regulation to correct market failures or distortions. In addition, the abuse of lobbying practices undermines citizens’ trust in democratic processes.’
OECD, 2021, Lobbying in the 21st Century: Transparency, Integrity and Access.4OECD. (2021). Lobbying in the 21st Century: Transparency, Integrity and Access. Accessed 3 June 2024. https://doi.org/10.1787/c6d8eff8-en
Applying human right processes to responsible politician engagement
More than a decade after the adoption of the UN Guiding Principles on Business and Human Rights (UNGPs) by the UN Human Rights Council,5United Nations and United Nations Human Rights Office of the High Commissioner. (2011). Guiding Principles on Business and Human Rights. Accessed 3 June 2024. https://www.ohchr.org/sites/default/files/documents/publications/guidingprinciplesbusinesshr_en.pdf an increasing number of companies have begun to apply human rights due diligence to assess risks, take action, integrate human rights across their business, track progress and communicate both their approach and the results.6See the Corporate Human Rights Benchmark for an overview of progress to date. Accessed 3 June 2024. https://www.worldbenchmarkingalliance.org/corporate-human-rights-benchmark/ However, in 2022, the UN Working Group on Business and Human Rights released a report on how corporate political engagement contributes to human rights harms and negatively affects the state duty to protect, and the business duty to respect, human rights.7UN Working Group on Business and Human Rights (2022). Corporate influence in the political and regulatory sphere: Ensuring business practice in line with the Guiding Principles on Business and Human Rights. Accessed 3 June 2024. https://undocs.org/Home/Mobile?FinalSymbol=A%2F77%2F201&Language=E&DeviceType=Desktop&LangRequested=False
The adoption of human rights due diligence (HRDD) provides both a precedent and an adaptable model for how corporate political engagement can address these harms, including by applying a saliency lens (based on risks to people and the environment rather than materiality, which focuses on risks to business), and engaging potentially affected rights-holders as participants in the development of company priorities and actions. Aligning political engagement with protection of human rights as well as climate change and other social and environmental issues should be a critical driver of priorities.
Essential actions for business
The essential actions for business set out below are intended to guide companies in developing a responsible approach to corporate political engagement. They support better policy outcomes to deliver social and environmental progress by:
- tackling inequality, including racial and gender inequality;
- aligning political engagement with the company’s stated purpose, values and commitments;
- reducing reputational, financial and other risks linked to corruption and impropriety; and
- contributing to a stable and political economic environment by not undermining government institutions or civic space.
The actions are organized under categories taken from the human rights due diligence process. Each action contains a list of recommendations for better corporate practice.
Table 1: Actions to guide responsible corporate political engagement
The report Right-Sizing Corporate Voice: A briefing for business on responsible political engagement and its executive summary was written by Oxfam.