Ethical companies that respect human rights when lobbying will best survive the post-COVID 19 recession
29/06/20 - By Rocio Paniagua, Head of Business Integrity at Transparency International UK
Aggressive lobbying for bailouts or deregulation is bad for business long term, writes Rocio Paniagua of Transparency International UK
The unprecedented international health and economic emergency that is sweeping the globe raises the potential for corruption, which in turn increases the risk to human rights where businesses do not engage in responsible and transparent lobbying.
Environmental, social and governance (ESG) concerns, such as respect for anti-corruption, human rights and climate resilience, will be at the centre of the post-COVID-19 economic recovery. But already we’ve seen aggressive lobbying by corporates in order to secure bailout funds, or lobbying for deregulation around key climate and worker protections.
This deprives governments of funding which could otherwise be spent on programmes that protect human rights, and contributes to the watering-down of measures that support our own long-term, sustainable existence.
Lobbying and COVID-19
Corporate political engagement, or lobbying, is an important and legitimate method of engagement between government, businesses and stakeholders – when done responsibly. Across the world, governments are taking extraordinary measures to keep the pandemic under control as health systems struggle to cope.
The economic standstill has put a stop on businesses’ cashflow and employment opportunities, and caused untold harm to workers in supply chains. In response, governments are adopting unprecedented economic relief and stimulus measures. Decisions are taken quickly and, often, without public oversight.
At the same time the private sector, directly or through intermediaries, is engaging with governments on COVID-19 related measures. Some businesses are opening up their services and resources to help support the crisis response, while other companies are seeking to influence decisions that will affect them as governments continue to take measures to prop up economies.
What risks can arise for businesses?
Businesses should carefully consider the potential for corruption risks in their COVID-19-related lobbying activities. The disruption and distraction caused by the pandemic, combined with the need to expedite key decisions, has created the conditions in which practices such as irresponsible lobbying can thrive.
This carries the very real risk of causing irreparable damage to a business’s reputation and can lead to hugely damaging legal and financial consequences in the medium to long term.
Examples of lobbying practices that do not consider respect for human rights are increasing.
A leaked letter from the International Air Transport Association – the aviation industry’s influential trade body – describes how its aggressive lobbying helped secure relief from corporate taxes, sales taxes, employer-paid payroll taxes and passenger ticket taxes.
Such lobbying practices, if successful, deprive governments of the resources required to provide the programmes that give effect to economic, social and cultural rights. Similarly, key oil and gas industry players in the US, Australia and Canada are lobbying very actively for financial support and deregulation.
Fossil fuels are a major contributor to climate change which threatens, among others, the right to life, the right to adequate food, the right to adequate housing, the right to health, the right to water, and cultural rights.
States must regulate private actors and end financial incentives in activities or infrastructures that are not consistent with low greenhouse gas emissions. At the European level, the agricultural and chemical lobbies are putting pressure on the European Commission to delay the Farm to Fork Strategy. This strategy is expected to set ambitious target in the use of pesticides, fertilizers and antibiotics, and take steps to ensure the rights to health, right to an adequate standard of living, and right to a healthy environment.
What are the benefits for companies?
As well as tackling risks, companies benefit from transparent and responsible behaviour. We have seen better ESG-performing businesses, funds and supply chains weather the economic shock better than their lower performing counterparts, alongside an emphasis by mainstream policymakers on the importance of placing ESG performance at the heart of the new sustainable global economy. By adopting responsible and transparent behaviours now, companies will be prepared for an evolving legislative landscape.
How can businesses manage these risks?
In order to ensure that lobbying is done in a responsible and transparent way, and consistent with businesses’ responsibility to respect human rights, companies need to be aware of the actual and potential human rights impacts of their lobbying practices.
They need to adopt human rights policies, engage relevant stakeholders in consultations on lobbying activities, conduct human rights due diligence, remedy human right violations for which they are directly responsible, and use leverage in business relationships to prevent human rights risks.
For companies looking for further guidance, the Transparency International UK report ‘Wise Counsel or Dark Arts?’ provides practical insights into responsible and transparent lobbying.
Investors, consumers and societies around the world are increasingly demanding that companies do the right thing, be transparent on how they manage their corruption risks and how they address their impacts on human rights. Responsible and transparent political engagement is paramount to avoid negative human rights impacts by companies in these difficult times.