Whether behind closed doors, in fleeting corridor conversations or through more public channels, corporate influence on ESG is constantly working to shape public policy across the world. The relationship between corporate lobbying and legislation is powerful – and can influence the very foundations of legal frameworks and public decision-making. When corporate actors are so closely connected with lawmakers, the power they can wield shouldn’t be underestimated. But how does corporate lobbying affect policy in real terms? And why does this matter to policymakers?
The scale and impact of corporate lobbying on ESG
Corporate lobbying includes everything from direct engagements, information dissemination and financial contributions to strategically planned and executed communications. All of this activity – however it’s carried out – is designed to sway legislators and public officials and embed corporate interests into the legislative process. The impact of this dynamic has recently been felt through the development of the Corporate Sustainability Due Diligence Directive (CSDDD), with research from Social LobbyMap showing how corporate lobbying dramatically changed the scope of the directive. The finance, apparel and energy and utilities sector were all involved, to varying degrees, in lobbying on the CSDDD.
While the directive was eventually adopted in 2024 despite heavy opposition, research suggests corporate lobbying played a part in making sure concessions were made. The threshold for company applicability was raised and value chain coverage was limited. Directors’ duties were removed but civil liability and grievance mechanisms remained. Our research revealed that value chain coverage was particularly strongly contested by financial and cross-sectoral actors, and stakeholder engagement was the theme least lobbied on, despite being the subject of some of the most extreme views around the topic. Stakeholder engagement includes directors’ duties.
Risks and concerns
In the case of CSDDD, there’s a clear parallel between the topics lobbied on by corporate actors and the eventual shape of the directive. But our research also revealed that trade associations often opposed the directive, even when their member companies were publicly supportive. Some of those bodies we researched both showed strong individual support for the directive while their trade bodies lobbied against core provisions. This suggests that the voices of the largest organisations are often heard more than the smaller. This results in a democratic imbalance, with the influence of wealthy corporations being disproportionately represented.
Transparency issues were also highlighted by our research. Often businesses were perceived as saying one thing about the directive and either lobbying in opposition or taking the route of silence. For some, it appears they felt that saying nothing was equivalent to not opposing, but often these actors were represented by others, such as the trade associations they’re members of, and often this position was oppositional.
While corporate lobbying isn’t inherently bad and how corporate lobbying affects policy isn’t always negative, when it’s carried out with a lack of transparency and accountability, there’s a risk corporate interests are prioritised over public good. The CSDDD was set to be a landmark European Union law and offer a comprehensive framework of due diligence for companies to identify risks and harm to human rights and the environment. While the final directive achieves some of these objectives, and sets a standard for better practices across the EU, it’s clear that the approach doesn’t go as far as initially intended. Corporate influence on ESG was prioritised over the greater good for people and planet.
Why should policymakers care?
Policymakers are responsible for formulating political policies. It’s their duty to create legislation which governs communities and addresses the problems which matter to those they’re working for. If those policymakers are only hearing the voices of the organisations who shout the loudest, they’re not getting the full picture. Corporate influence on ESG could lead to the introduction of legislation which favours corporate interests over people – outcomes ultimately at odds with policymakers ambitions and objectives to represent all constituents.
There are long-term economic and social consequences of corporate influence on ESG and it’s impact on legislation too. For example, lobbying by large financial institutions may lead to deregulation which benefits short term profits but impacts human rights in a very real way. Lobbying against labour protections or environmental regulations can lead to wages being suppressed, inequalities being widened and negatively impact the environment. These outcomes have a huge impact on the lived experiences of citizens.
Lobbying has long played a pivotal role in the sectors that directly impact the future of people and planet. With the CSDDD, the policy was proposed to protect human rights, but the changes to the shape of the directive mean those rights are not as protected as they could, or should, be. Corporate influence on ESG regulation can impact progress, deepen inequalities and prevent the development of policies which serve the broader public interest.
What can be done?
Increasing transparency and accountability around corporate influence on ESG is essential to ensure that the needs of the many are represented, rather than just the voices of the powerful few being heard. Social LobbyMap monitors corporate lobbying activities to shed light on how big business influences supply chains, workers and communities. By tracking these efforts, and providing this data, we aim to raise awareness of how corporate lobbying affects real people and the policies that shape their lives.
Through this work, we endeavour to help stakeholders who care about sustainable business and human rights better understand the significant influence corporate lobbying has on social policy outcomes. It’s crucial to ensure this influence is aligned with human rights, equity and responsible business conduct. Understanding and recognising how corporate lobbying affects policy is key for ensuring the best outcomes for the causes which matter.