Lobbying is a common practice in the political sphere. Interest groups, individuals and organisations are constantly vying to influence decision-makers on specific issues of policy and legislation. But what does that mean for investors, CSOs, policymakers and companies?
In an era of increasing scrutiny around corporate influence, transparency and a heightened understanding of ESG commitments, understanding how lobbying works – especially how it intersects with business strategy, public trust, and regulatory frameworks – is more important than ever. Whether you’re allocating capital, shaping policy, advocating for social change, or managing corporate reputation, lobbying can be both a powerful tool and a potential risk.
This guide breaks down the essentials: what lobbying is, how it’s done, who’s involved and why it matters to you.
1. What corporate lobbying actually is
Corporate lobbying is a form of advocacy where companies try to shape the government decisions that impact everything from operations to profits. It’s a way for businesses to have their voices heard in the political process and can include direct communication with policymakers, financial contributions and participation in industry associations. This influence can affect public policy in many ways – including shaping regulations, tax policies and trade practices. When it comes to ESG, Dieter Zinnbauer, advisor for The Good Lobby, claims that lobbying is the endgame for ESG approaches, explaining “what companies do in the political realm, that is how they seek to influence policies and public opinion, is at least as consequential, and very often much more consequential, for society and the planet, than their efforts to green or otherwise ESG (Environmental, Social and Governance)-ify their operational footprints.”
2. Why corporations lobby
Corporations and big business lobby governments to influence policy in their favour. They’re usually seeking favourable legislation, lower taxes or reduced regulations. Their approaches might include shaping policy to increase profits, reduce costs or gain advantages over their competitors. But lobbying also involves shaping public opinion and building relationships with policymakers to ensure that the best interests of business are upheld. When organisations lobby for some things – including around ESG – and support this work with PR campaigns and wider messaging, it can help shape public perception. For example, when corporations lobby governments around environmental or social policy, it can demonstrate their commitments to CSR practices. CSR policies have become more important to consumers over recent years, particularly Gen-Z.
3. Who does the lobbying?
In corporate lobbying, the individuals or entities who engage in the process can be pretty diverse. These can include professional lobby firms (organisations who specialise in influencing government policy and decisions on behalf of their clients), in-house lobbyists, trade and industry associations, think tanks and, sometimes, those in the companies involved. Whichever method harnessed by corporations engaged in lobbying, the outcome remains the same – to impact legislation which might ultimately affect their bottom line.
4. How is lobbying regulated?
The ways in which lobbying is regulated differ from nation to nation. In the UK, the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 aims to increase transparency across the field. This Act requires lobbyists to register and disclose information about their clients and lobbying activities. In the EU, there’s the Transparency Register, which is overseen by the European Parliament, Council and Commission and requires lobbyists to register and adhere to a code of conduct. Outside of the UK and EU, lobbying regulation tends to focus on transparency and ethical conduct. Many governments require lobbyists to disclose their activities and stick to a code of conduct with government officials. Some countries also have specific rules around how and if former government officials can become lobbyists (known as ‘revolving doors’) and restrict finance contributions related to lobbying.
5. Lobbying vs advocacy – what’s the difference?
Both lobbying and advocacy are methods used to influence decision-making, but their scope and approach differs. Typically, lobbying targets policymakers and specific regulations or legislations. For example, policymakers structuring the legislation of the Corporate Sustainability Due Diligence Directive (CSDDD) were lobbied by corporations opposing certain elements of the directive. Advocacy, meanwhile, covers a wide range of activities which are all designed to raise awareness and support for a cause. This activity is often less targeted at specific pending legislation but aims to educate and inform wider audiences on relevant issues. Advocates for the CSDDD may focus more generally on the human rights violations which happen as a result of poor policy around corporate issues, rather than trying to target specific elements of legislation and regulation.
6. The role of money in lobbying
Investing in lobbying is increasingly viewed as strategically necessary to advance corporate aims. Government policies, regulations and legislation shape the business landscape and influence organisational growth in significant ways. But when large corporations dominate lobbying efforts due to their financial power, the voices of smaller organisations and civil society groups are often underrepresented or unheard entirely. These groups, which typically advocate for public and environmental interests, lack the resources to compete, leading to a skewed policymaking process that favors corporate agendas over broader societal needs.
7. Risks and reputational impacts
Corporate lobbying isn’t inherently harmful, but when done without transparency, it can prioritise private interests over the public good. The Corporate Sustainability Due Diligence Directive (CSDDD), intended as a landmark EU law for human rights and environmental protection, was significantly influenced by lobbying practices from a wide range of organisations. While the final directive sets important standards, it falls short of its original ambition, suggesting corporate interests prevailed.
From a reputational standpoint, companies face growing scrutiny over ESG practices. Lobbying against human rights policies can damage public trust, leading to boycotts and shareholder activism with potentially serious consequences.
8. Lobbying success stories and controversies
During the COVID-19 pandemic, some companies advocated for deregulations which would harm climate and labour protections. At a time of economic standstill, governments aimed to adopt unprecedented economic relief and these decisions were taken quickly and, often, without public oversight. Despite the speed at which policymakers needed to operate, the private sector engaged with governments to open up their services and support the crisis response. Transparency International UK highlighted how some companies engaged in responsible lobbying during the pandemic, advocating for policies that protected workers and upheld human rights. These companies avoided lobbying for deregulation that would harm climate and labor protections, instead choosing to respect measures which would support human rights and positive environmental policies.
In terms of controversies, several businesses appeared to be supportive of the CSDDD, but in fact were lobbying against key provisions. Major industry lobby groups, for example, publicly supported due diligence but actively opposed the CSDDD. They lobbied to:
- Limit liability provisions
- Restrict the law to direct suppliers only
- Avoid reversing the burden of proof from victims to companies
- Promote voluntary CSR schemes over enforceable legal standards
This strategy of appearing cooperative while actively working to weaken the law was seen as a way to preserve corporate objectives and avoid accountability for human rights abuses in global supply chains.
9. Global variations in lobbying practices
Approaches to lobbying practices vary from state to state and these approaches are undergoing significant transformation as corporate entities strive to engage more effectively with decision-makers. As more scrutiny is directed towards the lobbying of corporate organisations, calls for greater clarity, transparency and regulation are being heard across the globe. This indicates a growing understanding of the need for effective oversight, reflecting demands for clearer boundaries and better ethical conduct within the sphere of influence from wider society.
Many jurisdictions are actively examining existing protocols, aiming to enhance public trust in how decision-making processes are influenced. These adjustments often include stricter disclosure requirements and focus on enhancing the clarity of funding sources and the activities of those who engage in corporate lobbying efforts. Such measures are intended to create an environment where stakeholders can engage constructively without obscuring their motives.
10. What ethical lobbying looks like
As outlined in this article, lobbying raises questions of transparency, accountability and fairness, among others. Lobbying isn’t inherently bad – in fact the impact of ethical lobbying can result in the best outcomes for everyone. Lobbying ethics is essential for maintaining the integrity of the political system and making sure that lobbying approaches serve the common good rather than only reflecting the interests of a few. It also helps to avoid corruption and develop public trust in political processes. Transparency, accountability, fairness and integrity all play a part in ethical lobbying. By upholding these qualities, corporate lobbyists and those they represent can contribute to a more effective political system that serves a wide range of interests, not just the voices which shout the loudest.
Tools like Social LobbyMap improve ethical lobbying approaches by drawing attention to both bad and good practices in corporate lobbying. By improving transparency and accountability through data and analysis on how companies and trade associations are lobbying around particular legislations, we can work towards world where corporate lobbying drives positive social change, fully aligned with human rights and environmental principles.