Bart Slob Milano, March 18, 2008 NGOs and corporate accountability advocacy, lobby strategies and influence on policy making

Introduction Since 1973, SOMO analyzes the consequences of the policies and activities of multinationals for developing countries. We do research and support campaigning on: CSR and corporate codes of conduct Sustainability issues in different sectors International trade and investment agreements and treaties Reform of the international financial system (WTO negotiations: General Agreement on Trade in Services - GATS)

Since 1973, SOMO analyzes the consequences of the policies and activities of multinationals for developing countries.

We do research and support campaigning on:

CSR and corporate codes of conduct

Sustainability issues in different sectors

International trade and investment agreements and treaties

Reform of the international financial system (WTO negotiations: General Agreement on Trade in Services - GATS)

Objectives of this lecture To analyze the different attitudes of NGOs towards the corporate social responsibility phenomenon To discuss several theories on how NGOs and companies seek to influence policy makers with regard to the rights and obligations of enterprises To develop an understanding of the differences between corporate lobby strategies and NGO lobby strategies

To analyze the different attitudes of NGOs towards the corporate social responsibility phenomenon

To discuss several theories on how NGOs and companies seek to influence policy makers with regard to the rights and obligations of enterprises

To develop an understanding of the differences between corporate lobby strategies and NGO lobby strategies

Contents of this lecture NGO origins Typology of NGOs NGOs and business Networking and lobbying Corporate influence on policy makers Suggestions for discussion

NGO origins

Typology of NGOs

NGOs and business

Networking and lobbying

Corporate influence on policy makers

Suggestions for discussion

NGO origins (I) Many civil society organisations have their roots in social movements: Civil rights movement Movement for women’s suffrage Anti-apartheid movement Alter-globalization movement But also: Pro-life vs. pro-choice movement Movement for gun ownership vs. gun control Gay rights movement vs. Religious Right

Many civil society organisations have their roots in social movements:

Civil rights movement

Movement for women’s suffrage

Anti-apartheid movement

Alter-globalization movement

But also:

Pro-life vs. pro-choice movement

Movement for gun ownership vs. gun control

Gay rights movement vs. Religious Right

NGO origins (II) Other NGOs were created after world war II to carry out activities and functions previously developed by public authorities, churches or companies: Development agencies Foundations engaged in philanthropy NGOs that provide technical assistance Many NGOs still rely heavily on financial resources provided by governments, churches and businesses

Other NGOs were created after world war II to carry out activities and functions previously developed by public authorities, churches or companies:

Development agencies

Foundations engaged in philanthropy

NGOs that provide technical assistance

Many NGOs still rely heavily on financial resources provided by governments, churches and businesses

Typology of NGOs Operational NGOs Design and implementation of development-related projects Advocacy NGOs Defend or promote a specific cause

Operational NGOs

Design and implementation of development-related projects

Advocacy NGOs

Defend or promote a specific cause

NGOs and business – context (I) Large companies are omnipresent and have influence and power worldwide GDP of Pakistan is inferior to the value added of Exxon Mobil; Peru is “smaller” than General Motors; Nigeria’s GDP is less than Daimler Chrysler’s value added (UNCTAD). Burdensome implementation of labour, human rights and environmental laws by national governments in the Global South Increase in information flows about impacts of companies Consumer concerns in Northern countries

Large companies are omnipresent and have influence and power worldwide

GDP of Pakistan is inferior to the value added of Exxon Mobil; Peru is “smaller” than General Motors; Nigeria’s GDP is less than Daimler Chrysler’s value added (UNCTAD).

Burdensome implementation of labour, human rights and environmental laws by national governments in the Global South

Increase in information flows about impacts of companies

Consumer concerns in Northern countries

NGOs and business – context (II) The roots of CSR: 1960-1970: Debate about the function of companies in societies 1988: The Body Shop launches an international campaign for human rights in cooperation with Amnesty International 1989: Ben & Jerry’s commissions a “social auditor” to publish a “stakeholders report” to inform customers about the company’s social standards 1989: The Exxon Valdez oil tanker spill causes an environmental catastrophe in Alaska

The roots of CSR:

1960-1970: Debate about the function of companies in societies

1988: The Body Shop launches an international campaign for human rights in cooperation with Amnesty International

1989: Ben & Jerry’s commissions a “social auditor” to publish a “stakeholders report” to inform customers about the company’s social standards

1989: The Exxon Valdez oil tanker spill causes an environmental catastrophe in Alaska

NGOs and business – context (III) Rise of CSR initiatives: Charity work and philanthropy Corporate codes of conduct, labelling initiatives and certification schemes Government guidelines: UN Global Compact, OECD Guidelines Environmental and social reporting

Rise of CSR initiatives:

Charity work and philanthropy

Corporate codes of conduct, labelling initiatives and certification schemes

Government guidelines: UN Global Compact, OECD Guidelines

Environmental and social reporting

NGOs and business – context (IV) NGO responses to CSR: NGOs and trade unions: model codes of conduct Call for implementation and verification Engage in partnerships and multi-stakeholder initiatives Research on the behaviour of companies worldwide Naming and shaming in international campaigns Call for international binding regulation

NGO responses to CSR:

NGOs and trade unions: model codes of conduct

Call for implementation and verification

Engage in partnerships and multi-stakeholder initiatives

Research on the behaviour of companies worldwide

Naming and shaming in international campaigns

Call for international binding regulation

NGO strategies towards business (I) Cooperation: Partnerships Consultancy services Alliances to improve distribution of wealth along value chains Engagement in stakeholder dialogues and standard-setting processes Lobby for CSR incentives

Cooperation:

Partnerships

Consultancy services

Alliances to improve distribution of wealth along value chains

Engagement in stakeholder dialogues and standard-setting processes

Lobby for CSR incentives

NGO strategies towards business (II) Confrontation: Action research on critical issues Naming and shaming – NGOs reveal bad practises International campaign against companies, call for boycotts Lobby for binding international regulation regarding human rights, labour conditions, the environment, accountability, transparency, supply chain responsibility etc.

Confrontation:

Action research on critical issues

Naming and shaming – NGOs reveal bad practises

International campaign against companies, call for boycotts

Lobby for binding international regulation regarding human rights, labour conditions, the environment, accountability, transparency, supply chain responsibility etc.

Informal and formal networks (I) NGOs organize in networks to have more impact: Clean Clothes Campaign (1989, 11 countries) Maquila Solidarity Network (1996, Canada) BankTrack, (2003, 18 organizations in 12 countries) OECD Watch (2003, 78 organizations) European Coalition for Corporate Justice - ECCJ (16 national networks) Friends of the Earth (1971, organizations in 70 countries)

NGOs organize in networks to have more impact:

Clean Clothes Campaign (1989, 11 countries)

Maquila Solidarity Network (1996, Canada)

BankTrack, (2003, 18 organizations in 12 countries)

OECD Watch (2003, 78 organizations)

European Coalition for Corporate Justice - ECCJ (16 national networks)

Friends of the Earth (1971, organizations in 70 countries)

Informal and formal networks (II) NGOs also partner with other actors, such as: Trade unions (e.g. Play Fair campaign) Companies (e.g. Fair Trade movement) Consumers (e.g. Make IT Fair) Ethical investors (e.g. OECD Watch and Eurosif) Governments (e.g. HIV / Aids campaigns)

NGOs also partner with other actors, such as:

Trade unions (e.g. Play Fair campaign)

Companies (e.g. Fair Trade movement)

Consumers (e.g. Make IT Fair)

Ethical investors (e.g. OECD Watch and Eurosif)

Governments (e.g. HIV / Aids campaigns)

Networking and lobbying (I) Lobbying is about establishing, maintaining and using networks of personal relations Machiavelli paved the way for modern lobbying Suggested reading (off the beaten track): Baltasar Gracián, The Oracle, a Manual of the Art of Discretion , commonly translated as The Art of Worldly Wisdom , first published in 1637 Ovidius, Ars Amatoria , translated as Art of Love , first published in 1 BC Erving Goffman, The presentation of self in everyday life , published in 1959

Lobbying is about establishing, maintaining and using networks of personal relations

Machiavelli paved the way for modern lobbying

Suggested reading (off the beaten track):

Baltasar Gracián, The Oracle, a Manual of the Art of Discretion , commonly translated as The Art of Worldly Wisdom , first published in 1637

Ovidius, Ars Amatoria , translated as Art of Love , first published in 1 BC

Erving Goffman, The presentation of self in everyday life , published in 1959

Networking and lobbying (II) Mapping stakeholders / actors

Networking and lobbying (III) Recognizing other lobbyists is not an easy task: Manager public affairs Head of corporate affairs Manager corporate external relations Senior vice president governmental affairs Director of governmental relations Advisor on parliamentary and departmental contacts Permanent representative Special advisor Few lobbyists call themselves lobbyists…

Recognizing other lobbyists is not an easy task:

Manager public affairs

Head of corporate affairs

Manager corporate external relations

Senior vice president governmental affairs

Director of governmental relations

Advisor on parliamentary and departmental contacts

Permanent representative

Special advisor

Few lobbyists call themselves lobbyists…

Corporate influence on policy makers - background Corporate lobbying can have negative impact on developing countries (e.g. Blowfield 2004, Dharanajan 2005, Utting 2000) Alignment of corporate lobbying with CSR policies lacking (Blowfield 2005) Few studies on corporate lobbying in developing countries

Corporate lobbying can have negative impact on developing countries (e.g. Blowfield 2004, Dharanajan 2005, Utting 2000)

Alignment of corporate lobbying with CSR policies lacking (Blowfield 2005)

Few studies on corporate lobbying in developing countries

Corporate influence on policy makers – lobbying targets (I) Lobbying can influence (Henriques 2007): Legislation Interpretation of legislation by judiciary Political ties (donations) Other stakeholders (brand management)

Lobbying can influence (Henriques 2007):

Legislation

Interpretation of legislation by judiciary

Political ties (donations)

Other stakeholders (brand management)

Corporate influence on policy makers – lobbying targets (II) Important to distinguish policy areas: Directly related to CSR  E.g. Shell lobbying against UN Norms for Business Other relevant policies  E.g. Financial Leaders Group lobbying for liberalisation of financial services

Important to distinguish policy areas:

Directly related to CSR

 E.g. Shell lobbying against UN Norms for Business

Other relevant policies

 E.g. Financial Leaders Group lobbying for liberalisation of financial services

Corporate influence on policy makers – lobbying channels (I) 3 dimensional model (Hillman & Hilt 1999): Approach  transactional or relational Participation level  individual companies or a network of companies Type of strategy (Getz 1997) Information-oriented types  informing decision makers, revolving doors Pressure-oriented types  financial incentives (donations, threats & promises), constituency building (grassroots campaigning)

3 dimensional model (Hillman & Hilt 1999):

Approach  transactional or relational

Participation level  individual companies or a network of companies

Type of strategy (Getz 1997)

Information-oriented types  informing decision makers, revolving doors

Pressure-oriented types  financial incentives (donations, threats & promises), constituency building (grassroots campaigning)

Corporate influence on policy makers – lobbying channels (II) Additional strategies (Bonardi & Keim 2005): Type of strategy Information-oriented types  … influence experts, opinion leaders, journalists (early stage) Pressure-oriented types  … self-regulation to pre-empt government regulation (late stage, for policies directly related to CSR)

Additional strategies (Bonardi & Keim 2005):

Type of strategy

Information-oriented types 

… influence experts, opinion leaders, journalists (early stage)

Pressure-oriented types 

… self-regulation to pre-empt government regulation (late stage, for policies directly related to CSR)

Corporate influence on policy makers – lobbying channels (III) Coll. Indiv. Advertising Public Constituency building Stake-holders Self-regulation Threats Donations Policy makers 3B. Pressure- oriented Influencing experts Experts Revolving doors Direct lobbying Policy makers 3A. Infor-mation- oriented 2. Part. level 3. Type of strategy Target group Orienta-tion

Corporate influence on policy makers – lobbying channels (IV) Cisco (ICT company) lobbyist appointed US assistant secretary of commerce, then founded lobby firm; favourable changes in US policies American Chamber of Commerce speaking out against new Chinese labour law ExxonMobil funding climate change denial groups, directing Global Climate Coalition US agribusiness companies invited by US trade representative to defend in-kind food aid in trade negotiations

Cisco (ICT company) lobbyist appointed US assistant secretary of commerce, then founded lobby firm; favourable changes in US policies

American Chamber of Commerce speaking out against new Chinese labour law

ExxonMobil funding climate change denial groups, directing Global Climate Coalition

US agribusiness companies invited by US trade representative to defend in-kind food aid in trade negotiations

Corporate influence on policy makers – lobbying channels (V) Coll. Indiv. Advertising Public Constituency building Stake-holders Self-regulation Threats Donations Policy makers 3B. Pressure- oriented Influencing experts Experts Revolving doors Direct lobbying Policy makers 3A. Infor-mation- oriented 2. Part. level 3. Type of strategy Target group Orienta-tion

Corporate influence on policy makers – lobbying channels (VI) Coll. Indiv. Advertising Public Constituency building Stake-holders Self-regulation Threats Donations Policy makers 3B. Pressure- oriented Influencing experts Experts Cisco Revolving doors Cisco Direct lobbying Policy makers 3A. Infor-mation- oriented 2. Part. level 3. Type of strategy Target group Orienta-tion

Corporate influence on policy makers – lobbying channels (VII) Coll. Indiv. Advertising Public Constituency building Stake-holders Self-regulation China China Threats Donations Policy makers 3B. Pressure- oriented Influencing experts Experts Revolving doors China China Direct lobbying Policy makers 3A. Infor-mation- oriented 2. Part. level 3. Type of strategy Target group Orienta-tion

Corporate influence on policy makers – lobbying channels (VIII) Coll. Indiv. Advertising Public Exxon Mobil Constituency building Stake-holders Self-regulation Threats Donations Policy makers 3B. Pressure- oriented Exxon Mobil Influencing experts Experts Revolving doors Direct lobbying Policy makers 3A. Infor-mation- oriented 2. Part. level 3. Type of strategy Target group Orienta-tion

Corporate influence on policy makers – lobbying channels (IX) Coll. Indiv. Advertising Public Constituency building Stake-holders Self-regulation Threats Donations Policy makers 3B. Pressure- oriented Influencing experts Experts Revolving doors Food aid Direct lobbying Policy makers 3A. Infor-mation- oriented 2. Part. level 3. Type of strategy Target group Orienta-tion

Corporate influence on policy makers – lobbying channels (X) US survey among executives and congressional aides (Lord 2000): Constituency building most effective to get proposed law passed or defeated Direct lobbying by executives or lobby firms most effective to influence content of legislation Advocacy advertising and political donations much less effective

US survey among executives and congressional aides (Lord 2000):

Constituency building most effective to get proposed law passed or defeated

Direct lobbying by executives or lobby firms most effective to influence content of legislation

Advocacy advertising and political donations much less effective

Corporate influence on policy makers – lobbying channels (XI) Coll. Indiv. Low Low Advertising Public High Constituency building Stake-holders Self-regulation Threats Low Donations Policy makers 3B. Pressure- oriented Influencing experts Experts Revolving doors High High Direct lobbying Policy makers 3A. Infor-mation- oriented 2. Part. Level 3. Type of strategy Target group Orienta-tion

Corporate influence on policy makers – government regulation Types of government regulation (Chari & Murphy 2007): Disclosure of political donations Disclosure of lobbying positions Registration of lobbyists Disclosure of payments to lobby firms Government revolving door regulation  Only a few jurisdictions have regulations (US, EU, Canada, Germany)  Most of these jurisdictions do not have highly regulated systems

Types of government regulation (Chari & Murphy 2007):

Disclosure of political donations

Disclosure of lobbying positions

Registration of lobbyists

Disclosure of payments to lobby firms

Government revolving door regulation

 Only a few jurisdictions have regulations (US, EU, Canada, Germany)

 Most of these jurisdictions do not have highly regulated systems

Corporate influence on policy makers – voluntary initiatives Voluntary initiatives often concern disclosure: Disclosure of political donations most common (GRI S05) Some companies report lobbying issues, but not positions (GRI S06) No systems to align lobbying activities with CSR policies (e.g. SOMO survey on the pharmaceutical sector 2006) No initiatives on collective level

Voluntary initiatives often concern disclosure:

Disclosure of political donations most common (GRI S05)

Some companies report lobbying issues, but not positions (GRI S06)

No systems to align lobbying activities with CSR policies (e.g. SOMO survey on the pharmaceutical sector 2006)

No initiatives on collective level

Suggestions for discussion Regulations on lobbying rarely address the most important lobbying channels. Do you think it is feasible to create effective regulation about lobbying? How can companies themselves address inconsistencies between CSR policies and their lobbying activities? What are the differences, if any, between the strategies used by NGOs and those used by companies to influence policy makers?

Regulations on lobbying rarely address the most important lobbying channels. Do you think it is feasible to create effective regulation about lobbying?

How can companies themselves address inconsistencies between CSR policies and their lobbying activities?

What are the differences, if any, between the strategies used by NGOs and those used by companies to influence policy makers?

For more information: SOMO Sarphatistraat 30 1018 GL Amsterdam The Netherlands www.somo.nl [email_address]