Opaque lobbying by companies with revenue of almost half of global GDP risks undermining progress on the SDGs

The lobbying efforts of the world’s 2,000 most influential companies, representing USD 45 trillion in revenue, can either drive or hinder sustainable development. Currently, however, there is no way to know which direction companies are pushing. Most companies are not transparent about their political engagement strategies or spending. With an unprecedented 4 billion people worldwide eligible to vote in 2024, a better understanding of companies’ political influence, which impacts the functioning of a healthy democracy, is more important than ever.

Lobbying is the primary way that companies influence the political process. Companies partaking in political activities and spending, either directly or indirectly through institutions such as trade associations, is part of a healthy democracy, and companies can play a legitimate role by providing diverse perspectives and expertise. However, when corporate lobbying is opaque and disproportionate, to the extent that the company gains an unfair advantage over public decision-making at the expense of the public interest, it can lead to undue political influence. Large companies wield considerable power through their economic weight and political access. They engage in political activities to benefit their business interests, though at times this may be in opposition to affected stakeholders’ interests. Weak or absent legal and institutional transparency frameworks exacerbate the societal impact of corporate lobbying and make it impossible for stakeholders to hold companies accountable for their commitments to responsible business conduct. Where regulation regarding corporate lobbying is limited or non-existent, there is a greater possibility for misalignment between companies’ political activities and their own human rights and decent work commitments, as well as with broader expectations of creating an equal, inclusive and just society.

There is a real risk that private interests are prioritised over the public good where corporate lobbying happens behind closed doors without the necessary transparency to demonstrate that lobbying activities have been conducted responsibly. Stakeholders want information on companies’ objectives for their political engagement activities and how these align with their social and environmental commitments. Transparency is crucial for building stakeholder trust. It is the only way to convince stakeholders that a company’s political activities are a genuine and legitimate part of the democratic process.

– Chara de Lacey, Head of Business Integrity at Transparency International UK

When well-resourced companies participate in opaque political processes, the likelihood of corruption and its associated negative social impacts increases. Should a company’s lobbying practices involve bribery – covertly giving or receiving something of value to influence an illegal or unethical action – this is typically seen as illegal conduct and is well regulated across most legal systems. In other cases, the way a company interacts with the political process may be legal but nonetheless amount to improper influence. Although bribery and corruption differ from legitimate efforts to influence political processes such as lobbying, corporate involvement in politics can still create a risk for both bribery and corruption. The Social Benchmark’s findings indicate that most companies are establishing a zero-tolerance approach to bribery and corruption: 61% of companies commit to prohibit bribery and corruption across their operations globally.

However, it is unclear whether companies are making the link between their anti-corruption commitments and their political activities, as most companies are not open about their lobbying objectives or political spending. Only 11% of companies have established a policy that publicly sets out their lobbying and political engagement approach. Moreover, less than 3% of companies ensure that third-party lobbyists, such as consultants and lobbying firms, comply with their lobbying and political engagement policies. Stakeholders lack the information they need to hold companies accountable on whether their commitments and efforts are out of step with their lobbying practices.

A mere 5% of companies assessed in the benchmark disclose data on their lobbying expenditures, and the existing disclosures are far from being standardised. This makes it difficult to draw any conclusions about companies’ lobbying approaches. Among the few companies that disclose spending – such as on directly hired lobbyists or trade association dues – even fewer report on the specific issues being lobbied. Those companies that do disclose their expenditures spend on average USD 14.4 million per year on lobbying activities, underscoring the substantial corporate investment in political influence.