Transnational companies are part of the problem or the solution

Transnational companies - part of the problem or part of the solution?

Relationship between transnational corporation, governments and civil society organizations in the field of “lobbying”


BINGO Business and Industry Non-Governmental Organization

CCS Carbon Capture and Storage

CDM Clean Development Mechanism

CO2 Carbon dioxide(chemical formula)

CSR Corporate Social Responsibility

EU European Union

NGO Non Governmental Organization

UE United States

ZEP Zero Emissions Platform

I. Introduction

This paper sill try to show the different interactions that lobby groups has between transnational corporation, governments and civil society organizations. I consider this subject of great importance due to the proliferation of this so called Interest groups (Kenneth, Berry & Goldman 2008 p, 2019) and their influence in important matters that are currently affecting the different levels of the society, among them we find the reduction of CO2 emissions of industries, regulations in health care and even the web browser we use in our computer in a day to day basis.

There has been and increase in the lobbying activities in the past years. Now there are business strategies aimed to improve the lobbying activity and corporations have realized that this practice has its benefits, mainly economic benefits despite sometimes the detriment of environmental wellbeing. Nowadays corporations have expanded their influence across borders, permeating various sectors of the society including the political arena in which lobby groups work its best to promote the interest of private companies by misleading the law making process into a mere technical discussion. This off course affects the relationships between the corporation, civil society and government expanding the number of actors that influence national and supranational governmental issues (Haufler V, 2006 p. 99).

The paper is structured as it follows: how the Private Sector interacts with governmental issues and how its influence permeate a whole range national and supranational institutions making it an organism capable of whatever needed to fulfill its power needs. Later I analyze the role of the government and how it was the base for what we call today lobby groups, all of this based from a Political Frame where law makers and bureaucrats shape the standards of living of a society and how they are being advised. Then I will try to show how Global Lobbyist influence supranational governmental institutions, and by setting a real life example recognize its danger to the society, I try to asset here the importance of being informed because that is were lobby groups manage their schemes, by not allowing the public to inquiry about the scope of their proposals. After analyzing its danger if misused the lobby practice show that is a powerful tool in order to get things done from inside congress halls, and how if it is well managed, lobbyism can be a good way to improve businesses and its whole value chain including civil society and governmental institutions. Finally, some concluding remarks regarding the relations exposed in the previous chapters.

II. Private Sector

In the world of economics and commerce we have seen the rise of a new type of organization, one that transcends frontiers trough world markets and that is getting away from the government scope making it to hard to control them. This organization is called corporation, and they are implying that self regulation is the best way to control its behavior by setting rules and standards covering their operation in a worldwide basis, but this situation comes with a problem, it is now clear a confrontation between the government body and the transnational firms (Haufler V, 2006 p. 85).

Under this scenario is there an umbrella that can cover such wide spectrum of duties and responsibilities among transnational corporations? Globalizations offers the concept of global governance, as an organization that trough collective decision making by means of formal and informal mechanisms can coordinate a great range of actors. Global governance functionality surely is not new in our society but there has been an evolution in the approach of understanding its relation with the private corporations.

First, there has been always the need in separating the private from the public establishments. Nowadays and thanks to neoliberal tendencies we can detect that the separation between the government and the economic market is visible at a domestic level, instead, international networking have diminished the role of government, showing that there is no sense of authority from it, this lack of authority have been replaced with private initiatives supported by corporate power, making too hard to differentiate the role of the actors in a global level. Second, there has been an increase in the participant of the governance scene in the past years, most of them in a global level. This is originated mainly because, sometimes, the is no visible authority that set the rules of behavior in a world market, instead, a whole community of economical actors, mainly private, provide the framework to in order to bring some organization to international commercial activities. Lobby groups are also included in this framework, permeating business organizations, congress halls, NGOs among others. In relation of this evolution of participants in the global sphere, large corporations have gradually been displaced from their prime status and they have been replaced by industry associations, alliances and other form of coalitions among partners making global governance a hard issue to define due to the thin line that separate the public from the private sphere. Third, Global governance was strictly framed into the creation and regulation of rules and standards of economically affairs. These affairs were only studied between firms and governments and their relations. But now, there are a whole new set for actors who participate in a ruling level, among them are consumers, intergovernmental organizations, citizens, environment associations among others (Haufler V. 2006 p 85-87).

This mean that the range for global governance have expanded and even tough, there are a lot of external influence in congress halls to pursue private and social initiatives, making the public authority, at least, at a local level, the most important organism in rule making and supervising authority and that is where BINGOs (Business and Industry Non-Governmental Organizations) come into scene and were they exercise their influence (Willson K. 2009).

III. Political Frame

The way governments have acted during decades is based on the influence that external actors have over the politicians and law makers in other to promote laws that attempt to fulfill certain interest. But the effort to influence legislators is nowadays staged in the beginning of the electoral process, even in the election campaign process. This particular form of intervention can be seen if the financial support that some campaigns have from private actors, off course, this behavior is condemned in most countries, moreover if the support is based on monetary contributions in exchange for political favors (Fuchs D. p, 72). Even if this behavior is deeply punished by law, is also true that any kind of favor (monetary or not) increase the chance of a contributor to be heard in the legislative offices.

The lobbying process in order to finance campaign private companies have rise trough the years. From 1920 to 1968 there has been an increase in 175 offices from corporations in Washington D.C. and by 1990 there were more than 600. (Shaiko 1998 in Fuchs D. p 74). This behavior show us two main scenarios, first, the tendencies for corporations into exercise more influence in the political arena , second the increasing enthusiasm from policy maker into listen business recommendations.

Another issue that has to be addressed as lobbyism characteristic is the need for more economic resources in order to finance more complex and aggressive political campaigns (Fuchs D, p. 80). The high cost of elections campaigns (i.e. United States) are allocated in media time and the inclusion of disciplines like public relations strategist or marketing experts in order to promote candidates as if they were products designed to fulfill a certain demographic group, in the same way as a product have to reach a market.

Parallel to the increase of corporations into entering the congress halls there has been an increase in the demand of information that politicians need to deal with in order to implement their respectively laws. The information held by corporations, civil society and movements have gains more importance due to the great complexity of regulatory framework based in technical information or specific knowledge in order to address specific need from the society.

Activities related to lobbyism had become into one of the most lucrative disciplines inside congress halls around the world. We can se how lobbyist influence affect the performance of a company by influencing the inclusion of laws that promote some kind of advantage towards that industry. Nevertheless the connection between a campaign sponsorship and the subsequence allocation of policies in order to the sponsor to have an advantage is not clear. Usually, corporations spend more money on lobby schemes than on contributions to campaigns (Apollonio 2003 in Fuchs D. p 81). This behavior induces to a creation of a kind of an “allowed external support” in order to provide legislators of an expertise base that will assist them in the decision making process.

This scenario makes us realize that there is an increasingly power in the corporations by using their knowledge ant their economic resources in order to influence political activity. This go beyond the basics of sponsoring campaigns or specific candidates, this practice induce to have a great divergent knowledge base that will permeate legislators and politicians and in doing so, they are acquiring more technical base in order to create better and more sophisticated laws according to our expectations and needs.

IV. Global Lobbyist

One example of the interactions of the private corporations and the influence in politics matters is the ZEP (The Zero Emissions Platform) a lobby group based in the European Union (Corporate Europe Observatory, p, 2009). The ZEP was founded in 2005 in Lisbon as an advisor organization to the European Commission on public research policies, and its part of the (ETPs) European Technology Platform which also include the European Technology Platform for the Electricity Networks of the Future (smartgrid) or the European Technology Platform for Wind Energy (TP wind) (Technology Platforms (ETPs) Leaflet, European communities 2005). These latter ones are also from great importance for the creation and sustainability of new forms of renewable energy within the European Union.

The ZEP main objectives are (European Technology Platforms (ETPs), 2005)[1]: first, “to define research and development priorities, timeframes and action plans on a number of strategically important issues where achieving Europe's future growth”. In order to accomplish this there is implicit the support of the industry stakeholders, this off course, bring to our mind the influence of private companies into de development of political issues in order to give a competitive advantage for a nation.

Second, to “ensure an adequate focus of research funding on areas with a high degree of industrial relevance”. This objective is also addressing the relevance in covering the whole value chain of the industry permeating the whole business structures and networks, and also including the mobilization of public authorities at a national and regional level in order to cover the needs of the program.

Third, “Address technological challenges […] which are essential for Europe's future competitiveness, including the timely development and deployment of new technologies”. Once again, the ZEP refers in to having a policy support in order to improve technology development and bring to the EU to the top places in competitively, but off course, without the help of “breakthrough” policies, sponsored by private firms. This simple scenario show us how interconnected is the private company within the objectives of this group, and how it can affect the lawmaking process within the European Union.

But if this sounds so go, after all, this lobby group is looking to preserve EU technological status and boost a growth trough technology investment what could be wrong with that picture? In the last Copenhagen Summit the ZEP was the leader of a campaign aimed directly to improve the CDM (Clean Development Mechanism) of the carbon capture and storage technology. This technology is aimed to recall the CO2 emission of large industries (mainly coal and refinery sector) and store them below the surface of the earth in order to mitigate the impact of the CO2 emissions in the climate change (The European Technology Platform for Zero Emission Fossil Fuel Power Plants (ZEP) 2009).

But we have to recall the objectives previously described. The ZEP is mainly dominated by large corporations most of them with great interest in the fuel industry and this kind of technology. Some of those companies are BP, Siemens, Shell and Statoil, among many others (European CO2 Capture and Storage projects p 5-10). In fact, it doesn't matter the initiatives expressed by the ZEP, moreover, there is not one power plant able to capture and store CO2 emissions, and right now, some scholars consider that the initiative is a risky and expensive use of resources.

But what is behind the curtain, why big companies invest their economic resources into lobbying schemes such as seen in Copenhagen. Well for starters, thanks to them, the coal industry is about to receive the greatest one funding issue by the EU initiative in order to fight against the climate change. Through lobbying the ZEP have achieved the following funding proposals, € 1bn from the EU recovery plan from the financial crisis, € 425m from the seventh framework programme, among others, meaning that there is almost € 13bn that the European Commission plan to give to ZEP representatives in order to set functional mechanisms and fabrics that apply the principles of retaining CO2 and store it (Corporate Europe Observatory 2009, p. 3-6).

But how is it possible to attain that kind of influence within the government officials, well, the old saying, unity makes you stronger, came into my mind when analyzing the issue. The ZEP was not the only one represented in the halls of the Copenhagen summit, in fact, it was part of a larger delegation, the BINGOs (Business and Industry Non-Governmental Organizations), they are representatives of associations of businesses who have interest in common that represent their companies (mostly private corporations) interests at UN climate negotiations (The Center for Public Integrity2009).

At summits like Copenhagen, BINGOs executives reunite in order to show and discuss important matters as CO2 emission reduction, effects on climate of the carbon production, and off course deadlines to implement their projects. Nevertheless, even if the objectives on climate change are clear, the strategy to obtain result is not. The BINGO representatives often try to hang around making connections, and meeting key role players in order to influence more effectively (Andrew G & Willson K 2009, ) .

To summarize the union of these types of organizations are the responsible for the funding and the regulation schemes that allow big corporation gain contributions in the form of aid from governments. Even the ZEP realizes that the technology will not be useful and available before 2020 (Corporate Europe Observatory 2009, p, 7). That off course means that the EU is funding a technology that could not reach to the main goal to reach the 20% reduction in CO2 emissions in the next 10 years.

These types of organization represent a new model on lobby. Now their influence is global, not only are representing traditional corporations, but they are advocating for a whole range of new targets mainly represented in renewable energy companies, such as the ones investing in solar and wind energy producers. Under that evolutionary frame, is there a possibility for lobby groups to improve the well being of the society?

V. Powerful Tool

It is clear the many firms do not realize the value of their effort invested in lobby groups, most of the time they under use it. Many organizations leave behind the possibility to show the world their advance in CSR (Corporate Social Responsibility), this term was firstly used by Michael Porter and Mark Kramer in the Harvard Business Review (“Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility,”December 2006). CSR look directly into the role of business, and its behavior above the law, off course, corporations should obey the law, and have to take care of some practices in order to establish a connection with the environment, but when those rules are gone, do firms have any extra social or moral responsibility in order to commit, for example, environmental issues? (Reinhardt F, StavinsR, Vietor R. 2008, p. 4)

In order to promote well being large corporations should align their business operations, objectives and goals, into the CSR activities, not only they have to concentrate into acquire large amount of money but to focus on more generic social issues like environmental protection or labor rights. Nevertheless we have to take into account that lobbying is a good way to reach innovation and reduce toxic waste trough the whole value chain. Even more, sometimes it is possible to create new healthy standards for the industry and those industries that focus on improvement of their society and environment can generate more competitive advantage against competitors, by creating more consumer and environment friendly products and services (Peterson K, P. fitzer 2009).

VI. Concluding Remarks

Along the paper I have try to establish a relationship between lobby groups and the different agents that shape the governing world in our society. Mostly by addressing transnational corporation behavior, its relation with the government correlation and emerging of a series of representatives from the civil society and their different establishments.

First of all lobby groups have a great influence in the shaping of the political outcome within a country. Its influence comes from the mere beginning of the campaign, and by supporting political parties or politicians by monetary means or technical advisory is clear to say that there is a big chance for this lobbyist to be heard and to have an influence in the decision making process inside congress halls around the world (Fuchs, D. 2007 p. 92). This scenario show us that regulation in the lobbying activity inside governmental institutions is too inefficient, there is not a supranational institution that can put a fence around this kind of activity in order to promote social well being instead of private initiatives.

Corporations are going to be exercising their influence and their power in order to establish their rules to promote their competitive advantage in international markets. This type of private governance is going to be held as long as the corporations keep influencing government basing their politics on technical issues, as we have seen previously with the capture and storage of CO2 initiative (European CO2 Capture and Storage projects. 2009), that is why we only see certain type of corporation addressing particular issues, as long as there are no more observers or auditors for technical advisory the influence of corporation will prevail. Unfortunately, until now, the only really organism that can put control to lobby groups is the government itself, who has to battle against the big multinational corporation who has as twice as government resources influencing in a very impeccable way law makers and bureaucratic political establishments.

There are new actors in the field of governance, and that lead to the creation of more modern systems of governance in order to fulfill the needs of an increasing range of issues that permeate the society nowadays, that lead us to study more closely the relation between large corporations, government and civil movements, as for now Governance issues cannot be seen only as an state matter, we are witnessing the process into establishing a new form of global government, but off course this raises questions as who is capable of shaping this kind of authority or who is going to be the main beneficiary of breakthrough technology applications, should be large corporations, or the civil society who deserve better standard of living.

Our responsibility now is being part of the decision making process, we have to use the information-networking society that is building up to be informed about the initiatives that are being held in environmental and economical summits, with that in hand, ask our legislators if they know all the facts that lobbyist groups advocate and if they are aware of the consequences of applying them. We have to be a part of the solution by addressing the decision maker directly, communicate to the society what is really happening at the summits in order to be informed and try to open the eyes of those who shape the political framework that we will live in the next decades.

VII. Bibliography

Andrew Green and Kate Willson, December 18, 2009 “Meet the BINGOs”, The Center for Public Integrity, ,

Bakan Joel, March 1, 2005 , The Corporation: The Pathological Pursuit of Profit and Power, Free Press

Baumgartner Frank R., Jeffrey M. Berry, Marie Hojnacki, David C. Kimball, Beth L. Leech, 2009 Lobbying and Policy Change: Who Wins, Who Loses, and Why University of Chicago Press, chapter six, strategic choices.

Corporate Europe Observatory, public funds used to lobby for fossil fuel in Copenhagen, December 2009

Cutler A.C. transnational business civilization, corporations, and the privatization of global governance. In May, C. globate corporate power, London, 199-225

European Technology Platforms (ETPs) Leaflet, European communities 2005

European Technology Platforms (ETPs) Leaflet, European communities 2005

European CO2 Capture and Storage projects

Forest L. Reinhardt, Robert N. Stavins, Richard H. K. Vietor, April 2008, Corporate Social Responsibility through an Economic Lens, Faculty Research Working Papers Series,

Fuchs, D. 2007 Political mobilization, structural power: old and new facets, in D. Fuchs, Business power in global governance, chapt. 4 & 5, oulder / London (Lynee Rienner): 71-137

Haufler V. 2006 global governance and the private sector in May, C. globate corporate power, London, 85-103

King David C, Fall 2009 , “Course Syllabus”, Interest Group Activism and Representation, Harvard University$FILE/dpi-332m%20interest%20groups%20fall%202009%20syllabus.pdf

Kenneth Janda,Jeffrey M. Berry,Jerry Goldman,Kevin W. Hula, 2008, The Challenge of Democracy: American Government in a Global World, Student Choice Edition, Cengage Learning, , Chapter 7, interest groups

Peterson Kyle & Pfitzer Marc, Winter 2009, “Lobbying for Good”, Principio del formulario

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The European Technology Platform for Zero Emission Fossil Fuel Power Plants (ZEP)

Willson Kate, November 10, 2009, “BINGOs and the Global Lobbyist”, The Center for Public Integrity,

[1] This reference cover the 3 ZEP objectives

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