Corporate lobbying needs closer attention.
... and the ecgi has done just that!
Tom Gosling, Executive Director at the European Corporate Governance Institute (ecgi) recently interviewed Professor Michelle Lowry on her research paper ‘Firms’ Transition to Green: Innovation versus Lobbying’ We strongly encourage all Sustainability Professionals to watch the interview (the above video) and then read the paper.
What's the research paper about? It's about Governance. We know that G for governance is really important. But, it often doesn't get the attention it deserves - lost in the (important) discussions around E for Environment and S for Social. A material element of governance is company lobbying. Sometimes this can act to support the sustainability transitions, but often it is aimed at the opposite - putting a break on change.
There are a number of really interesting things about this research. First up - green innovation. Much green innovation (as measured by patents etc) is carried out by brown firms. In fact the leading green research innovators are found in the chemical, consumer durables and manufacturing sectors. This makes sense. If these are the sectors that could be most impacted by the sustainability transitions, it makes commercial sense to develop alternatives. So far so good.
Now turning to lobbying. We know that lobbying can be opaque. Sometimes it's very public, but mostly it is, almost by definition, private. One-on-one conversations. So hard to track. But, in the US, companies have to disclose the $ value of their lobbying, and who carries it out on their behalf. And we know the political affiliation of the lobbyists. Plus, we 'know' that democratic lobbyists are more likely to lobby for green actions, and republican lobbyists are more likely to lobby for brown. Using this data, we can make assumptions about the direction of a company's lobbying.
And it turns out that many firms do green innovation and brown lobbying. Professor Lowry's team suggest two reasons for this. One is protecting cashflows. Brown firms might do more green innovation, but they also generate most of their near term cashflows from brown activities. So planning for the future via green innovation, but using brown lobbying to delay it makes financial sense. The second is corporate power. Research tells us that most lobbying takes place to protect the status quo. Either way, lobbying can dramatically slow change - we need to be aware of it and take action to direct it.
If your analysis focuses more on green innovation than on lobbying activity, you could be missing an important trick.
Link to blog 👇🏾
Steven Bowen
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