09.01.2020 | KPMG Law Insights

Lobbying and compliance

Lobbying and compliance

Many companies do not record their lobbying activities systematically enough, if at all, as part of preventive compliance. However, if a company only includes the topic in compliance at certain points, it runs the risk of not recognizing risks and reacting too late to possible misconduct.

The external representation of corporate interests through lobbying is firmly anchored in our political system and promotes democratic discourse. Although lobbying is relevant to compliance, many companies only include the issue in corporate compliance in traditional risk areas, for example, only in the case of benefits such as hospitality for and invitations to public officials.

However, such a selective survey does not do justice to the diversity of lobby actors and activities and falls short of the mark.

Typically, a wide variety of departments within the company are involved in lobbying, such as engineering, development, legal, marketing, corporate communications, or corporate social responsibility (CSR). Examples: In a public lawsuit, a company’s litigation strategy and litigation PR can have political implications. Technological progress can influence location decisions, which are always highly political.

However, the various departments perform very different tasks and often use separate structures, for example in data management. The differences between the departments make interdisciplinary working methods and thus a uniform and professional positioning more difficult.

Code of Conduct as a basis

The Code of Conduct is recommended as the basis for a company’s lobbying activities, as it creates a clear, transparent and value-based basic understanding. The code should define unclean lobbying practices and sanction them from the outset. An overview should also determine at which points in the process organization lobby functions are involved and which operational and strategic units of the company perform these tasks.

The employees concerned should be trained accordingly and be able to identify politically relevant topics independently. They also need to be made aware of how to behave at association meetings.

Of increasing importance for lobbying are digital tools, such as newsletters, social media, blogs, monitoring crawlers or CRM and event software. They help to implement measures efficiently and on a case-by-case basis, for example when up-to-date information on the state of the public debate is required in a crisis situation, or when you want to respond individually to statements made by participants in the debate. However, digital tools also bring new dangers; data protection and personal rights must be observed when using digital tools.

Clear governance requirements can ensure compliance with laws and corporate guidelines. Modern advocacy sees the public and the company as part of an increasingly interconnected society.

Viewing the company as a whole

All rules and specifications must relate to the entire company, both spatially, i.e. worldwide, and temporally, tomorrow as well as today. For this reason, independent guidance valid for the entire corporate group should establish clear and unambiguous rules, for example on events, invitations and gifts to public officials. Continuous and conscientiously updated documentation of all measures already implemented is essential and also helps to keep lobbying activities consistent over a long period of time.

Companies should also ensure consistent data and knowledge management with clear proxy rules and unambiguous rules for storage and access permissions of confidential documents.

In particular, the larger the company, the more important it is to have consistent language on key policy positions and issues – again, both geographically and temporally.

In addition to internal rules and procedures that a company can use to ensure that lobbying is carried out in a compliant manner, the EU Transparency Register at EU level also provides corresponding processes that can be used as a guide. By registering in the Transparency Register, companies undertake to comply with the Code of Conduct, which sets out, among other things, the principles of transparency and disclosure of interests when carrying out lobbying activities. Another requirement of the EU Transparency Register is an annually updated percentage disclosure of all persons who perform lobbying activities for the company. Documentation and transparency rules of the company should comply with this standard.

Those who professionally structure, implement and document their lobbying activities not only meet national and supranational requirements. It also creates the best conditions for any misconduct to be detected quickly and for a prompt response to limit the potential damage. Last but not least, stringent lobbying that is consistently aligned with clear guidelines is also more effective, more efficient and creates trust among business partners and the public.

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