Business Ethics Essay
Ethical Aspects of Corporate Lobbying
Lobbying is a practice that seeks to influence the authority and decisions of governments, through lawmakers, officials, either organized groups or even constituents. Initially lobbying was founded basically to act as a source of information. In nations, state power often defines and gives regulations on lobbying by corporations and organized groups. Views against lobbying describe it as undesirable to permit specific interested groups or individuals to get special attention from legislatures because they are favoured by the contributions they make. However, when most people see lobbying as a form of system corruption, others hold contrasting views about the same (LANDIER & NAIR: 2008). Most economists and business people hold a common viewpoint of corporate banking as a case in point of people in possession of better knowledge of their interests as compared to the majority population.
This article critically analyzes the consequences of corporate lobbying, in the wake of non-commitment by regimes to regulate taxes and the irreversible reserves. It is evident that companies with a high dependency on capital lobby investment dynamics fair generally well and are favoured without hitches in their efforts to gain tax relief. Therefore, corporate lobbying in a way aids companies
Need essay sample on "Business Ethics"? We will write a custom essay sample specifically for you for only $ 13.90/page
Need for Lobbying
Standard accounting and liability disclosures have been closely linked to politics and corporate manoeuvres. Any proposal by an agency to set accounting standards is readily criticized by interested lobby groups who are always on the look out to lobby even the standard setting agency (VILCOX & MOHAN: 2007). Nevertheless, studies show that there is a possibility that in the course of corporate lobbying revelation of certain information is accompanied. If a set proposal interferes with the interests on a company, then the management will take the incentive to lobby against it and deter the compulsory regulations as stated in the plan. Lobbying against the legislation in some cases may result in disclosing of the very same data and information that a company is out to conceal.
A balanced investigation exposes this information conflict as a cause to why some industries opt out of lobbying regardless of the effect of the suggested law on its interests. Conversely some companies still manage to conceal their information despite their adopted nature of corporate lobbying as key in the daily functions (RAE & WONG: 2004). Moreover some industries do not practice business lobbying themselves instead they ride freely on the lobbying attempts by other firms. It is argued that at least most companies benefit from free rides some of the time by sharing responsibility when lobby efforts are directed on probable and random foundations.
Lobbying In the UK
In the United Kingdom, lobbying was perceived as an effort aimed at manipulating the votes of legislatures through fellow members of parliament, and outside bodies or their constituents. According to a report by Landier & Nair (2008), the growth rate of corporate lobby industry has been steady in recent times with a work force of about 14,000 and capital worth 1.9 billion pounds. The report also states that legislatures can be visited more than a hundred times in a week by lobbyists. A lobbying investigation held by the Public Administration select committee from the House of Commons, this year emphasized on the need to have a statutory record of corporate lobbying dealings, to increase clarity in the activities between legislatures and lobby groups (LANDIER & NAIR: 2008).
The self-regulatory organizations that receive joint applications from corporate affair companies in the UK are the public relations consultants association (PRCA) and the association of professional political consultants (APPC). Individual lobbyists are reserved to register with the chartered institute of public relations (CIPR). Besides open lobbying, political parties in Britain have been accused of attempting to solicit for campaign finances through peerage offers and other credits. In view of the fact that the UK legislature’s House of Lords is occupied by aristocrats, then they are strategically positioned to instigate and revise Bills before they become acts of parliament However, parliament legislation lays a requirement that debate participants should have their interest declared, and furthermore it’s a criminal offence to sale peerage. There is an allegation that contributions raised in this manner are offered instead as loans not as automatic gifts in order to evade this regulation (VILCOX & MOHAN: 2007).
Government agencies in the British Empire often argue that even though regulation in corporate lobbying has its weakness, to lobby with the aim of influencing political outcome is an essential and lawful tool in democratic systems. The government on one hand benefits by accessing the scrutiny and knowledge brought by lobbying, on the other hand groups and individuals with good reason deem it fit to influence the outcome of political verdicts that impinge on their interests, their environment and neighbourhoods. Corporate lobbying is now rampant worldwide and when it comes to politics, contributions are made at nomination level.
Lobby groups aid in drafting party manifestos that not only favour their interests but also ensure long term benefits on the invested capital (BRENKERT: 2004). Political parties and governments benefit from corporate lobbying which assist them in achieving, maintaining and even control power from the background in case their term ends. The influence of such groups lies latent and they are normally put in open practice when need arises either in rally occasions by demonstration or through closed arena negotiations. Usually, this is done contrary to the stated best practice in the corporate world since they result in undue advantage on the competitors.
Lobbying in Europe
In Brussels, the EU headquarters thousands of lobbyists have pitched camp drawn by ever-increasing powers of the European commission and parliament. The consequences have been felt in the EU policies on environment, trade and health (KRONENBERGER & WOUTERS: 2004). The commission acknowledges these grave apprehensions and debate on lobbying commenced in 2006 laying down solid suggestions for corporate lobbying in Brussels. Regrettably, such suggestions proposed to deal with these distresses have proved either insufficient or frail practically (VILCOX & MOHAN: 2007). Brussels is flooded with more 15,000 professional lobbyists who widely promote big business interests with a 1 billion Euro budget expenditure on corporate lobbying annually.
This haws instilled widespread fears that the increasing pressure of corporate lobbyists jeopardize health and environmental protection and democracy in Europe in general. The dark side of this lobbying lies in its untransparent nature, non regulation and lack of guiding business ethics in all its dealings. A classic example was exhibited when a lobby campaign was initiated some years back to undermine the EU proposal of a system for registration and chemical testing referred to as REACH (KRONENBERGER & WOUTERS: 2004). Corporate lobbyists employed the services of impact studies that were flawed, scare mongering and delay tactics as part of a destructive counter, which has undermined the EU proposal dangerously.
It is o obvious that the chemical industry lobbyists outnumber in a massive way with a huge budget expenditure than the NGO’s in defence of strict environmental laws and health regulation. Then there is also the problem in disclosing how much the lobby groups have devoted in their campaigns because of lack of transparency in the transactions and activities. Currently most companies conceal their activities in faceless business organizations to evade inspection from the public in cases where questions are raised concerning their commitment in corporate social responsibility and business ethics, with regard to reflection in the lobbying efforts. In order to facilitate thorough assessment of corporate lobbying activities there need be established transparency laws with no compromise in the course of their implementation (DODDS & PIPPARD:2005).
From one corner of the ideological spectrum to the other, there exists a worldwide conformity that businesses ought to operate as pertains the rules and regulations the game, what is referred normally to as business ethics. Essentially most fervent free market fans hold this as the sole ethical responsibility beyond profit pursuit. The government is required to put the regulations in place while the businesses are obliged to operate within the accepted code of ethics. However, several questions have been posted with regard to the kind of ethical standards applied in business practices if they attempt to manipulate the very regulation to which they are expected to seek governance.
The truth that corporate managers have to chase profits within the law limits also shows that they have to attempt to manipulate the regulations for profit enhancement (LANDIER & NAIR:2008). And with the ability and capacity to do this, then the normative power of playing by the rules defence is surely robbed of at this point-thus its very simple to arrive at a consensus of playing by the rules if your are better positioned to influence the nature of the laws. It is a situation where most corporate firms would be better of by staying away from lobbying, but it would be better for the shareholders and their firms if they meddle with the rules- termed prisoner’s dilemma in philosophical and economical jargon. Government experiences most information deficits when it comes to regulatory issues; more often firms are in position of knowing feasible regulatory standards with desired goal achievement. In view of these circumstances is the creation of the public interest argument that permits and encourages business to share views and information with the government or simply lobbying (RAE & WONG: 2004).
Corporate Social Responsibility and Conflict of Interests
Corporate lobbying of governments is an issue that has registered questions in the corporate social responsibility’s emerging issues. Within CSR the growing concern for the past couple of years has focused not just on how wealth is spend but also on its creation. Brenkert (2004) states that at present there are of course many rules and regulations that are supposed to govern on how wealth creation is carried out and within what limits, but in practice free markets do not exist. The passing of laws that secure minimum standards for consumer protection and ethical conduct by firms has been for hundreds of years present. Similarly, the sought by corporate institutions to influence the regime in the application and nature of such regulation is as old.
It is legitimate in entirety that to get better legislation, representation by stakeholders is a vital ingredient. CSR has presently put on scrutiny the issues on how and for what are companies lobbying, with the recent highlighting of the existing challenges in a report by the institute of business ethics. A problem arises where a direct contravention occurs between a firm’s CSR position or stated values and the lobbying activity conduct and objectives it partakes (RAE & WONG: 2004). An example in recent times is the slamming of BP for opposing a legislation piece related to climate change in the United States, this situation is in contradiction with the company’s stated commitment in climatic actions. But BP would for instance draw attention to the fact of the presence of three varied pieces of legislation offered on climatic change by that time and that they supported the business compatible one and opposed the other that was anti business fundamentally. There are also business organizations, which lobby governments, so that they can get socially beneficial solutions. Companies normally lobby for issues that concern the bottom line, and ultimate scrutiny of negative effect legislation followed by the taking of favourable position (VILCOX & MOHAN: 2007).
It is no surprise that persons in corporate communications, dealing with lobbying logically follow their calling like their companions in other fields. For example, purchasing managers hardly ever analyze the CSR objectives of their firms, with the pressure on the ground to acquire from suppliers the best purchase terms. Thus, most companies strive for means that enable them to strike equilibrium of maintaining a steady pressure on the clients, but within the limits that are not supposed to be surpassed. Concerning corporate lobbying, the limit is not defined because it is no crime for a company to lobby for bottom line benefits (RAE & WONG: 2004). Except where during or in the course of the lobbying process, they defy the valuable and essential good principle enforcing regulations, then lobbying is legitimate. It is just sufficient to state that companies expect that, their efforts to manipulate rules do not stray in the least from the CSR arrangement and corporate ethics. Besides, it could be fair for corporate firms to reveal their lobbying aspiration and objective (VILCOX & MOHAN: 2007).
However, the expectation of companies to give a revelation of every occasion, when representation is done is impractical. Because some organizations feel that, the risk of such disclosure is in itself, to the benefit of the company’s competitors in certain circumstances. Another issue arises from the documentation burden, which in some cases may by far outweigh any social or business advantage. The reality on the ground is that there is limited means, in the task of either auditing or confirmation of what a company surfaces as its lobbying information, which is normally on the record if submitted formally in written. Nevertheless, the informal meetings during charity events, brief conversations in enclosures will occur unrecorded, though will form the basis of greater and meaningful company actions, I bet more than what is formally written. Without a doubt, the burdensome procedure of formalizing lobby activities will drive into informal arenas most of the dealings (RAE & WONG: 2004).
Reforms on Corporate Lobbying
There has been experienced an increase in general public outcry, over social funds that are donated into politics and government through lobby groups (BENOIT: 2007). Corporate lobbying activities should be initiated best practices, which involve stakeholders’ interests and not the company interests alone. The management of industries should not lobby using finances of shareholders, on matters regarding public policy and wide implications on society, without engaging all the stakeholders on the company’s decision-making body. Companies argue that, their increase in budgetary lobby activities are essential in securing, their commercial policies and plans from unpredictable adjustments in government legislation, which may have an undesirable result on the industry’s benefits.
The intrinsic value of public policy matters to an industry stands out as a careful duty that should involve the board of directors responsibly, in a company’s lobbying strategy in line with overseeing other business aspects. The deficiency of transparency, oversight and standard accountability in the entwined corporate lobbying should serve as basis to advocate for reform agendas that call for increased responsibility in lobby group activities (GOODPASTER:2007).
The matter may be further complicated since companies lobby through trade associations in addition to using their own names. Such companies adopt conservative stands on matters of public policy, situations often contrary with the well being of the better placed industry players, who nevertheless herd along with the aim of achieving a harmonized company front. What compounds such a cross purpose difficult is that corporate lobby contributions that aid campaigns via trade unions and associations are more hidden relative to direct offers. From a shareholder’s viewpoint, corporate lobbying in fact exposes the public to investments via huge pension financing which broadly control diverse range in a manner that cancels out corporate lobbying benefits if any. Since lobbying successfully by one industry affects other firms negatively, thus there is no benefit if one is a stakeholder in most of the lobbying companies.
Corporate lobbying at present is associated with multiple problems that have been identified in this essay; therefore, recommendations should be laid in order to speed up swift implementation of best practice in the management of activities to do with corporate lobbying. As per now there are very few frontline corporate managers of public policy issues in relation to lobbying and enactment of new rules is long overdue. Note should be taken here that the establishment of an approval system to watch over lobbying activities and transactions in the quest of adopting best practice is not in itself a universal remedy to all the problems (BENOIT: 2007).
The rule of the game should always defy the storm in order to ensure fair practices in the society, and the corporate sector stands out as core in impressing business ethics. But problems resulting from selective laxity in implementation of the rules are increasingly creating unfair play. Thus the establishment and implementation of best practices in the corporate sector is advocated for to enhance competition through the accepted code of business ethics. According to ACKERMAN (2000) there should be no expectation whatsoever that a government should be in place to audit and police corporations in their quest and apply of influence. However, there should be an appeal aimed at entrenching in the manager’s mind, corporate communication and the CSR department to realize that lobbying as any other corporate behaviour aspect, ought to accord with accountable business ethics.
Seemingly, large and small industries may view corporate lobbying as perfect and legitimate in their attempt to manipulate public policies, save for such immense powers should accompany responsibility of the same magnitude. This will give a clear line between ethical and non-ethical personalities in management who proclaim naivety and ignorance in the wake of accusations when otherwise should account for their negligence (CRANE & MATTEN: 2007).
ACKERMAN, Frank. 2000. The political economy of inequality: Global Development and Environment Institute. Washington DC: Island Press
BENOIT, Denise. 2007. The Best-kept Secret: Women, Corporate Lobbyists, Policy, and Power in the United States. New Jersey: Rutgers University Press
BRENKERT, George. 2004. Corporate integrity & accountability. London: Published by SAGE.
CRANE, A. & MATTEN, D. 2007. Business Ethics. Managing Corporate Citizenship and Sustainability in the Age of Globalization, 2nd Edition. London: Oxford University Press
DODDS, F. & PIPPARD, T. 2005. Human and Environmental Security: An Agenda for Change. London: Published by Earthscan
GOODPASTER, Kenneth. 2007. Conscience and corporate culture. Oxford: Blackwell Publishers.
KRONENBERGER, V. & WOUTERS, J. 2004. The European Union and conflict prevention: policy and legal aspects. Cambridge: Cambridge University Press
LANDIER, A. & NAIR, V. B. 2008. Investing for Change. Profit from Responsible Investment. Oxford: Oxford University Press
RAE, S. B. & WONG, K. L. 2004. Beyond Integrity: A Judeo-Christian Approach to Business Ethics, 2nd Edition. Michigan: Published by Zondervan.
VILCOX, M. W. & MOHAN, T. O. 2007. Contemporary Issues in Business Ethics. New York: Nova Publishers.