18.6 Corporate Political Engagement
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Companies participate in political activities in many ways, such as political contributions, lobbying, and the revolving door between the public and private sectors. When done properly, under the right regulation and scrutiny, corporate political engagement can serve to ensure that laws and regulations set by government are in the best interests of the public. It enables interest groups the ability to understand, track and influence legislation such that policy is informed by those with knowledge and experience in the relevant areas. However, when this influence becomes opaque and skewed towards a small number of powerful companies, corporate political engagement can result in legislation being influenced away from that which is in the public’s best interest.
In 2018, Transparency International UK published the Corporate Political Engagement Index, a comprehensive tool that provides businesses with the best guidance on how to improve their political engagement. A small, anonymous, assessment is provided for businesses to evaluate their current standards of corporate political engagement against the index, which ranks corporations from A to F.
As informed by the 2018 Corporate Political Engagement Index, it is recommended that to best regulate their political engagements, firms should endeavour to create a control environment in which board oversight, guiding principles and the monitoring of corporate political engagement activities are all standard processes. This helps ensure that corporate influence in politics remains ethical and transparent, minimising the risk of reputational damage.