The Hidden Risk: Corporate Lobbying and Investor Responsibility 

Elissandra da Costa, Director of Social LobbyMap, Eiris Foundation

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The Hidden Risk: Corporate Lobbying and Investor Responsibility

Elissandra da Costa, Director of Social LobbyMap, Eiris Foundation

From reputational and regulatory risks to stewardship responsibilities, understanding who shapes human rights policy – and how this influences responsible investment – is no longer optional. As the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) moved through the legislative process, behind the scenes lobbying reshaped its scope and ambition – but why should this matter to investors?

The CSDDD was set to be a landmark European Union law. By establishing a framework of due diligence for companies to identify risks and harm to human rights and the environment, the legislation aimed to diminish these risks. But despite the adoption of the CSDDD in July 2024, corporate lobbying dramatically changed the shape of the directive. 

EIRIS Foundation launched Social LobbyMap to track corporate influence on human rights legislation. The research comes at a moment of strong backlash to human rights violations and in this atmosphere, lobbying around human rights will be increasingly prevalent.  

We aim to provide transparency and rigorous analysis on social policy lobbying at a company level. By doing this we’ll enable changemakers, such as investors, to hold companies that lobby against legislative efforts around human rights due diligence to account. 

The data we gathered on corporate lobbying related to human rights due diligence was revealing. Key findings from the report reveal patterns around lobbying activity, the disparity of opposition between trade associations and the individual companies they represent, the stark range of sector differences and the mostly contested themes. Where individual companies showed strong support, this was often not reflected in the opposition of their trade associations. For example, of the 43 companies included in the latest SLM research, 26% were publicly supportive of the CSDDD, while 69% of the trade associations researched by SLM were not supportive. 

The most contested themes were around remedy and value chain coverage. As a result of contention around these themes, amendments included raising the threshold of companies to whom the legislation would apply as well as limiting the parts of the value chain the legislation would apply to. Directors’ duties were also removed but, despite strong opposition, civil liability and grievance mechanisms remained in the legislation. 

But how does this impact investors? The consequences of overlooking corporate lobbying on human rights are too significant to ignore. Both regulatory and reputational risk are at stake – alignment with companies who oppose strengthening human rights legislation may conflict with ESG commitments and damage stakeholder trust. Materiality and stewardship are also influenced. Lobbying is not a bad thing, but if interests are not aligned with shareholder values, investors may see a misuse of corporate funds.  Investors can drive greater adherence to human rights legislation by supporting and working with companies that not only talk the talk, but walk the walk. 

Social LobbyMap supports companies, CSOs, and investors alike in understanding and responding to corporate lobbying on human rights. The data can be used to Inform engagement strategies and voting decisions, as well as benchmarking companies on lobbying transparency and alignment. Investors have a role in holding companies accountable for policy influence – and Social LobbyMap’s reports and research offer greater transparency for investors to ensure they’re responding accordingly.  

By integrating Social LobbyMap’s data into ESG analysis and risk models, investors can ensure they’re reducing risks, protecting reputation and supporting the ‘S’ in ESG better than ever before. 

As more companies explore their approaches to human rights due diligence and we gain a greater understanding into how corporate lobbying shapes the laws that impact those rights, we’re on the precipice of change. The more informed we are on how those laws are impacted by external players, the more we can work towards a better world with greater rights for everyone. Social LobbyMap is a key tool in the drive to improve human rights legislation for everyone. Explore the research now and get in touch to discuss how we can further increase lobbying transparency for good.