Engaging with corporates

The private sector includes multinational companies (MNCs), small and medium sized enterprises, and micro-enterprises. Advocacy towards the private sector on tax justice is likely to be primarily focused on large, often foreign-owned corporations. As we saw in Chapter 1, it is MNCs that are able to secure far-reaching tax breaks from host governments as well as to structure their finances so that they get away with paying the minimum amount of tax. Of the world’s largest 150 economic entities, 95 are corporations (63.3 per cent). This gives companies both enormous negotiating power in relation to governments and a great ability to manipulate their tax liabilities.

Civil society organisations (CSOs) can target MNCs in a number of ways, for example through seeking to:

  • change the behaviour of individual companies or groups of companies, for instance through influencing their corporate social responsibility (CSR) initiatives
  • engage companies with the aim of getting them on side to lobby for regulatory standards
  • expose a company’s bad behaviour to make the case for why regulatory standards are necessary.

It is important to remember that the private sector is comprised of a range of actors – some of whom may support your agenda and will be your allies, and others who will be opposed to your agenda. There may be individuals within a company who will agree with you and can be your advocates on the inside. You may need to take an approach that exposes abusive behaviour. Whichever approach you take, it is important to think about the business case.

Can you find a way in which supporting your agenda will be beneficial to the company? Will it give them an advantage over their competitors? Or can you convince them that the reputation risk of not supporting your agenda is too high?

There are a range of tools that can be used to engage with corporates, but the choice will depend on:

  • the approach you have decided to take. Is your approach to lobby a company to voluntarily change its behaviour? Do you want to get it on side to push for regulation? Or will you mount a public campaign to expose the company’s behaviour?
  • the type of company you are seeking to engage or target. Different companies will be sensitive to different pressures. A foreign multinational requires a different approach to a locally owned company. This section focuses on engaging with MNCs.
  • where you are situated in relation to that company. Multinationals are more likely to be responsive to engagement or campaigns in their country of origin than in host countries. So southern CSOs seeking to engage or target MNCs are unlikely to make a mark on their own, as MNCs are largely accountable to their shareholders rather than the citizens in their host countries. In this case, linking up with NGOs from the MNC’s country of origin is crucial. Alternatively, southern campaigners will often find it much more productive to target their governments and call on them to regulate MNCs, rather than seeking to engage with or target their campaign directly at MNCs.

Pros and cons of regulation versus voluntary standards





All companies with certain characteristics or across a sector are obliged to change their behaviour, through mandatory regulation.

It has greater impact than individual companies changing behaviour.

It is binding and enforceable.

There’s no room for backsliding.

Depending on the type of regulation, companies can find loopholes to get around the legislation.

It may undermine efforts to change business culture from the inside.

Voluntary standards (CSR)

An individual company improves its behaviour – often in order to improve its reputation or sometimes out of genuine commitment from directors.

It can happen more quickly than regulation.

It can motivate other companies to change behaviour.

It can lead to changes in legislation if the issue becomes important for a critical mass of companies.

Voluntary approaches are often not independently audited and can sometimes be a smokescreen.

Because they’re voluntary, there’s scope for backsliding.

Research and reporting on corporate conduct

The first rule of corporate advocacy is to find out everything you can. Whichever approach you are planning to adopt to your corporate advocacy, good research on your target company will help you. A report on a company’s activities can be:

  • a highly effective way to throw the spotlight on the company, generate publicity and rouse public opinion
  • useful in direct negotiations with companies and in advocacy efforts with government and opinion-makers.

Writing a report forces you to lay out your case and document your argument. It is important that you do your research and – above all – that you are accurate. Be thorough and take the time to validate any controversial claims that you make. See Chapter 3 for detailed guidance on researching how much a company is paying in tax and to spot where tax evasion or avoidance is likely, as well as for advice on how to avoid the risk of libel.

Direct engagement with companies

Direct engagement with companies requires many of the same tools used in government lobbying (see pages 4–9 above on ‘Lobbying’).

Lobbying companies can involve identifying allies within a company with a personal commitment for change who can act as internal advocates and get the issue on the agenda of the company directors.

More often, however, senior-level engagement from companies with NGOs takes place when:

  • there is a risk to the business of not engaging: for example when the company is faced with a high-profile campaign or a large-scale boycott, or even a legal challenge from the stakeholder
  • there is an opportunity that can arise through engagement: for example limiting the risk of negative media exposure, gaining access to new markets, or reducing costs – advice from NGOs on environmental issues has often saved companies money
  • they are required to do so by law or to get finance for a project: in a minority of circumstances, such as for the extractives industries, companies may also be required to engage with NGOs in order to gain access to finance from international institutions, such as the World Bank or the International Finance Corporation, its private lending arm. For example, Equator Principles Financial Institutions18 adhere to a financial industry benchmark for determining, assessing and managing social and environmental risk in project financing, which requires companies to consult with local communities in order to understand the social and environmental effects of a project. If companies are legally obliged to engage with civil society, you need to know the preconditions for such engagements, as well as the conditions the company has agreed to in order to receive funding for its project.

NGOs and CSOs engaging directly with companies must be aware of what they are up against. Companies often have vastly superior resources at their disposal. This may enable them to draw out endless meetings or use their legal experts to defend their position and ultimately to avoid making necessary changes. There are several techniques that NGOs and CSOs can use to help them clarify the terms of engagement and ensure a more balanced process of dialogue.

TOP TIP for direct engagement with companies

  • Set and agree ground rules upfront: it’s quite common for NGOs and companies to agree to engage, but then have endless meetings without making any headway on the issues at hand. The first meeting should set the ground rules for the purpose of the dialogue, the length of any subsequent meetings, the plan of action, transparency and recording, and legal representation. You should know how the company is going to engage with you and what goal you are both working towards before you agree to any further meetings. Too often, dialogue breaks down because the rules of engagement have not been agreed on from the outset.
  • Do your homework: investigate the company before you agree to meet with its staff, so that you understand its structure, how it is regulated, how its business is faring, whether it is facing stiff competition or is making record profits. Has it confronted the issue you are campaigning on somewhere else in the world? Where do you have leverage? What does it want from engagement? Does it have a CSR policy? Northern NGOs can usually assist with this research. Often, CSR is seen as an add- on to what the company does, but increasingly it is seen as a crucial part of doing business. Can you assist this process by getting the CSR team to speak to the tax team? If you can engage directly with the tax director, it is a good indication that you are speaking to the right person who can make decisions.
  • Maximise your impact: most large companies with which you are likely to engage have probably been challenged by NGOs or unions in other parts of the world over similar issues. Opportunities for sharing information with others can strengthen campaigns. But often companies will require NGOs to sign a confidentiality agreement once a deal has been reached.
  • Seek outside representation and legal advice: make sure that you have representation from outside your organisation or community throughout the engagement process. In certain situations, the company may decide to sue your organisation or even threaten the personal safety of your staff. Enlisting someone with legal expertise to accompany you in meetings can help to reduce such risk. Do not sign a pre-engagement confidentiality agreement without seeking legal advice, as this may limit your ability to campaign on the issue or keep you from sharing your experience with people in similar situations elsewhere.
  • Facilitation and translation: an independent facilitator should be appointed who is acceptable to both parties – not someone provided by the company. They may come from the local community or be a third-party facilitator from outside the area. Translation that meets the needs of all parties should also be provided. Liaison officers from the company’s headquarters may be unable to speak the local language. Try to provide your own translator and ensure that all the relevant documents are available and cross-checked, both in the language of the company and the local language.
  • Record meetings: you must always record what has been said. Ideally, you should make a tape recording; written records don’t always give the whole picture and may be open to interpretation at a later date. Do not rely on the company, either, to keep records – provide your own resources. Companies may also insist on keeping the details of meetings confidential, but this may be to your disadvantage. Seek legal advice (see the point above on seeking outside representation and legal advice).

Corporate social responsibility and voluntary standards

Many companies today have adopted CSR codes of conduct, through which they incorporate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.

NGOs can help persuade MNCs to adopt such voluntary codes of conduct and to implement business practices that incorporate commitments to behave in a responsible manner. NGOs can also act as watchdogs. They can use companies’ existing CSR codes to assess corporate behaviour and expose irresponsible behaviour to the public. They can advocate for stronger codes and enforcement where national laws and regulations are weak or non-existent.

CSR codes come in many forms, from vague declarations of business principles to detailed codes of conduct for managing a range of social issues in a supply chain. Good codes generally contain a set of overarching principles with details of what these mean in practice. Companies can develop principles themselves or they can endorse international codes.

A major problem with CSR codes remains that they are voluntary. This means that they cannot be enforced in any way. What voluntary standards can do is to set out principles for responsible corporate behaviour. What they cannot do is to prevent companies that choose to act irresponsibly from doing so. Therefore, enforceable regulation is necessary in the long term. But voluntary principles can be seen as an important first step.

However, CSR codes usually lack any reference to the payment of taxes! Indeed, MNCs are known to structure their activities and financial affairs so that they minimise the tax bill in relation to their worldwide operations. Some companies use CSR as a tax avoidance tool: they set up philanthropic foundations and use these to lower their tax bill. Other companies justify tax exemptions by explaining that they build schools or roads. However, it is the government’s role to provide public services in the general interest.

Governments rely on tax revenues to pay for the provision of social protection, infrastructure and basic services such as education and healthcare that are crucial for development. Paying taxes is a legal obligation. Public funding allows citizens to have a collective say in how resources are spent, and thus helps to build stable democracies. Companies cannot presume to take the place of public authorities and pick and choose their own charitable causes instead of paying taxes. They may contribute to a country’s development by building infrastructure and through philanthropy, but the empowerment of citizens and the building of a stable democracy require that the means to finance these public goods and services should come, as much as possible, from the government’s own resources.

Therefore, tax compliance should be an essential element in CSR. NGOs can press this point and call companies to account, urging them to include in their voluntary codes the conditions to ensure that they pay their fair share of taxes in the countries in which they operate. There are a number of CSO initiatives that are pursuing this agenda (see box below).

CSO initiatives on corporate accountability

Global Reporting Initiative
The Global Reporting Initiative (GRI) is a network organisation dedicated to the development of a worldwide sustainability reporting framework. Its G3 Guidelines19 include a performance indicator on tax that specifically stresses the need for country-by-country reporting. Companies should report ‘all company taxes (corporate, income, property, etc.) and related penalties paid at the international, national, and local levels. … For organizations operating in more than one country, report taxes paid by country.’OECD Watch
OECD Watch20 is an international network of CSOs promoting corporate accountability. OECD Watch analyses the implementation and effectiveness of the OECD Guidelines for Multinational Enterprises.

Publish What You Pay
The Publish What You Pay (PWYP)21 coalition campaigns for the mandatory disclosure of company payments and government revenues from the oil, gas and mining sectors. PWYP works with CSOs in nearly 60 countries, helping citizens of resource-rich developing countries to hold their governments to account for the revenues from their extractive industries. These are an important source of income which, when properly managed, can serve as a basis for poverty reduction, economic growth and development.

Revenue Watch Institute
The Revenue Watch Institute (RWI),22 which promotes transparent, accountable and effective management of natural resource wealth in the interest of development, also focuses on developing civil society capacity. RWI advocates that, in the interest of transparency, the contracts for oil, gas, mining and forestry sectors should all be on public record.

Although most companies do not currently include tax in their own CSR initiatives, there are a number of multilateral voluntary codes that CSOs can use as benchmarks to measure companies’ performance on tax payments and to hold them to account (see box below).

Voluntary codes on tax

The OECD Guidelines for Multinational Enterprisesoffer international guidelines on CSR. According to the OECD, the governments subscribing to the Guidelines represent all regions of the world and account for 85 per cent of foreign direct investments. The Guidelines include references to tax compliance. MNCs are urged to offer full disclosure on company data required for the correct determination of taxes, to refrain from harmful transfer-pricing practices, to refrain from seeking tax exemptions and to pay their tax liabilities on time.The Extractive Industries Transparency Initiative (EITI) is a voluntary standard in the extractives industry that aims to enhance transparency by publishing and verifying company payments, including taxes in all forms, and government revenues from oil, gas and mining. The EITI – a coalition of governments, companies, CSOs, investors and international organisations – says that around 50 of the world’s largest oil, gas and mining companies support and actively participate in the EITI process. However, the current level of compliance to the EITI guidelines varies, with not all signatories yet fully meeting the requirements. Critics suggest that it has had a limited impact on those perceived as the worst offenders in terms of corruption.

Shareholder action

Shareholder action involves existing investors in a company using their power as owners of the company to influence its behaviour.

The potential for shareholder action is growing, in particular in the global South. Stock exchanges are emerging in an increasing number of developing countries. In Africa, governments have begun to demand that subsidiaries of foreign companies, especially extractives, register with local stock exchanges. Most Asian multinationals are shareholder companies; and pensions and insurance companies, as institutional  investors, are ever more common as points of pressure.

Shareholders are the individuals or institutions who buy shares in companies that are listed on public stock exchanges. They have different powers in different countries – this may affect your choice whether to work with them. For example shareholder action in the US tends to be much more effective than shareholder actionin the UK.

Most companies allow shareholders to raise issues of concern directly at their annual general meetings. Many multinationals have adopted CSR programmes, which offer scope to raise tax compliance. A campaign to influence a company’s tax policy may also focus on institutional shareholders as a target. These often have more clout than individuals because of their large portfolios.

In addition, investor groups such as FTSE4GOOD determine criteria for companies. Many ethical investors will only invest in companies within this group – therefore getting tax on their agenda could have a real impact.

Public campaigning towards corporates

Public campaigning has been used effectively in a number of countries to mobilise public opinion and put pressure on a company to change (for example various campaigns in Europe over the past 15 years targeting exploitation in the global supply chains of major retailers and leading to changes in certain companies’ policy and practice). Negative publicity can have a direct impact on a company’s sales, on staff morale and, in some cases, even on share prices. The threat of consumer action or critical comments about corporate behaviour from politicians spell anxiety for companies. And that in turn can be an incentive for change.

Much of the public campaigning towards corporates starts with public exposure of an individual company’s alleged wrongdoing – requiring a big investment in research and investigation prior to launching the public campaign. Legal costs also have to be budgeted for, as a lawyer will need to scrutinise any text
for public consumption in order to avoid or reduce the risk of libel action by the company. Further legal costs could be incurred if the company decides to take legal action (see the section on Libel in Chapter 3). But public exposure of corporate malpractice can be very powerful (see the ActionAid case study on page 32).

Recently in the UK, some tax justice campaigners have opted for direct action in order to draw public attention to the issue of tax and directed at certain well-known companies they perceive to be dodging tax (see the UK Uncut campaign case on page 32). This direct action on the streets has received huge media coverage in UK newspapers, radio and TV and sent ripples through the entire private sector.

An alternative approach – currently being piloted by Christian Aid in the UK (see the Trace the Tax case study on page 32) – is to appeal to a company’s stated commitment to corporate social responsibility and publicly challenge the company to put this commitment into practice. Challenging a company in public – even if you are simply calling on the company to support your campaign – may well have more impact than simply engaging with the company privately – especially if the company prides itself on its CSR profile.

Expand your impact: from local to global

Campaigns often start locally but can gain momentum by going global. Look for ways to tie in the issue or problem in your area to what is happening elsewhere. Make connections with other campaigns, or with local governments or institutions tackling similar problems with the same or other corporations. Adding up all the examples can help build an international campaign to bring the company into the spotlight.

Involve the public

Remember: public campaigns can’t work without the public! The public is your target audience, not the company, so think about what information and language will generate public action towards the company. Generally, campaigners will take action if they think an injustice has been done. But bear in mind that the company will also be reading your campaign materials and may fight back with its own negative publicity about your campaign or threaten legal action to defend its name and reputation if it thinks your public allegations are false. Information should be accurate but easy to follow. People have to know exactly what actions they can take to support the campaign – whether it be boycotting a particular product, writing to company directors or staging demonstrations or stunts outside company outlets or offices (see the table on pages 22–25 above for some examples).

  • Case Studies

    NGO engagement with the mining company Vedanta

    Case Study

    NGO engagement with the mining company Vedanta

    In 2007, UK NGOs ACTSA, Christian Aid and SCIAF published the joint report Undermining Development? – Copper Mining in Zambia, which questioned theVedanta mining company’s corporate social responsibility record.This was followed in early 2008 by an email campaign asking Vedanta’s chief executive officer (CEO) to ensure that its Zambian subsidiary Konkola Copper Mines would not oppose the government’s new mining tax regime, which required companies operating in the country to pay fairer levels of taxes and royalties. Thousands of postcards and emails were also sent to Standard Life Investments, one of Vedanta’s biggest investors at the time.
    This campaigning resulted in a meeting between ACTSA, Christian Aid and SCIAF representatives and Vedanta’s CEO. Several days after this meeting, Vedanta came out in public to confirm that it would not challenge the new tax measures, which was critical for Zambia as its subsidiary Konkola accounted for around 50 per cent of copper production in the country at that time.The combination of public pressure and private lobbying was hugely effective in this case.

    ‘Schtop tax dodging!’ – ActionAid’s campaign to SABMiller

    Case Study

    ‘Schtop tax dodging!’ – ActionAid’s campaign to SABMiller

    In 2010 ActionAid undertook extensive and detailed research into the operations of one multinational company (SABMiller) and its operations in six African countries – specifically zeroing in on one African country (Ghana). Using published financial information, interviews with government officials and undercover research, ActionAid sought to show how the world’s second-largest beer company was avoiding tax in Africa. It published a report of its findings23 which received media coverage in the UK and internationally.The report called on SABMiller to take a responsible approach to tax, understand and disclose the impact of tax planning, and be more transparent about financial information.To accompany the report, ActionAid produced eye-catching campaign materials bearing a simple slogan (for example `SchtopTax Dodging’ beer mats playing on the name of a SABMiller beer) and launched an email action on their website.To capture the public’s imagination, ActionAid also injected a human element to the story.They introduced campaigners, for example, to Marta Luttgrodt who runs a small beer stall in the shadow of the brewery that produces the beer and pays a flat US$47 a year in tax while the brewery next door owned by a subsidiary of SABMiller pays no tax at all.

    At the time of writing, it was too early to say what impact this campaign will have had on SABMiller. Although the company reacted negatively to ActionAid’s report, a negative reaction does
    not mean that the report will have had no impact. Beyond SABMiller specifically, it is likely that the report will impact on the private sector generally in some way, as other companies will be concerned to avoid a similar targeted investigation of their own operations. Consequently, it is conceivable that the ActionAid investigation into one company may contribute to a change in thinking on tax and corporate social responsibility among UK-listed multinationals in general. It could also have a knock-on effect on bodies that regulate or oversee UK-listed multinationals’ working standards and practices such as the OECD, the EU, and the UK government.

    Trace theTax campaign

    Case Study

    Trace theTax campaign

    Christian Aid has been campaigning to raise awareness of the billions lost to developing countries from tax evasion and avoidance by unscrupulous companies.
    The campaign calls on the International Accounting Standards Board (IASB) to introduce an international country-by-country reporting standard that requires firms to report the profits made and taxes paid in every country they operate in.The IASB is a little-known, but very powerful, body based in the UK that devises the rules covering how corporations should produce their annual accounts. More than 100 governments worldwide tend to rubber-stamp its findings into law.
    The IASB is part-funded by the ‘Big Four’ accountancy firms – PricewaterhouseCoopers, Deloitte, Ernest &Young and KPMG. In 2009, Christian Aid decided to directly target the Big Four with a postcard and email campaign.There is evidence to suggest that this had a significant impact, but more pressure was needed.To increase the campaign’s momentum, Christian Aid decided to target the clients of the accountancy firms – the big names in the private sector. It was hoped that their support would make it almost impossible for the IASB and the accountancy firms to say ‘no’ to country-by-country reporting. In 2010, Christian Aid contacted the CEOs of all the 100 biggest companies registered in the UK (the FTSE 100 firms), asking them to complete a confidential online survey on country-by-country reporting. Christian Aid campaigners sent ‘reminder’ emails, so that many companies did eventually respond. However, very few companies responded in support of country-by-country reporting.
    The campaign has now decided to engage supporters with four FTSE companies that are well-known brands in the UK and which have subsidiaries in developing countries. Each of the four companies selected is audited by a different one of the Big Four accountancy firms. In the next stages, the campaign will be using a number of the above-mentioned campaign tools to mobilise campaigners. Campaigners will call on these companies to speak out publicly in favour of country-by-country reporting and to ask their auditor to support this new standard too. In that way, the campaign will keep up the pressure on the Big Four accountancy firms and the IASB to push for global accounting rules that will help poor countries and their citizens trace the taxes they’re owed. In this case, public campaigning will be used to positively persuade these companies to join the drive for greater tax transparency – rather than aggressively campaigning against them.The campaign is not accusing the companies of tax dodging, nor is it asking the companies to introduce country-by-country reporting unilaterally before an international standard is introduced.The whole point is to harness the immense power of some of the world’s largest MNCs to increase political pressure on the Big Four and the IASB.

    UK Uncut campaign

    Case Study

    UK Uncut campaign

    In October 2010, the UK’s coalition government announced swinging cuts to government budgets and public sector jobs. In response, many campaigners pointed the finger at the government for cutting services and jobs while letting the banks pay bonuses and certain private sector companies avoid billions in tax, as they saw it. One group of campaigners – loosely connected and mobilised entirely through social networking sites and mobile phones – selected two campaign targets well known to UK consumers: Vodafone and Sir Philip Green, the owner of Arcadia which includes many of the UK’s leading clothes retailers. Taking to the streets with `tax dodgers’ placards, they organised sit-ins, pickets, flash mobs, and even superglued the main doors of a big clothes shop on London’s Oxford Street. Although only a relatively small group of protestors was involved, this direct action attracted huge media attention, including the financial press. Early evidence suggests that these protests – the first such protests on British streets against perceived corporate tax dodging – have sent shock waves through the private sector.