Companies need a foreign policy

One of the success stories of the pandemic has been the fast speed of vaccine development, but this has not stopped some of the companies developing them from becoming political footballs.

Despite the AstraZeneca vaccine’s proven efficacy, it has been questioned by many politicians, especially in continental Europe. In Australia, the government issued updated guidance last week to recommend only those aged over 60 get the shot due to the risk of a rare blood-clotting syndrome; this despite the fact that many millions of people younger than 60 have been given the AstraZeneca jab in other nations.

The pharmaceutical industry is not the first to face the wrath of governments during the pandemic. Last year, French digital minister Cédric O took leading technology players to task over coronavirus digital contact tracing systems, becoming the first major government minister to publicly call for Google and Apple to weaken privacy protections.

What these developments underscore is the potential for businesses to become ensnared in sometimes thorny international political, human rights, technological and legal issues.

Partly, this is driven by globalization, and also the growth of key industries including the “borderless”technology sector.

Technology companies are not alone in experiencing issues from working with diverse political authorities across the world. Indeed, internationally focused companies in many other industries, ranging from energy and extractives to banking and fast moving consumer goods, have long been confronted with such challenges.

Take the example of HSBC, which UK MPs on the House of Commons Foreign Affairs Committee accused of enabling China’s crackdown in Hong Kong after it froze accounts belonging to pro-democracy politician Ted Hui and his family.

In navigating such situations, various international codes of conduct, including the UN Guiding Principles on Business and Human Rights, reinforce corporate social responsibility practices of individual firms. However, some of the most enlightened companies have recognized the need for a more decisive shift toward what has been termed corporate foreign policy.

Corporate foreign policy aligns a company’s external affairs activity, including media relations, risk management, corporate social responsibility, government affairs, and operational planning, in a clear strategic framework. Recognizing the need for an unusual mix of core competences — for instance, in advanced diplomacy — in some of these corporate functions, means that tools, training and infrastructure can be enhanced where any gaps exist.

The relentless march of globalization, with the interconnections it brings, means that few international companies will escape these pressures completely.

For those companies that are perceived to misstep, the fallout can be increasingly damaging, both financially and reputationally. For those that are pro-active and invest in their capability, the potential rewards are ever more significant.