A Window of Opportunity Opens for Corporations in Latin America to Speak Up
Major elections offer a unique moment in time to start advocating for the freedom to operate.
Around the world, corporations and the executives who run them are speaking louder than ever. For their part, CEOs are the new thought leaders of the day; they are expected not only to advocate on behalf of their businesses and industries, but to take a public stance on social issues.
Meanwhile, new technologies are advancing faster than regulations can keep up, making the need for a proactive, strategic corporate voice all the more essential.
On the reactive side of this situation, corporations and industries accused of wrongdoing are expected to acknowledge the allegation when appropriate and engage with the public. The presumption is that all sides will be heard and that the debate will be open and forthcoming.
The Latin American Dilemma
Within Latin American countries, however, a culture of corporate silence persists. This is largely due to three issues:
1. In the past, a handful of prominent foreign and local companies chose to promote their interests through illicit acts that
included bribery and other corruption.
2. A business culture that avoids discussing social, political or other issues that might be considered controversial.
3. Fear of backlash from a skeptical public that is suspicious of motives related to any kind of corporate self-interest.
This context has left industries across Latin America without a voice and the space to join the conversation in the new, open era. As a result, corporations are vulnerable to outside accusations, and with the viral nature of social media, debate can skew toward the emotional rather than factual.
Abstaining from speaking freely about the issues relevant to their industries — as well as the policies that impact them — negatively affects the very economies and welfare of the people that depend on their success.
Case Study: Colombia
Colombia is a prime example of the financial costs that can come with a culture of corporate silence. In recent years, external actors have exploited regulatory loopholes to produce highly emotional policy debates that disregarded economic and scientific fact. That had the effect of raising business uncertainty and several industries were deprived of their ability to operate freely.
One well-known case involved the U.S.-based oil company Hupecol, which was granted a license by the Colombian government to explore in the vicinity of the Caño Cristales river. An emotionally charged public backlash heated up the debate to such a frenzy that honest discussion became impossible.
As a result, the project became politically untenable and the government revoked Hupecol’s exploration license. This, despite the fact that many consider that both regulators and the private sector had thoroughly examined the plan and declared it environmentally sound.
Elsewhere in Colombia, activist organizations targeting the biopharmaceutical industry began constructing their own narrative a number of years ago. A rash of one-sided arguments brought about restrictive policies and decisions that reduced the interest of research-based companies to operate in the country. The fallout limited the possibility of bringing state-of-the-art and life-changing technologies to Colombian citizens.
However, in contrast to the tepid reaction of other industries, biopharma took a proactive approach to addressing issues that demonstrated the value of speaking up — and the timing of doing so strategically.
In early 2018, as Colombia addressed policy changes required to join the Organization of Economic Cooperation and Development (OECD), industry associations and local and international companies pressed their own agenda. They introduced a research-grounded narrative to refute much of the misinformation being portrayed by the activists. In its cross-border campaign, industry managed to communicate both in Bogotá and in key international policy centers (such as Washington and Brussels), that healthcare and intellectual property reforms were critical. These motions would ensure that Colombia met international standards and that its patients had appropriate access to life-saving medicines.
With facts at center stage of this public policy debate, the government of Colombia reconsidered select restrictive policies that were affecting the industry’s freedom to operate.
Now is the Time to Speak Up
To argue that isolating businesses and industries from the conversation is somehow noble is an antiquated and unproductive idea. Innovation, new technologies and new business models generated through private (corporate) initiatives have historically been among the main drivers of regulatory change and incremental human progress and well-being.
Now, a window of opportunity for changing the culture is about to open for corporations doing business in major Latin American countries, such as Colombia, Mexico and Brazil. These nations, which represent three of the top-four economies by GDP in Latin America, have held, or will hold, major elections in 2018.
Top 4 Latin America Countries by GDP
The transition of power stemming from a major election offers a unique moment for businesses to start conversations and advocate for regulatory modernizations that benefit both their business models and the country’s economic development, knowledge and technical capabilities. Why is that? Because by the end of an administration’s tenure in office, the effect of economic policies and their impact on industries is well-known and up for review.
Those policies essentially produce winners and losers within industry. Corporations on the winning side can speak up to maintain the status quo or to ward off potential policy changes that might affect their freedom to operate while helping promote a stable transition as the new administration takes office. The losers can use the moment to appeal for regulatory change.
This environment of advocacy is especially acute during the first year of a new administration. To seize the moment, corporations must be willing to make their voices heard to decision-makers and take a strategic and forward-looking approach to advocacy.
Here are three crucial elements for leveraging change:
Presidential Power Transitions
- Colombia: President Iván Duque assumed office on August 7.
- Mexico: President-elect Andrés Manuel López Obrador assumes office on December 1.
- Brazil: Presidential elections take place in October.
As these three countries transition their regimes, you should choose an issue that is most vital to your industry and prepare your argument or case for winning the day, no matter how it might be perceived politically by outsiders. Well-positioned and precisely timed facts and figures tend to win the day. Do you have policy experts who understand the regulation you are seeking to change? Is the regulation one that also advances the public good? Do you have a government affairs expert who knows the process and how to connect within the new administration to get your point heard? You may want to first pressure-test strategies with your experts to better hone your arguments.
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Are you ready for the long game? Winning regulatory change doesn’t happen overnight. You can’t simply activate and sit back to monitor the situation. You must engage the stakeholders at every stage and maintain presence to ensure your point remains top of mind. Developing strong relationships with other business leaders in the industry can help support your mission and provide collective muscle for a common cause. Maintaining industry contacts is also valuable.
Advocating for regulatory change is not just about political lobbying. (Nor does it have to be included in your efforts). It involves communicating your message with the public across multilateral forums. Establishing a consistent social media presence (Twitter, Facebook) that allows your corporation to react in real time to hot-button issues while also promoting positive outcomes allows you to shape the narrative. Work with journalists and columnists as well. Also, be aware that issues affecting your industry might be reverberating globally. Monitor the issue in other countries to be better prepared to respond when the issue arises domestically.
Without a debate, the Latin American public will hear only monologues from the same groups that want to maintain the status quo and restrict businesses from operating. While there will always be risks in taking a proactive stance, the more corporations speak up, the more opportunities they will have to affect outcomes that benefit everyone — industry, society, people — across the board. As the corporate world continues to move toward greater transparency, expectations rise for a new way of doing business that CEOs and other C-suite leaders must embrace.
Senior Managing Director