THE IMPORTANCE OF CORPORATE BRUSSELS LIAISON OFFICES

While companies in the European Union increasingly recognize the importance of public policy advocacy at the European and national level only a few have their own representation office in Brussels. Yet companies need to be compliant in many sectors e.g. consumer protection and producer liability, work safety, product certification, technical regulations, standards, food quality and safety, environmental protection, rules of competition, labels, trademarks, patents without talking about what’s in the pipeline in terms of new legislation that is bound to affect their business.

With 80% of national commercial law based on decisions taken in Brussels, companies are finding more and more that their markets are shaped by regulations established in Brussels. Today’s business strategy must therefore be based on the legal instruments that the EU is likely to introduce. The existing resources of the EU law givers are exhausted by the continuous process of market change and increasingly complex economic structures. There is no guarantee that there will be any consideration of the impact their measures may have on business. Although EU legislators appeal directly to market players to become involved in the decision making procedures they remain insufficiently informed about the varying interests of the different sectors of trade and industry.

Companies that understand and work to impact the EU legislative and regulatory arenas deliver great rewards to their shareholders. On the other hand those that ignore Brussels miss opportunities and are often left behind by policy-makers and more active stakeholders.

For internationally oriented firms the EU legal and political framework is crucial for the development of their international operations and having a permanent representation in Brussels allows them to stay in direct contact with politicians and officials at the EU level.

Corporate Public Policy Activities at EU level

Corporate public policy activities include a broad set of actions with the overall purpose of ensuring that a company’s views are listened to within the EU institutions and other areas of policy debate and development. The aim is to ensure that the legislative, regulatory framework protects and promotes the company or at least does not damage it.

Companies typically strive to identify potentially problematic issues as they begin to emerge, intervene with decision-makers at an early stage, set the agenda and shape policy as it is formulated.

Most companies aim to present an issue arising rather than seek to defeat a proposal once it has been formulated. This calls for the development of relationships with the EU decision makers. The company viewpoint is expressed at formal and informal meetings. Formal submissions include briefing documents and position papers, responses to official proposals and direct contact with EU officials.

Monitoring political issues is a critical element of corporate public policy advocacy activities. This covers current legislation proceedings as well as an informal policy activity in order to provide early warning of emerging issues. Companies need to understand the macro-policy framework as well as the specific areas to the company on a day-to-day basis. Policy analysis on specific issues such as CO2 emissions require a detailed understanding of the political evolution, political pressures and opportunities for changing proposals.

A huge variety of initiatives and consultations are often in play at anyone time across a range of EU institutions. Intelligence gathering acts as an early warning service on relevant consultations, inquiries and policy initiatives. Good radar systems also help to identify suitable opportunities for companies to comment publicly and privately on policy developments.

In summary, public policy activities may fall in several areas:

•  Influencing the outcome or direction of a proposed or existing legislation;
•  Influencing how regulators apply or enforce existing laws;
•  Influencing the broad direction of public policy at EU level;
•     Supporting either directly or indirectly external organisations, including industry associations, chambers of commerce, think tanks and NGOs that seek to influence public policy;
•  Develop or improve the company’s relationships with EU officials, civil servants, MEPs. etc.

 Purpose of Brussels Office

The prime purpose of the Brussels office is to promote and ensure the influence of the company in European policy and decision-making on both European and international issues that affect the company’s business. The Brussels office allows a better coordination of the public policy advocacy strategy, monitoring policy developments, building contacts with relevant MEPs and Commission officials and taking care of the company’s senior officials when they come to Brussels for meetings.

In view of the increasing number of European legislation as well as regulations this task is of increasing importance. For a company’s long term strategy it is essential to be well informed about developments in the EU. The Brussels office facilitates swift and efficient cooperation with the institutions.

In short, the Brussels office serves as the ears and the eyes of the company by monitoring and forwarding information to headquarter as well as the voice and the feet of the company on the Brussels playing field by fine-tuning the efforts to lobby the EU process.

Of course the opening of a Brussels office does not mean that companies will stop using the services of law firms, consultancies and leave the industry associations that represent them. On the contrary companies want to be represented through all channels at the same time to maximize contact and coverage of the EU institutions and their regulations.

Typical Tasks and Responsibilities of Brussels Office

• To co-ordinate and promote the representation of the company to the institutions of the European Union;
• To represent the company in day-to-day contact with European institutions and networks in order to influence their policies and decisions;
• To develop and advise on specific policy influencing materials and activities to influence European policy development and decision-making through press releases, publications, speeches, briefing papers, legislative amendments, seminars etc.;
• To build strategic relationships with people in positions of influence e.g. Commissioners, civil servants in key Directorates General, journalists, parliamentarians, professionals and other journalists;
• To represent the company on relevant industry associations committees;
• To ensure the alignment of public affairs objectives to planning processes;
• To identify and prioritize key objectives and develop and support public affairs strategies to seize opportunities and minimize threats that have a major impact on the company’s bottom line;
• To monitor policy development advising on significant trends and development as part of an overall information strategy.

In order to do an effective job in Brussels, your corporate representative needs to develop a great deal of interest and attention to the issues that are critical for the company’s business units he/she represents before the EU institutions. The job is mostly being a sort of ambassador for the company in the political arena. This entails a great deal of patience and perseverance. It requires a lot of diplomatic skills internally making sure that the Brussels office communicates effectively within the company. Sometimes the messages to be delivered to policymakers are clear. It’s just a question of tailoring them to the circumstances. In other instances, getting a company’s position is not that clear cut. It is important that the people your Brussels office deals with feel confident and trust their working methods. Most of the time the Brussels office will be confronted with situations that need a quick reaction and answers must be communicated in an assertive manner. Clarity and thoroughness of the company’s messages is crucial as is creativity, imagination and the ability to prioritize tasks.

Key Value Drivers of Public Affairs and Brussels Office

Compelling evidence shows that a company that understands the public affairs function and invests in a Brussels office will see real benefits from that commitment. The following are the key value drivers of public affairs and a Brussels office:

•  Freedom to operate: Preventing restrictions on the company’s ability to act. These restrictions could come from EU regulators, legislators, unions and public opinion.
• Cost avoidance: Preventing future taxes, rate increases, permits or other business costs.
• Market opportunity or advantage: Establishing a competitive advantage such as favorably shaping the business climate to the benefit of the company.
• Brand image or reputation: Increasing the company’s brand equity or the brand equity of its products and services among its stakeholders.
• Speed: Moving quickly to capture opportunities, respond to threats or alter the business in an advantageous way.
• Productivity: Increasing the quantity and quality of products and services produced.

In summary, companies must realize that market success depends not just on their products and services, the efficiency of their operations, their internal organization and the organization of their supply chains, distribution channels and alliance networks. Success also depends on how effectively they deal with governmental authorities at both the EU and national level, interest groups, activists and the public. The forces these parties generate can foreclose entry into new markets, limit price increases and raise the costs of competing. They can also unlock markets, reduce regulation, handicap rivals and generate competitive advantage. These forces are manifested outside of markets but often work in conjunction with them.

Conclusions

The open structure of the supranational institutions and the complexity of the decision-making processes have created a multitude of opportunities, and challenges, to influence the decisionmaking process. The typically elitist nature of the system of interest representation at the EU level, having the timely access to the right information and being able to influence in the decision-making process, requires a strong presence in Brussels and insider knowledge of how to play the ‘Brussels game’.

Having a permanent office in Brussels with knowledgeable and skilled staff allows a company to further its interests and ensures a better profile of their organisation vis-à-vis the EU bodies. It also facilitates access to crucial information regarding opportunities and threats to a sector’s interests.

Although companies can choose from a number of public affairs approaches, according to their specific industry and needs, the majority of companies in Brussels attempt to influence the EU policy- and decision-making processes through monitoring, intelligence gathering and by providing information to EU institutions that could influence policy outcomes. Secondly, the company will use its own statistics, research and information to design strategies, create position papers, and develop programmes that correspond to the policy being discussed, submitting these to the EU institutions. This is a proactive function.

To summarise, the main functions of the Brussels office can be generalized as:

•  Local network building and management;
•  Monitoring of policy developments and legislative initiatives;
•  Influencing EU policy and legislation as a recognized stakeholder.

In a complex and influential policy environment such as that of the European Union, a company can strengthen its competitive advantage by actively engaging in public affairs rather than taking a passive or politically inactive stance.

Successful Brussels organisations tend to view the European policy environment as a set of opportunities, within which they face a multitude of choices about what objectives to pursue and how to pursue them in a way that best serves their members.

Developing a public affairs capability is a process by which a company attempts to influence the policy environment affecting it for the purpose of generating future value or protecting the current value from any changes in the legal or competitive environment. The costs of developing and maintaining an organization’s public affairs efforts need to be appraised against any potential opportunities for value creation or protection. Favourable subsidies, grants or European funding, the reduced threat of market forces, greater legitimacy, the reduced threat of foreign product subsidies are all examples of potential outcomes of effectively managing the policy environment in Brussels.

Participation in the EU legislative and regulatory process is difficult to achieve from afar. It is important to be present in order to facilitate the vital face to face contacts, networking and attendance to meetings, presentations and events that allow the effective exchange of information.

The opportunity cost of not having proper corporate representation in Brussels is too high to be ignored. An investment in a Brussels office will pay itself back in the form of greater influence and legitimacy. Whatever the current structure or financial capacity may be, it is vital that the Brussels office is managed as professionally as possible. It is important for the company to make use of current management best practices and activities. These include the strategic use of outsource service partners and experts that fully understand and appreciate the special needs of the company, especially as relates to activities in the complicated legislative and regulatory environment of the European Union.