Companies on the international scene: a portrait of corporate diplomacy

Erkki Maillard is the diplomatic advisor of the CEO of EDF (French electric utility company). He shares his views on corporate diplomacy.

Companies on the international scene: a portrait of corporate diplomacy

At first glance, the links between the world of business and diplomacy do not appear to be very strong. Corporate activities are generally limited to the economic sphere whereas diplomacy is a sovereign function of the state. How would you define corporate diplomacy, its raison d’être and its importance? What is the essence of your mission?

The objective of corporate diplomacy to align the company strategy with the international political context. The state defines diplomacy: there is no confusion of roles. On the other hand, when the company operates in an industry with a strong sovereign component (armaments, energy, transport etc.), it must succeed in combining its strategy with economic diplomacy.

Corporate diplomacy is becoming increasingly important in the corporate internationalisation process, because big companies need political support, both to break into emerging markets, which are complex and volatile, and to be able to withstand the upheavals of an increasingly unstable world since the end of the Cold War.

You say that corporate diplomacy is vital in industries with sovereign components, but what about those that are less closely related to state functions (for example luxury goods manufacturers and large retailers)?

Everything depends on the importance of the political decision in the purchase decision. Every company needs to acquire basic knowledge of the international environment, especially when their economic model depends on political and diplomatic criteria. The way of incorporating this dimension in the firm's organisation can vary: the company can externalize it and call on external advisors, for example.

What are the challenges of this multi-disciplinary profession, halfway between the private and public sectors? 

It is very important to understand that companies do not make international policy, which is the prerogative of the state. It is true that international society has widened to include new stakeholders (NGOs, the media and big companies): today, big companies can express themselves on the international scene, and even modify the international environment. For example, GAFA (Google, Apple, Facebook, Amazon) have a significant impact on taxation, on the lifestyle of whole populations, even on politics. But companies have limited influence over public decision-making, because the state maintains control over the majority of important subjects. 

The job requires a lot of skills...

Above all, it requires the ability to link the public and private dimensions, while retaining a clear vision of your missions: the company’s objective is not to make speeches about the geopolitical development of the world, but to place subjects that concern it on the political agenda. For example, to explain to public decision-makers why CO2 pricing instruments will reduce emissions and facilitate their implementation, show concretely how such pricing influences investment decisions, and finally, influence international negotiations to ensure that the CO2 price really is taken into account. 

My job also includes a much more practical dimension, which is to make the authorities aware of the company’s projects, on condition that the said projects correspond to a political agenda. I’ll give you an example: when the Indian government decides on a new energy policy, the French state can include industrial companies in its energy cooperation plan with India. The companies can thus contribute their technologies to change the Indian energy mix and decarbonise it. It is important to understand the mechanisms of bilateral and multilateral relations and the objectives being pursued by different states, so that the solutions that the company can provide are taken into account and useful to the decision-makers.

Over the last few years, the development of CSR has enabled companies to go beyond the purely economic dimension, by confirming their commitment to sustainable development issues. Does corporate diplomacy also prove that companies are seeking to widen their horizons?

You are quite right, companies are in the process of acquiring an international and diplomatic culture that is no longer limited to the traditional “inter-cultural management”. Companies’ multicultural knowledge has much improved over the last few years, and has moved away considerably from cultural stereotypes. At EDF, we sometimes invite academic experts in international matters to speak in order to develop general international knowledge within the company. 

From the economic point of view, some multinational companies are more powerful than a number of states. Is their large size sufficient to make them full-fledged participants on the international stage?

Be careful not to go too far with theories of the weakening of the state. Although some companies have played an important role in certain international negotiations, such as COP21, you cannot go so far as to say that companies and states have the same decision-making power. The climate negotiations represent an original and effective model but it is not replicable beyond the scope of certain global public goods such as biodiversity or health.

What is more, I think that we are seeing a return to the politics of power in international affairs, with strong states like Russia and China maintaining control over the whole decision-making process and using economic diplomacy as a tool of geopolitical conquest. It is true that the economic power of some big companies exceeds that of some states, but this power is not necessarily translated into political power. For example, it is not in GAFA’s interest to blackmail states to achieve their ends, because clients are increasingly strict about companies’ ethical positions. 

Secondly, companies only take positions on specific subjects that are related to their activities: a pharmaceutical laboratory will not express an opinion on the Syrian conflict.

You are a career diplomat, and you have had several jobs in general government. What is your appreciation of the way in which the French state accords increasing importance to economic diplomacy? How does a company like EDF perceive public decision-makers’ efforts in that direction? 

 EDF’s view is that public decision-makers have made enormous progress in combining French economic diplomacy with the promotion of corporate interests. There is very good cooperation between companies and all levels of the state apparatus.