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- A team of researchers is calling for companies to be as transparent about what it’s dubbed "corporate political responsibility" as they are about corporate social responsibility.
- Covert lobbying for policies that contradict the ones espoused in "green" advertising and branding is getting harder to pull off, and companies can gain a competitive advantage through transparency that customers and shareholders are increasingly demanding.
- This article is part of our ongoing series on Better Capitalism.
- Visit Business Insider’s homepage for more stories.
Regardless of their leaders’ politics, the world’s largest corporations have recognized the call from customers and potential employees for a move to more sustainable ways of doing business. It’s easy to find even the companies with the worst pollution track records in the world proclaiming a deep concern for the environment.
That’s why Thomas P. Lyon of the University of Michigan and a research team that comprised the Bretesche Workshop on Systemic Change have called on companies to start being transparent about what they dubbed corporate political responsibility (CPR). If a company spends millions on green ad campaigns but tens of millions more lobbying politicians to pass laws that would protect business as usual, then the whole idea of corporate social responsibility (CSR) is undermined.
In an article that those researchers published in the California Management Review last year — cheekily titled "CSR needs CPR" — the authors wrote, "as demands for political transparency grow, it will become increasingly difficult for companies to execute a strategy that involves contradictions between virtuous public statements and self-serving lobbying and other political activities."
They reached three conclusions that they believe will not only benefit consumers, society, and the environment, but also the companies’ long-term profits:
1. "Fully disclose your corporate political activity."
The authors recognized that this could seem "utopian" or naive in the wake of Supreme Court decisions that have allowed unlimited "dark money" contributions from corporations to candidates and politicians, but they also recognized that such behavior is increasingly unpopular with the public, as well as more likely to be revealed. It’s harder than ever for companies to hide their behavior, and if a company can take a leadership position in transparency, the authors wrote, they can gain a competitive edge.
There is plenty of room for improvement here. For example, InfluenceMap found that despite their ads, the top five publicly traded oil and gas companies "have invested over $1Bn of shareholder funds in the three years following the [2015] Paris Agreement on misleading climate-related branding and lobbying."
2. "Align your political activity with your public pronouncements and CSR efforts."
Customers and shareholders do not appreciate hypocrites, and there has been a recent movement from investors to stop hypocrisy and greenwashing.
Climate Action 100+ is one such group of influential institutional investors, with a total of $33 trillion in assets under management, that is pushing the corporations that are the world’s largest greenhouse-gas emitters to transparently commit their proclaimed concern for the future of the planet to action. CA100+ and another shareholder group, Follow This, helped compel Shell to agree this year to a timeline of emissions goals, and to leave industry groups that were in opposition to them.
3. "Support public policies that will enable the private sector to better pursue sustainability efforts and commitments."
The authors took a moderate approach to this issue, writing, "This does not mean supporting public policies that are financially disadvantageous to the firm, but on the contrary supporting policies that enable the firm to act more responsibly without suffering a competitive disadvantage."
In May, the heads of 13 major companies (including fossil fuel and chemical giants) partnered with four environmental nonprofits to form the CEO Climate Dialogue, for the purpose of lobbying President Donald Trump and Congress for market-based climate policy. The members have not gotten into specifics, though the two most prominent market-based policies are a carbon tax and cap-and-trade system. The members are all very familiar with lobbying, and many are also guilty of violating the researchers’ second request to companies. Still, the formation of this group falls in line with this request. Sure, the companies are looking to steer the conversation before harsher policies are inevitably imposed on them under another administration, but using the authors’ logic, this is a sign of progress.
"Many citizens of western democracies despair over the inability of their governments to solve the pressing problems of our times," the authors wrote. "They suspect that a big part of the problem is the influence of money and corporate power in politics. Although not a panacea, creating new norms of CPR — coupled with radical transparency around corporate political action — is a promising step."
See Also:
- The chairman of PwC said that after surveying more than 1,200 CEOs, he believes there are 4 things every leader must do
- Wells Fargo donating $1 billion to affordable housing as part of a larger philanthropic shakeup
- How Everlane uses sustainable practices to make clothing that young people are obsessed with
Source: Business Insider – rfeloni@businessinsider.com (Richard Feloni)