Beyond CSR: Corporate Political Responsibility (CPR)

In 2017, U.S. President Donald Trump withdrew
from the Paris Climate agreement. Immediately, many of America’s business
leaders denounced Trump’s decision and pledged to independently uphold their climate commitments. Today, it is clear that public policies will
have a major effect on the nation’s response to its social and environmental problems. In his 2005 book, “The Market for Virtue,”
UC Berkeley Professor David Vogel pointed to a number of companies that had adopted
new standards all on their own. Today, Nike enforces stricter labor requirements
at its factories. Home Depot and Lowe’s have committed to
preserving forests. Over the past 20 years, there’s been a huge
amount of interest in Corporate Social Responsibility (CSR). Of the Fortune 500 companies, 80% now issue
sustainability reports. But there’s a problem. Data shows that state-level policies still
have the biggest effect on corporate sustainability outcomes. So corporate political actions (like lobbying
and campaign funding) still have a major impact. But they’re often ignored because of the
focus on CSR. To make matters worse, CSR can be hijacked
through corporate hypocrisy. Some companies use sustainability initiatives
to disguise political activities happening behind the scenes that actually block meaningful
change. In reality, Corporate Social Responsibility
(CSR) is just one component of sustainability. We need to start focusing on Corporate Political
Responsibility (CPR). CPR should be monitored and evaluated just
as carefully as CSR. There are a few important metrics to track
here. And it all starts with transparency. Companies need to be transparent about their
lobbying and campaign funding activities. This goes beyond simply reporting aggregate
expenditure. Instead, they’re going to need to report
on the actual objectives of their lobbying. Transparency will reveal hypocrisy, and allow
us to track how well companies are really doing. So how should managers approach this? First, they need to fully disclose all of
their political activities and objectives. It will pay off to take a leading position
in transparency. Next, they need to align all of the company’s
political activity with their public statements. Anything less will be seen as disingenuous. Finally, they need to be sure to support public
policies that advance sustainability but do not put them at a competitive disadvantage. Striking that balance means that the company
will be able to operate sustainably while still meeting fiduciary obligations. It’s clear that companies have a big role
to play in solving social and environmental problems. But they must learn to work intelligently
and transparently within the political sphere. To learn more, please read the latest issue
of California Management Review, Volume 60, Issue 4.


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