By Elizabeth Doty

The heated corporate-political standoffs of 2023 — with headline-grabbing stories involving giant corporations such as Disney and Budweiser — are glaring examples of why brands today increasingly consider expectations and threats around socio-political issues as critical aspects of corporate sustainability. As the political environment becomes increasingly challenging, companies face urgent questions about whether and how to engage. What do stakeholders want and expect? What are the costs of action and inaction? How do companies simultaneously challenge the status quo, align their influences with brand values and commitments, and avoid the risks of retribution? 

Because of these complex challenges, the 2023 Sustainable Brands flagship event in San Diego — which brought together a global community of sustainability communicators and practitioners around the theme “challenging the status quo” — included an array of programming aimed at addressing the tightrope brands must often walk when working to use their influence responsibly. The University of Michigan’s Erb Institute Corporate Political Responsibility Taskforce (CPRT) hosted a workshop titled “Current Challenges in Corporate Political Responsibility: Explaining ‘Why’ and ‘How’ in an Environment of Distrust,” led by CPRT Director Elizabeth Doty. The panel featured several experts in sustainability and communications: 

In this interactive workshop, participants explored the Erb Principles for Corporate Political Responsibility (CPR) and how they might apply them to current challenges, reviewed new research from Porter Novelli on stakeholder perceptions, and heard from practitioners on how they are using non-partisan principles to weigh decisions and articulate their reasoning in an environment of distrust. The panelists shared the benefits and usefulness of a non-political framework of shared principles. They were joined by an engaged audience, including Erb Institute Managing Director Terry Nelidov, who helped drive the conversation with insightful questions, comments, and observations. 

Here are a few key takeaways from the conversation:

On the complex socio-political environment for companies today: During the discussion, Skees, who recently wrote the book Purposeful Brands, shared data from a 2023 survey of more than 7,000 U.S. consumers across generations and political persuasions. She highlighted how the political environment for brands today is more complex than ever, with increasing and competing expectations from stakeholders. “They’re saying, ‘We want you to operate in a way that improves our lives, and that doesn’t mean just give us a product that does what you say it will,’” Skees said. “65% say they want you to demonstrate that you’re following through on your commitments and, this was surprising to me, 82% across the entire population want companies to support social and environmental issues. I’m not just talking about consumers. I’m also talking about employees, investors, and the many people who are your stakeholders. And, for the first time, brands are being protested against on both sides. We’re used to activists like Greenpeace and the ACLU coming after companies and saying, ‘You’re not making good on your commitments.’ But we now have activists from anti-woke and anti-ESG groups, and they’re saying, ‘Businesses, this is not your play. You don’t belong in societal discourse. Sit down and be quiet.’”

She said business leaders need to consider what parts of the social commons are relevant to their work and supportive of their highest purpose as a business. “Your highest-level commitments should be those that deliver on your purpose as a business,” she said. “You can do it in modest ways or in leadership ways. You can be an ally or an activist. But this is how you determine where you show up and how you show up.”

On taking the “third side”: In the environment Skees describes, it’s critical for companies to convey their commitment to the “third side” — the health of the country and society — even as they engage in debates, said CPRT Director Doty. 

The Erb Principle of legitimacy in CPR can be helpful in the pursuit of working from the third side. In an environment of distrust, businesses that are scrupulously clear about why they are engaging — or not engaging — can demonstrate respect for civil society. Specifically, companies can be clear about how they came to that decision and outline the criteria they used, including whether they contributed to an issue, are linked through their business or stakeholders, or it is of such consequence that it affects everyone. For example, with a civic engagement program, businesses should be clear about why they feel civic engagement is within their purview, then follow it up with actions to show their commitment. “As we were developing this idea, we asked ourselves, ‘How do we bridge divides to find something we have a clear shared interest in?’ Principles ended up being one of the key elements. They can help us both make better decisions internally and articulate our reasoning to those who might view it as trying to make a power play or exercise a political agenda. This is the idea of the third side: Instead of picking a side, you’re trying to strengthen the sense of a shared future — of shared understanding, shared relationships, shared nation.” 

On a framework for weighing stakeholder interests: Welsh of DSM Firmenich North America spoke about the utility of the Principles for CPR, which provide an important framework for considering legitimacy around statements and other political influence. As a leader of a large global corporation, he says he finds this kind of framework especially valuable when considering the organization’s hundreds of relationships with stakeholders with differing viewpoints. He gave a recent example: “Let’s say your CEO is evangelical on the issue of climate. If you send money to trade associations that lobby against climate-related matters, you will be discovered and all of the credibility built through your CEO’s actions will be for naught. Our company did a global audit on all of the trade associations we belong to — and there are hundreds of them because we operate across 67 countries. Then we made decisions: Which ones will we stay in because they support values on climate change? Which ones will we leave because they don’t support our values on climate change? And which ones will we stay with, even though they don’t currently support our values on climate change, because we believe we can take a leadership position in those organizations and change their minds? It was a difficult process, as you might imagine, but a very important process because, without that, we lose legitimacy. So to me, the principles are a basic risk-management and strategic decision-making tool that will lead your organization to that safe place where you can engage on these issues and have a means by which to defend yourself if challenged,” he said.

On ensuring integrity between statements and other influences: Carlyle of Earth Finance said corporate political responsibility presents a new opportunity for business leaders in an era of increasing transparency. He called on leaders to use the principles to examine whether they are living with integrity and a sense of philosophical consistency. As a former state senator, he often saw large global organizations demonstrating a “patchwork approach” to values, making public statements of support on climate issues while simultaneously making decisions and taking actions in other parts of their organizations that hinder climate progress. “This new essence of accountability means radical transparency and radical disclosure, which demands greater integrity of company values if you want to avoid having your political narrative be dominated by those who are determined to fundamentally hinder progress. … I hope leaders have the courage to use the moral authority within their organizations to move toward interest-based discussions and negotiations. They have to be willing to put the externalities on the table on these types of issues to move toward the third way, finding a pathway that’s real and authentic, and not allowing the institutional grip of the status quo to infect the ability to be bold on climate action.” 

On responsible influence on economic policy: Kline of Pirelli Tire North America spoke specifically about the responsibility element in the principles. It emphasizes not using political influence to externalize costs and risks, which undermines the free enterprise system. She said responsibility involves looking beyond trying to get more only for your company and instead considering what will create a healthier system to benefit all. “It’s important for companies to look at the entire ecosystem in which they operate and align their private interests with the broader public good,” she said. “It goes beyond mere compliance and encourages organizations to proactively contribute to policymaking using evidence-based, peer-reviewed facts. Responsible corporate behavior extends beyond avoiding harm; it involves actively contributing to the well-being of society and the environment.”

Read more about the discussion and SB 23 in this article from Sustainable Brands

Business leaders seeking resources on whether and when to weigh in on policy issues can consult the Erb Principles for Corporate Political Responsibility. See the CPRT website for additional information, and sign up for newsletter updates!