A framework for engagement and support
Increasingly, business leaders are stepping forward to help solve the crises facing society. The intersecting catastrophes of 2020 highlight the need for well-functioning institutions and an economy where financial performance translates into long-term human well-being. In response, companies have made bold commitments to support positive systemic change, focusing largely on voluntary measures such as internal people practices, supply chain policies, charitable contributions, community outreach and public communications.
Though many companies paused their political contributions following the January 6 Capitol attacks, most firms have not fully integrated “corporate political responsibility” (CPR) into their strategies for acting on these commitments. Every systemic issue depends on sensible, stable public policy and business is being called to support Sustainable Development Goals 16 and 17 (including effective, accountable and inclusive institutions and partnership). In addition, leaders are being challenged to ensure their corporate political activities (CPA) are not part of the problem, as business account for roughly 62% of all political contributions and 87% of disclosed federal lobbying expenditures.
Unfortunately, many executives operate without an integrated view of their firms’ engagement with governing or electoral processes, or clear principles to ensure transparency, accountability and responsibility. As we have seen in 2020, in an environment of polarization and distrust, inattention to CPR can increase reputational risk, destabilize the civic and business environment, threaten the credibility of other efforts and undermine the positive systemic changes society needs.
To help companies respond to this challenge quickly, the Erb Institute has convened a Corporate Political Responsibility Taskforce (CPRT) that leverages the Institute’s unique capabilities.
As the business sustainability hub at the University of Michigan, the Erb Institute is uniquely positioned to serve as Secretariat for the CPRT.
Not only does the institute provide coordination, facilitation and project management support, but our staff and faculty are able to tap a network of experts, research and advisory resources from across U-M’s 19 schools and colleges, as well as from Erb’s own global network of universities, research institutes, business partners and nonprofit alliances.
The CPRT is intended to help firms effectively manage the following risks and concerns related to their corporate political activities:
- Rising Reputational Risk: Potential damage to brand, employee engagement, customer purchases or share price due to political activity in a polarized, hyper-partisan environment
- Ballooning Requests to Engage: Lack of clarity about where to legitimately engage, and potential for overload in responding to complex issues beyond the firm’s area of expertise
- Escalating Pressure: Growing need to use political levers to defend or advance company interests, fueling an unstable “arms race” for influence and distraction from the core business
- Increasingly Visible Systemic Risks: Alarm over threats to foundational institutions and concerns that urgent systemic issues will not be addressed quickly or at sufficient scale with current approaches to corporate political activity
Professor Lyon is a leader in using economic analysis to understand corporate sustainability strategy and its interplay with public policy, NGOs, and consumer demands. His book Corporate Environmentalism and Public Policy was the first rigorous economic analysis of this important topic. His article “CSR Needs CPR: Corporate Sustainability and Politics” coined the term Corporate Political Responsibility.
Corporate Political Responsibility