As governments and public entities remain slow-moving, companies backing their values with action matters more than ever. But for those unsure how to respond to shifting expectations, how do they know they’re leading in a responsible way?
Ahead of their panels next month at SB’21 San Diego, we spoke with Elizabeth Doty and Terry Nelidov — both sustainability experts at the University of Michigan’s Erb Institute — about the role Corporate America needs to play in our volatile social climate. Some of their most pertinent work includes helping companies identify and manage integrated Corporate Political Responsibility (CPR) strategies in a world where acknowledging any political influence (or lack of it) can polarize potential customer bases.
Doty is Director of the Erb Institute’s new Corporate Political Responsibility Taskforce (CPRT); Nelidov is the institute’s Managing Director.
Why does the Corporate Political Responsibility Taskforce (CPRT) matter at a time like this?
Elizabeth Doty: At a time when companies are increasingly being held accountable and scrutinized, the CPRT is an applied, high-engagement opportunity for companies to explore how to use their influence on civic, political and societal issues. Our systems and institutions need to respond to enormous challenges; and there’s an increasing need for companies to play this positive role in everything from climate to economic opportunities to AI, jobs and more. We provide the forums, foresight and framework so companies can come out of these conversations with actionable items.
Terry Nelidov: Companies are expert lobbyists; and the challenge that we’re talking about here is how to align companies’ political influence with their big, bold public sustainability goals. This goes deep within companies — within some businesses, even the chief sustainability officer doesn’t talk to the main policy person; and that’s a huge missed opportunity (and a major source of risk). At the Erb Institute, we explore this role of business in society and CPRT is at the core of it. The goal is to activate purpose within the company and use political influence to help further that.
One of the tenets of the CPRT’s mission is to help companies act on responsible political influence without being political. Let’s explore that further. First, what makes a type of political influence 'responsible,' and how do you even begin to do that without a perception of politics?
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ED: We’re drawing on the work from Erb Institute Faculty Director Tom Lyon and his 2018 article analyzing the future of corporate sustainability. In this context, business has three responsibilities:
- Transparency: to disclose its actions to relevant stakeholders
- Accountability: having an integrated point of view, where different functions are speaking and acting with one voice; and the company's actions align with commitments to values, purpose, sustainability and stakeholders
- Responsibility: making sure a company’s political influences support and do not undermine the systems we all depend on — such as markets that reward free enterprise and real value creation; strong, just, representative civic institutions; and life-sustaining environmental systems.
Microsoft is a really good example of the current environment, where we are seeing breakdowns in many of those systems — pushing companies to respond to and support those foundational systems and institutions. The tech company was criticized for supporting election objectors; and through the dialogue, they ended up hearing a need for a democratic forum. This led to the establishment of Democracy Forward in the aftermath of the January 6, 2021 events.
TN: Climate denial is also an interesting case. A couple of years ago, we (Erb) moved beyond that: We don’t talk about climate as a question — it’s now science; it just is. The Erb Institute is a partnership between Michigan’s Ross Business School and the School for Environment and Sustainability, so we believe in climate change. Whether someone believes or doesn’t believe in human-driven climate change, it doesn’t matter. The world has changed, employees have changed, consumers have changed … and they’re all demanding a response from companies.
It could be argued that private business can make more meaningful change now than governments, and faster. What is the role of private enterprise going forward? How do companies large and small ascend to that responsibility?
ED: One would be that you want real value creation to be rewarded. In some cases, the most powerful lobbyists are powerful trade associations; and you want to create an environment where business has a common interest in those — responding proactively to the systemic challenges that will affect business and society, with a holistic view.
Ironically, this is a bit of a back-to-the-future moment. Drawing on the work of Michigan professor Mark Mizruchi, in the 1960s and ‘70s, businesses and their trade associations used to collaborate more to ensure incentives rewarded creating real value. In the 1980s, businesses began "fracturing" their political influence — advocating for more narrow interests — and trade associations became more of a "bodyguard" to protect firms. Unfortunately, this led to dysfunctional incentives. Now, there's a need and opportunity for businesses to come together to advocate for fixing those incentives, so markets reward those that are truly sustainable.
What are the CPRT’s plans moving forward?
ED: We’re focusing on two work streams. The first are public programs to build awareness and engage a diverse ecosystem in sharing research, best practices and tools related to corporate political responsibility.
Second are private programs with Taskforce members to go more in-depth in defining tailored principles, practices, policy evaluation guidelines and processes for practicing CPR. We’re excited to have a diverse set of inaugural members (and are accepting more). The beauty of this is that companies can share with peers and develop more integrated, proactive CPR strategies; and we will be able to publish frameworks and learnings next year.
TN: What we may learn in a year is that millennial and post-millennial workers are more agile in changing, and have this new expectation of CPR from their companies. Our hypothesis is that consumer-facing brands and those with younger workforces may be wired to be quicker and more responsive to employee and consumer demands. We’re wondering if “older” companies, in more traditional industries with more conservative company cultures, will be able to change quickly enough to keep up with society!