Finance:Corporate political responsibility

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Short description: Corporate responsibility concept

Corporate political responsibility (CPR) is a corporate responsibility concept that emphasises the political dimension of a company's actions. The concept was developed in the 2010s as an enhancement of existing frameworks such as Corporate Social Responsibility. CPR regards the social and ecological aspects underlined by CSR as secondary to the political, thus highlighting the interdependence of business activities with the public realm, societal institutions and collective goods.

To navigate in this environment, which is also shaped by megatrends such as globalisation, digitisation and climate change, CPR proposes that companies systematically develop the political role they already have. Some authors argue that by building and managing their political brand and strengthening the political fabric in which they operate, companies can advance their economic interests. Numerous companies have begun to act in accordance with CPR principles, including the clothing manufacturers Nike and Adidas, the coffee shop chain Starbucks, the homestay marketplace Airbnb, and the watchmaker Nomos Glashütte.

Background

Beginning in the second half of the 20th century, there has been an increased awareness of companies' impact on their social and ecological environment.[1] Under the label of corporate responsibility, several management concepts have been proposed to encourage corporations to contribute actively to the welfare of these environments.[2] The most established of these concepts is Corporate Social Responsibility (CSR).[1] Since the 2004 United Nations report Who cares wins, which popularly introduced environmental, social, and governance (ESG), sustainability principles have also found consideration in financial markets. ESG has then gradually been expanded to include companies' political actions.[3]

In the 21st century, scholars began to argue that corporate responsibility should extend to the political sphere, particularly since national governments have become increasingly challenged to provide effective governance services in the face of global challenges such as climate change and digitisation, a phenomenon known as governance gap.[4] In 2007, the political scientist David Vogel proposed that companies fill this void by taking 'virtuous' action when faced with deficits in state governance, which would in turn help facilitate the responsibility targets encoded in CSR.[5] Efforts by the sportswear manufacturer Nike to contribute to governance by observing self-imposed labour and environmental standards in its international factories have been cited as an example of this approach.[6] During the 2010s, such ideas were developed into a comprehensive new corporate responsibly concept named Corporate Political Responsibility (CPR), emphasising the political dimension of sustainability over the social and the ecological.[7] According to the business ethics magazine Forum Wirtschaftsethik, the term was introduced by the German political scientist and advisor Johannes Bohnen.[8] In a 2015 article in Zeitschrift für Politikberatung, he argued that political factors are foundational for social, ecological and economic concerns, and recommended CPR as a strategic evolution of corporate responsibility concepts.[9]

Concept

Basic principles

At the centre of CPR is the assumption that companies are already political actors: they advance their interests through lobbying, interact with diverse regulatory environments,[10] and they are bound up with the state in their role as taxpayers and employers.[11] Since the emergence of stakeholder capitalism, which emphasises companies' responsibilities towards numerous constituencies impacted by their business activity (such as customers, employees, investors, and suppliers), there has been an increased public expectation that companies show awareness of their existing political role.[10] The Edelman Trust Barometer, an annual survey gauging public trust in societal actors, found in 2020 that 92% of respondents wanted their employer to speak out more on political issues.[12] CPR proposes measures that sustainably strengthen institutional and cultural pillars of open societies and thereby also serve to advance business interests,[13] in line with United Nations Sustainable Development Goal 16, which calls for the development of "strong institutions".[14]

Political branding

In a 2021 book on CPR, Bohnen argues that companies should move away from equating the political solely with party politics: democratic politics extends to all actors of society (including businesses) when they engage in political debates and provide public goods.[15] Given the increased public expectations that companies show awareness of their role as political actors, he recommends that they embrace taking a political stance in accordance with their corporate purpose.[7]

Companies can then enter into a process called 'Political branding', which serves to operationalise their political stance. In an exercise of political brand creation, a company's existing political actions and resources are consolidated into a coherent political leitmotif, respectively.[16] Political brand management is then needed to develop and implement CPR activities. Bohnen distinguishes between four fields of action: 'responsible lobbying', 'political statement[s]' on business-relevant political topics (particularly by means of CEO activism), 'participation projects' (such as community dialogue platforms), and the 'provision of public goods' (such as infrastructure, education and sport facilities).[17] When engaging in CPR activities, companies support the state but must at the same time respect the primacy of politics. Bohnen stresses that CPR is also a 'business case': by contributing to the maintenance of robust societal institutions, collective goods and democratic infrastructure, companies invest in the political pre-conditions of their own economic success, thus broadening traditional notions of investment,[18] and strengthen their brand in the eyes of customers.[19]

Four principles of political action

A group of political scientists at the University of Michigan's Erb Institute proposes four standards against which corporate political action should be measured.[20] They define the principle of 'responsibility' as active support for the “systems on which the economy, society and life depend”, including “constitutional democracy; the rule of law [and] civic freedoms.”[21] 'Legitimacy' requires that companies' political activities authentically reflect the firm's collective stance as opposed to that of individual executives.[22] 'Accountability' demands that firms allow their political actions to be measured against their professed corporate values.[23] 'Transparency' describes an "open and honest" communication with stakeholders about the company's political operations.[24]

Application

Numerous companies have begun to act in accordance with the principles of CPR. In 2018, Nike produced an advertisement campaign with the American football player Colin Kaepernick, who had caused controversy by kneeling during a performance of the United States national anthem to protest against racism and police violence. Nike was criticised by then president Donald Trump but eventually received a positive market reaction.[25] The coffee shop chain Starbucks strengths the democratic process by aiding voter registration efforts with a dedicated online tool. The company was also among the first to pay for its employees' health insurance and to support their tertiary education.[26] In 2017, the homestay marketplace Airbnb opposed the far-right Unite the Right rally in Charlottesville, Virginia by disabling the profiles of extremist users in the run-up to the event. The company's CEO, Brian Chesky, publicly condemned the rally.[27]

The German watch manufacturer Nomos Glashütte wrote an open letter condemning racism, intolerance and hatred after far-right gains in the 2017 German federal election around its corporate headquarters in Saxony had caused irritation among customers. The firm also offered workshops to its employees to help them counter extremism[28] and was a founding member of the Business Council for Democracy, a private-sector initiative designed to foster debating culture.[29]

See also

  • Business ethics

References

  1. ↑ 1.0 1.1 Bohnen 2021, p. 93.
  2. ↑ Blowfield & Murray 2014, p. 7.
  3. ↑ Zinnbauer 2022, p. 17.
  4. ↑ Lyon et al. 2018, pp. 2–4.
  5. ↑ Vogel 2007, pp. 171–2.
  6. ↑ Lyon et al. 2018, p. 2.
  7. ↑ 7.0 7.1 Bohnen 2021, p. 102.
  8. ↑ Forum Wirtschaftsethik 2022.
  9. ↑ Bohnen 2015.
  10. ↑ 10.0 10.1 Zinnbauer 2022, p. 13.
  11. ↑ Bohnen 2021, p. 2.
  12. ↑ Edelman 2020, p. 27.
  13. ↑ Winston, Doty & Lyon 2022.
  14. ↑ Bohnen 2021, p. 136.
  15. ↑ Bohnen 2021, pp. 89–90.
  16. ↑ Bohnen 2021, pp. 122–6.
  17. ↑ Bohnen 2021, pp. 137–9.
  18. ↑ Bohnen 2021, pp. 8–9.
  19. ↑ Bohnen 2021, p. 5.
  20. ↑ Dolan 2023.
  21. ↑ Erb Institute 2022, p. 5.
  22. ↑ Erb Institute 2022, p. 3.
  23. ↑ Erb Institute 2022, p. 4.
  24. ↑ Erb Institute 2022, p. 6.
  25. ↑ Bohnen 2021, p. 130.
  26. ↑ Bohnen 2021, pp. 147.
  27. ↑ Bohnen 2021, p. 157.
  28. ↑ Bohnen 2021, p. 146.
  29. ↑ Langenbucher 2021.

External links

Bibliography



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