FACULTY Q&A

Corporations like to make statements about their responsibility to society, but follow-through is sometimes lacking.

The Erb Institute—a partnership between the Ross School of Business and the School for Environment and Sustainability at the University of Michigan—has launched an effort to bridge that gap.

The institute’s new Corporate Political Responsibility Taskforce will develop a set of principles to guide companies in doing the right thing. Erb Faculty Director Tom Lyon discusses the initiative and what impact it can have on current and future generations.

What led to the formation of the task force?

It came out of a retreat that was organized through the Alliance for Research on Corporate Sustainability, of which I’m currently the president. We recognized the need for business to follow the adage “First do no harm,” and the place where we were concerned that some businesses have been doing harm toward sustainability is in politics—lobbying against change, blocking improvements in environmental regulation, and in particular blocking progress on climate policy.

We followed up with a paper titled “CSR Needs CPR“—a declaration, if you will, that we need to expand our definition of corporate social responsibility to incorporate what companies do in the political domain. Because that may be much more important than any tweaks they make to their supply chain or to their greenhouse gas emissions.

That article led to an email out of the blue to me from Elizabeth Doty. She was deeply committed to the topic already. She had stepped aside from her consulting business so she could focus on working on corporate political responsibility. I was just blown away by the synchronicity of her email, and we quickly began talking about having her play a role with the Erb Institute in creating a task force on corporate political responsibility.

What made a task force seem like the right way to address this?

We wanted to work with actual companies who are struggling with the issue of how to engage authentically, legitimately and responsibly in the political domain. It’s easy to throw tomatoes from the sidelines at bad actors, and there are quite a lot of people doing that. But because the Erb Institute is focused on corporate sustainability and we work with business partners, we thought it made sense to bring in a group of firms that were willing to struggle with these issues and come up with a set of principles that they could adhere to. Then we can present that set of principles to other firms.

So the ultimate work product of the task force will be that set of principles? And then you’ll ask other companies to sign on?

Yes, it will essentially be a pledge, and it will cover three dimensions of behavior. The first tier is transparency in political activity—disclosing what the company does, much more fully than is currently required by law. Not just campaign contributions, but dark money contributions, giving to think tanks that take political positions, participation in trade associations that take political positions, lobbying activity. Companies spend a lot more money on lobbying than they spend on elections, by the way.

The second tier is accountability, which involves making sure that the board of directors and their shareholders know and have a say in corporate political activity, because many investors might not like what they see some of their companies doing.

The third and probably the most challenging tier is defining what it means to be responsible in a given policy domain, such as climate. For example, we might conclude that opposing a price on carbon is just not an acceptable thing for any responsible company to do. Or supporting laws that make it harder to vote is not a responsible thing for any company. Or supporting politicians who deny that the outcomes of our election system are legitimate.

There are some bright lines that we hope we’ll be able to draw, and then there will probably be some harder areas where we may not take any formal stand.

Is the membership of the task force set, or are you currently building that out?

We’re still building it. We want to have 6-8 corporate members, with two representatives from each company: one representing corporate sustainability efforts and one representing government affairs. We’re looking for a diverse group of companies that are willing to engage openly and authentically.

Is there a timeline for the task force’s work?

We want to do the first phase within about 8-12 months. It will start with clarifying the fundamental principles for engaging in politics. What can we stand for with regard to transparency and disclosure?

Then, we want to tackle three sets of issues during this first year: climate, racial justice and inclusion, and support for representative democratic institutions. If this proves useful, we hope it will become an ongoing project. These different thematic issues can require a lot of sorting out.

The Erb Institute is launching this task force. You’ve established the Michigan Business Sustainability Roundtable, which brings together sustainability leaders from most of the big companies in Michigan. And you also just released the results of your collaboration with Ford Motor Co. on the Model of Human Progress, which establishes standard metrics for social impact. The institute really seems to be taking an active role in helping companies be better.

A lot of the credit goes to our managing director, Terry Nelidov. Terry has really been a strong advocate for external engagement. We’ve got the world’s best dual-degree program, we’ve brought in faculty with a commitment to the issues, we’ve got a strong set of research outputs, we’ve got a postdoc program. Engagement was the thing that we had yet to address.

It has now really hit its stride: We’re starting to do executive education programs that are successful. The engagement efforts through the roundtable are going well. The partnership with Ford went great. All these things are coming together in a newly emphasized concern for the social dimensions of sustainability as well as environmental ones.

The underlying driver for all of this is an ethical commitment to the well-being of others. Sustainability as we’ve traditionally understood it is a concern for and a commitment to future generations. But once you start taking that very seriously, you have to also ask yourself, “Shouldn’t I be equally concerned about people who are alive today who might be not as well off as we are?” That concern for the well-being of present as well as future generations is what we’re trying to integrate now.