Corporate Political Responsibility

Posted by Flux on 

15 May 2022

What’s trending?
Companies are increasingly under pressure to take a stand on social, political and moral issues. Corporate Political Responsibility (CPR) refers to the expectation that companies speak out and take action on political matters. Employees are the largest segment calling out for this. According to a Financial Times Moral Money survey of readers, 70% of employees, 46% of consumers and 33% of investors are exerting pressure on companies to get involved. The most recent example is the rush by multinationals to exit Russia. Disney’s stance on the “Don’t say gay” legislation is another. 

Why is it important?
Companies risk a backlash if they are not vocal on important societal matters. But it can go either way on polarising issues such as abortion in the US, even threatening the stability of a business. “Unless corporations become more transparent and accountable, and therefore more sustainable in the way in which they exercise their political power, their licence to operate may be at risk,” says the Good Lobby, an organisation that encourages activists to participate in influencing decision-making processes. This is not something that companies can afford to ignore. The Eurasia Group says that it ranks “corporates losing the culture wars” among its top 10 risks for 2022. 

What can businesses do about it?
Businesses now need to not just articulate but also take action on the issues they choose to support. The decision on which issues to take a stand on is a difficult one. IBM uses five questions to help guide it: is the issue directly linked to the business? Does the company have a history of engaging in it? What are the stakeholders (employees, clients and shareholders) saying? What are competitors doing? Could the company make a meaningful difference by engaging? Signing petitions, issuing press releases, divestment, making charitable donations and engaging customers and employees on advocacy campaigns are examples of how companies can lend their support. Monies can also be spent on lobbying and funding politicians although this should be carefully considered. Some companies have opted to steer clear of this option.

By Faeeza Khan

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Image credit: Venti Views

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