Can Healthy Democracy Support Your Corporate Purpose?
Corporate purpose has been all over the news lately. More and more companies are publicly committing themselves to a positive larger purpose — that is, something beyond just creating value for their shareholders. The recent letter from CEO members of the Business Roundtable which urges “leading investors to support companies that build long-term value by investing in their employees and communities” is proof that the “corporate purpose” movement is growing and evolving.
Corporate Purpose: An Evolving Landscape
Companies may adopt a signature corporate purpose for many reasons, but a common motivation is that employees increasingly want to work for a company that stands for something they can identify with. Often that makes the decision to become a purpose-driven company very easy: by delivering a return-on-investment through building trust and loyalty with employees (and sometimes even customers), corporate purpose is good for business. It turns out that focusing on something beyond just shareholder value turns out to be great for shareholders, too.
Adopting and articulating a corporate purpose has some interesting side effects, one of which is an acknowledgement that the company is part of a larger civic ecosystem. As a result, the company can expect to be asked about how it sees its relationship to a diverse set of social, civic, and political issues. This is new territory for many companies that goes well beyond the narrow confines of traditional lobbying and political engagement. And there are new risks: if employees or other key stakeholders come to believe that the company is not genuinely committed to its stated purpose and is merely posturing, the result can be anger, loss of trust, and significant damage to the business.
To avoid this, companies go to great lengths to select and describe their corporate purpose carefully and in a way that fits well with their business strategy. But even with this level of care, showing that the company is continuing to make a difference in its chosen area of “purpose” can be challenging. For example, Tesla says its purpose is “to accelerate the world’s transition to sustainable energy.” (Sustainability is a theme for many purpose-driven companies.) But when employees see that little public progress is being made on the larger challenge of sustainability, it is easy for them to become cynical about the company’s efforts, or so disillusioned with our government that they stop voting altogether? What difference do Tesla’s efforts towards a zero-emission future make when employees see public policies encouraging reliance on fossil fuels?
Why Democracy Is Vital to Corporate Purpose
Purpose driven companies do not work in a vacuum and cannot afford to appear they think they can. Whether they like it or not, their decision to embrace something larger than simply making money thrusts them into a very public discussion of policy. To be credible, it’s not enough to explain to their stakeholders what they are doing on their own: they need to explain what they are doing to make sure their purpose is adopted by others and ultimately by society as a whole.
Addressing that challenge is where Business For America comes in. Our program for Corporate Civic Responsibility helps companies find the best way to integrate their corporate purpose into the larger public conversation and develop the evidence they need that their commitment to purpose is not just for appearances but is deep, authentic, credible, and most of all — relevant.
One obvious way to accomplish this would be to directly and publicly engage the company in lobbying and advocacy for policies that relate to the corporate purpose. While many companies choose this approach, many others — especially those with politically diverse employees and customers — are reluctant to take public positions on specific, controversial policy issues. For example, in the environmental area, many companies who commit themselves to sustainability at a corporate level find it problematic to take the step of advocating tougher environmental regulations because they know it would upset customers, employees, or suppliers.
CCR addresses this problem by creating a new way for companies to acquire a full-throated public voice without occupying a fixed point on the traditional left-right political spectrum, which would risk polarizing their stakeholder communities. CCR does this by highlighting the difference between civics and politics: instead of taking positions on specific substantive policies, the company instead takes a strong position about the policymaking process and actively supports a healthy, functioning democracy so that those same policies can be adopted naturally, organically, and democratically.
A public corporate commitment to supporting the health of democracy does not align the company with a liberal or conservative agenda. It is simply an expression of confidence and trust in people — people just like its own employees and customers. The company is in effect saying, “We have political interests, but we also know business shouldn’t dominate politics. That’s why instead of trying to influence politics directly, we’re putting our support behind you — our employees — and people like you. We’re not just confident that our corporate purpose is good for the world; we’re confident that when our democracy is working well, our government will deliver policies that support the positive changes we wish to see in the world.”
Getting Started on CCR
There are many ways a company can take action to support the health of democracy. Some are as simple as providing support for civic engagement by employees, such as giving them time off from work to vote. Beyond this are options that address functional challenges in the democratic process. For example, by advocating for better election security, companies can demonstrate that they care about preserving the political voices of their employees and other stakeholders.
These kinds of engagement in CCR are constructive and minimally controversial. But they fall short of attempting to address what is often offered as the most fundamental proof that our democracy is not healthy and that our politics are “broken”: the simple fact that many policies that enjoy clear majority support — even majority support among voters in both major parties — somehow never get enacted. This reality goes to the very core of our democracy and is arguably the defining political challenge of our time.
CCR in its fullest form engages companies in a public effort to solve this problem. Fortunately, there is a surprisingly strong consensus about the best way to do this. What is needed are various changes that move power from political parties to individual voters. These include solutions such as enacting ranked-choice voting, opening primaries to all voters, and enacting anti-gerrymandering measures. These innovative changes enjoy broad support among voters in both parties, but for obvious reasons they do not have the support of the major parties themselves. By supporting these solutions, companies can align themselves with the political voices of their own stakeholders and with the health of democracy itself.
BFA Members Are Taking Action
Doing this in practice requires an understanding of the landscape of these efforts, many of which take place at the state level. By joining BFA and engaging with the CCR program, companies can continuously track this rapidly changing area, evaluate specific initiatives, and determine the best way for them to engage. Unlike expensive lobbying activities, these efforts can be effective with a very small investment. Sometimes it takes nothing more than a carefully composed op-ed contribution, a letter of support, or a public statement to place the company in a position to credibly assert support for the health of democracy.
Although lobbying is sometimes necessary from the perspective of the business, it carries with it the risk of having the company portrayed as a “special interest” that is actively undermining the health of our democracy. CCR, by contrast, aligns the company with democracy itself while also laying the groundwork for achieving policy goals supportive of corporate purpose (yet well beyond the reach of any individual lobbying effort.)
To learn more about why a healthy democracy is good for business and how CCR can strengthen your corporate purpose initiative, send a note to info@bfa.us. We look forward to hearing from you.
David Gilmour
Director of Corporate Civic Responsibility
Business For America
