For sustainable business models to exist, organizations must embrace both their Corporate Social Responsibility (CSR) and Corporate Political Responsibility (CPR), both in words, spirit and actions. Unfortunately, in the modern corporate world, there exists a very wide gap between an organization’s purported values and their actions in the real world.
Here is one such scenario; the former CEO of PepsiCo, Indra K. Nooyi, was once quoted publicly saying, “The blind pursuit of profit at all costs is untenable. It is essential that we make money the right way. After all, if communities suffer as a result of a company’s actions, those returns are not sustainable.” On the other hand, PepsiCo has a shocking CSR/CPR track record of lying about the organic ingredients included their products, spending a lot of money to fight sugar tax/labelling initiatives, and clearing forest for palm oil.
The Pepsi example is only an example to demonstrate how CSR metrics are heavily environmentally focused, leaving other issues behind. Most organizations don’t shine a spot on other issues such as misleading/offensive marketing practices, gender equality, human rights violation, or racism.
For corporate sustainability to occur, corporates need to establish sustainable business models that acknowledge the social responsibilities of organizations, and come up with governance structures that will be accountable for executing these responsibilities. A section of the responsibilities should address on how companies interact with the political environment they operate in. Today, in the modern environment, political influence fused tightly together with social issues, CPR has become an inevitable aspect of corporate sustainability.
Corporate policy making is the perfect tool to balance the two responsibilities. When corporates participate in making political decisions such as voting against or for gun control, lobbying for or against building an oil pipeline, or funding pro/anti-immigration political nominees, they tightly tie CSR together with CPR.
For stakeholders to assess a corporation’s political stand, corporations must disclose some facts as part of their CPR-rating metrics. These facts include, the parties the company is backing, amount of money spent lobbying and where, the political issues the Board is passionate about, and if the organization will treat immigrant workers in accordance to any specific political ideology.
However, the understanding of CSR and CPR among organizations is expanding beyond just gun control and immigration hot buttons, but still there is so much to be done. Other metrics are needed to assess organizations on other issues such as environmentally friendly policies, responsible investing actions, slave labor policies, gender equality, lobbying practices, foreign raw material outsourcing practices, among many others.
Unfortunately, monitoring and measuring these metrics is not an easy job. Sometimes CSR components may undermine a corporation’s personal-made political agenda, such as lobbying to for lowering corporate taxes and expenditure. Also, monitoring operations in far regions such as Africa and Asia is extremely challenging.
Nevertheless, there is growing public demand for CSR/CPR initiatives that very soon is going to compel corporations to pick between profit and people. Any new rating system that will come up should be enhanced enough to rate organizations based on how they take both political and social responsibilities. Without such metrics, it will be very challenging for all concerned parties to judge the position of an organization on certain important issues, and whether these organization is sustainable for the people and the planet.
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Disclaimer: The views and opinions of Eric Lawrence Frazier are his own and do not necessarily represent First Bank or any organization affiliated with Eric Lawrence Frazier, or the Power Is Now Media Inc. First Bank is an Equal Credit Opportunity Lender. Eric Lawrence Frazier, MBA, is also a Vice President and Mortgage Advisor with First Bank. NMLS#461807 and a California Licensed Real Estate Broker DRE# 01143482. Email: Eric.frazier@fbol.com. Ph: 714- 475-8629.
Eric Lawrence Frazier MBA
President and CEO
The Power Is Now Media Inc.
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