The decision of major brands and banks to extract money from Republican politicians who campaigned against the result of the US presidential election was a major story after the capture of the Capitol. It didn’t stop there, as some companies decided to press the pause button on all political spending. IBM, meanwhile, deserved congratulations as a company that has attracted a clear line on political donations or electoral campaign of any kind, since its foundation, and lives from it.
And now? Could this be a moment of real change in the practice of influence peddling by private interests? As leaders and boards consider their options, we can hope that they take advantage of the political “off season” to refresh protocols and re-examine whether their actions align with intentions in supporting democratic institutions.
I think these three questions could shed some light for boards and executives trying to figure out their next move:
1. What is the purpose of our political activity?
Although there are a number of companies that engage their lobbyists in broad coalitions working for the public interest – from gun control to environmental protection – and although we hope to see more action on solutions to climate change by companies and commercial groupsit is not how most lobbying dollars are spent.
Most of the activity is aimed at obtaining or protecting benefits and grants to help a business or industry be more profitable. Economists have a name for this: rent seeking.
The media has understandably focused on the national scene in recent weeks, but the conversation has also shifted to state legislatures, as this editorial by Michael Porter, professor at Harvard Business School, and Bruce Freed, who directs the Center for Political Accountability, specify it.
Will local political activity also come under greater scrutiny? The common practice of companies pressuring local governments to trade jobs for tax breaks that sap school and public transport budgets hit a wall in New York last year, as Amazon could attest. At the local level, the trade-off between private benefit and public good can become quite complicated.
One of the most authentic tests of the Business Roundtable remarkable reformulation of the corporate purpose, and his argument that there are more important interests to serve than those of shareholders, is whether they are willing to put the very health of the commons before corporate profits. Are their political positions aligned with their statements?
Looking closely at how the government relations team’s priorities align with what the CEO has said about the company’s purpose and supporting non-financial “stakeholders” is one way to open this question about the goals of political activity.
2. Can we accomplish what we aim for without buying influence?
There is a difference between politics voice and political spending.
A sign of just how crazy the political spending system has gone can be seen in corporate donations, which are the largest source of campaign contributions. Companies are advised to move the money. Republicans who tend to favor lower tax rates and less regulation get more corporate dollars, but not that much according to Jeff Sonnenfeld of the Yale School of Management, which summoned the CEOs who took the first step to “defund” specific politicians. The goal for corporate donors is access, and the money needs to come from both sides of the aisle. This is to ensure that someone will take your call or do your bidding when the going gets tough.
Democrats are just as eager to accept political contributions as Republicans. That’s how the system works. Politicians are forced to dial numbers for hours every day and the dance between donors and incumbents is going faster and faster. We hardly see the alternative.
Businesses will be asked to get back in the game after this cooling-off period ends. Logic dictates that we need the voices of our major employers who care about a host of issues important to us all, from infrastructure to good business relationships.
But the question remains, is it necessary to buy influence?
Business coalitions and individual leaders have a voice, but also a keen interest in policy decisions. But they also have access to politicians at all levels through their role as employers, investors in public goods and creators of essential goods and services. IBM has its own protocols, as does the Center for Political Accountability, which promotes transparency between forms of political influence. Can a company use its voice without the corrupting influence of money?
3. Finally, a council might ask: what is in the best interest of the commons?
Political spending may be legal, but it remains the basis of corruption. Ironically, the very practices we take for granted in the United States are prohibited outside our borders under the Foreign Corrupt Practices Act.
United Citizens opened the floodgates 10 years ago, driving the levels of political spending we just saw in the 2020 election. The US Supreme Court just accepted a Case which will determine whether donors to intermediaries can be kept secret. Disclosure is the key to accountability. The role of so-called black money makes efforts to “follow the money” elusive at best. Which brings us back to how companies use this moment.
Corporate hypocrisy must end
The issues are hugely complex, but corporations cannot have it both ways: they cannot proclaim their commitment to the institutions that uphold the rule of law and play with an inherently corrupt system designed to circumvent those laws at their own expense. advantage.
As companies pause to examine policies and practices related to political spending, this opens the door to other questions and concerns, such as whether a company can even make a difference, or whether, like Fortune’s Alan Murray challenges, companies that avoid political spending will leave a vacuum for extremists to fill. Business can actually be a moderating influence on the candidates we elect. But businesses ultimately cannot succeed in a broken system. In the quest to uphold the institutions and protocols of our democracy, we need business leaders who are willing to be brave and begin to tackle the fundamental issues of fairness, justice, and true representative democracy. We also need forerunners to open blind spots in other areas that pit private interests against the public interest, such as tax evasion, the widespread use of contract workers and the way we pay executives.
The need for collective action is driving many of these desired changes. But the example of a company, or a handful of companies, can be decisive. By ceasing to question the status quo, companies allow a moment of reflection on the choices they make when it comes to political activity. Where will this lead?
The true purpose of society is best understood through the actions it takes. We have seen signs of change from business on environmental concerns and many social issues and now in the defense of democracy. They declared their intentions. The job now holds them accountable.
Judy Samuelson is executive director and founder of the Aspen Institute’s Business and society programand author of “The Six New Rules of Business: Creating Real Value in a Changing World.”