The Influence of the Responsible Corporation

CSR strategies can be more impactful than government regulation

July 6, 2022. As the United States federal government continues to push more decision-making for national social and environmental concerns to state and local levels, we have seen individual cities and states step up to fill the void by enacting their own local ordinances and laws. We’ve also witnessed another powerful player join the fray that strongly influences the way these local laws are implemented and enforced: the U.S. corporation.

Like no other time in its history, except perhaps the early 1900s when mine town employees used company scrip to buy from the company store, have large US companies had such an outsized impact on the fabric of our society. Companies are using their considerable economic might to influence the direction of a wide range of social and economic concerns.

Recent evidence of this can be seen in the corporate response to the reversal of Roe V. Wade by the Supreme Court, with over 60 major companies now announcing they will provide some type of financial support for their employees that must travel to different states to receive abortions or other reproductive care. We also see similar examples of this type of corporate response to issues of environmental concern, issues surrounding gun violence, and human rights issues regarding equality and the advancement of civil rights.

Through the lens of corporate social responsibility (CSR), many companies are fulfilling a new-found duty to their employees, customers, and communities that goes well above and beyond delivering a product or service. In fact, companies are realizing that this type of civic engagement yields very material rewards. It increases brand awareness and brand value. It increases employee retention and loyalty. It improves recruitment for new staff in a competitive employment market. It provides competitive advantage and differentiation. It creates strong engagement with customers. In short, when done correctly, it’s very good business.

In response, we’ve seen some cities and states create legislation to prohibit or dissuade companies from supporting social issues that run counter to political agendas. A recent example includes Florida’s removal of Disney’s special tax status in retribution for the Company speaking out against a state bill prohibiting discussion of sexual orientation and gender identity in public schools. Or, Texas requiring companies doing business with the state having to verify that they do not discriminate against the gun manufacturing industry in any way. Or Kentucky, prohibiting the state from doing business with banks that are divesting from fossil fuel resources to combat climate change. We anticipate this type of activity to grow as political organizations feel threatened by corporate support of these social or environmental concerns.

However, states will soon find the economic benefits to voters of having these companies present and active in their communities strongly outweigh the short-term political gains of passing this type of anti corporate legislation. While corporate advocacy has been in existence in some form for over 50 years, governments must understand that today’s corporation has the power to mobilize tremendous amounts of funding, taxable revenue, employees, and customers. And, in the end, these employees, customers, and taxpayers are voters.

With this power and influence comes great responsibility, and companies must have well thought out, transparent corporate social responsibility strategies in place. Companies must create these strategies with inputs from their stakeholders, specifically their employees. And companies must ensure these activities are aligned with their overall business mission and vision.

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