How accountants can embrace corporate political responsibility
As companies increasingly embed ESG activities into their business practices, a new push for corporate political responsibility is emerging.
Today, many businesses rely on an outdated model of engagement on public policy and civil discourse, often defaulting to trade associations and government relations departments to make decisions on their company’s stance on societal issues.
As more and more companies commit to embedding environmental, social, and governance (ESG) activities into their business practices, a related push for corporate political responsibility (CPR) is also taking shape. As a governance framework, CPR broadly includes the issues a company wants to take a stand on, how they will employ their resources and influence, and ensure transparency in doing so.
With investors and stakeholders taking note, accounting firms are following suit. By embedding a socially responsible and sustainable CPR strategy and governance framework, accounting firms can positively impact society — and set themselves apart from the competition.
What is corporate political responsibility?
Similar to corporate social responsibility (CSR), corporate political responsibility (CPR) is defined as how a business engages with and influences regulation, institutions, and public discourse to better society. This could include lobbying and advocacy, political spending, and relationships with trade organizations.
With so much at stake, businesses need a set of principles and guidelines to navigate CPR effectively. Often this responsibility lies with the department that oversees ESG, particularly the governance aspect.
A successful CPR framework integrates social and environmental values into business operations and interactions with stakeholders, including supply chains and trade associations. It’s an increasingly important piece of a company’s overall ESG strategy — and it has the potential to boost stakeholder sentiment and catch the eye of investors.
Why is corporate political responsibility important?
Essentially, corporate political responsibility resides at the intersection of business, politics, and civil society. From a transparency perspective, it is important as a framework for businesses to employ their resources and influence in ways they believe will further the public good.
While it is easy enough to talk about social and environmental issues, CPR ensures a company also puts words into action when it comes to public policy and civil discourse. It’s more than just the “why”— it’s the “how.”
Why should accounting firms embrace corporate political responsibility?
Due to increased demand from investors and stakeholders, a growing number of accounting firms are incorporating environmental and sustainability goals into their business strategies.
By going one step further and committing to corporate political responsibility, accounting firms can improve their brand reputation and boost sentiment by committing to action on the topics that matter most to their stakeholders.
As sustainability and related disclosures become law of the land, the ability for accounting firms to set themselves apart with proactive ESG initiatives and CPR frameworks not only makes the world a better place but also increases attractiveness to investors.
How can my firm incorporate corporate political responsibility?
As a critical part of the “G” in your ESG strategy, the first step to developing a CPR governance framework is to adopt internal policies that ensure legitimacy, transparency, accountability, and responsibility for all of your firm’s political involvements.
At a high level, this means disclosing all political activities and ensuring these activities align with your firm’s values. It also means obtaining consent when employing others’ capital or engaging employees, and adopting lobbying guidelines that ensure your firm’s political influence supports the foundational systems on which markets, society, and life depend.
How do I start my firm’s corporate political responsibility journey?
To start your firm’s corporate political responsibility journey, consider engaging with your employees, clients, and stakeholders to reflect on and prioritize ESG-related topics like climate and social issues.
As you review your ESG strategy, consider these questions to build the basis of your CPR framework:
- For what reason would we genuinely engage in civic or political discourse?
- How are these political interests aligned with our mission, vision, and values?
- How do we ensure our political activities support the betterment of society?
- How do we ensure transparency around our political activities relevant to stakeholders?
Based on these reflections, develop a framework that prompts leaders to identify a legitimate basis for political engagements and prioritizes your firm’s actions in relation to issues like climate change, privacy, education, social justice, and economic opportunity.
The long-term benefits of corporate political responsibility
In the debate on how to solve society’s problems, we often lose sight of the importance of foundational systems in achieving more sustainable and equitable outcomes. Market rules, civic institutions, and civil discourse are key in shaping whether ESG-related goals actually succeed — and CPR acknowledges that fact.
We all know that businesses are motivated by external pressure from employees, customers, investors, and other stakeholders. But there is a need for clarity beyond simply checking off the box in an ESG-related disclosure.
CPR helps businesses answer the question of what they stand for and when they will act using the resources and influence at their disposal — and that’s a powerful step that can benefit us all.
