IBM and Pirelli Tire North America are among a handful of companies that are joining together to adopt a new set of corporate responsibility principles aimed at helping businesses navigate a turbulent political and lobbying environment.
Danone North America, Aspen Skiing and DSM North America are among the other companies signing on to the effort for its launch Tuesday. Organizers said they expect to recruit additional companies over the coming months.
As part of signing on to the principles, developed with the University of Michigan’s Erb Institute, companies choose from a range of policies for political spending, from voluntary disclosures to a prohibition on using corporate funds for such expenditures, organizers said.
The moves come as corporations are under pressure from competing interests, including shareholders and customers who are prodding for more environmental, social and governance initiatives. On the other side, congressional Republicans — and even some Democrats — have sought to clamp down on ESG efforts.
“You can see over the last few years, companies are facing a lot more pressure about their political influence,” said Elizabeth Doty, director of the Erb Institute’s Corporate Political Responsibility Taskforce, which developed the principles. “They face more pressure to explain why they’re involved, more pressure to engage. And they are asking, ‘How do we engage responsibly?’”
Doty said the initiative grew out of informal conversations that began among executives and lobbyists who sought nonpartisan common ground to consider these matters.
Those conversations began amid fallout from the Jan. 6, 2021, attack on the U.S. Capitol by rioters who wrongly claimed that Donald Trump had won the 2020 presidential election. Following the violence, a number of companies suspended donations from their PACs, though most subsequently returned to donating. Overall, PAC donations were down about 10 percent in the 2022 cycle to the 147 Republican lawmakers who voted against certifying certain states’ results for President Joe Biden.
Maureen Kline, vice president of public affairs and sustainability at Pirelli Tire North America, said her company already has a “strong sustainability platform” and bans campaign contributions from the company globally.
“It seemed like a good fit,” Kline said of Pirelli’s decision to sign on to the principles. “The company believes in having a positive impact on society, in all of the ways that have to do with our operation.”
Pirelli’s U.S. outpost is in rural Georgia, a politically red enclave.
“This is a tricky, tricky time to be figuring out what to advocate for and how, so I think the Erb task force is also really trying to address this and provide a space where companies can try to figure some of this out together,” Kline said.
Noting the political divisions in America, she added, “We kept politics out of the factory,” in Georgia.
The Erb Institute is a partnership between University of Michigan’s Ross School of Business and its School for Environment and Sustainability.
Companies that sign on to the Erb principles must take one of three actions within the first year. They may adopt the Center for Political Accountability-Zicklin model code of conduct for political spending, which includes voluntary disclosures of spending to influence elections including through outside groups. They may choose the Global Reporting Initiative’s standard 415, which includes disclosures of lobbying activities, especially when a company’s lobbying position may seem out of alignment with its mission. Or, third, companies can opt for a ban on using any corporate treasury funds for election-related spending.
On the cusp of the 2024 presidential election cycle, “Companies face real risks for what their spending associates them with and what their spending enables,” said Bruce Freed, president and co-founder of the Center for Political Accountability. “Companies recognize they need to have this framework, the framework protects them. Policies allow them to set parameters.”
The Erb Institute said in a news release that it plans to add more companies as “supporters and participants” every few months, with the goal of at least 30 signed on in support by the end of the year.
“The interplay between government institutions and businesses engaging in both policy and politics is rightfully being scrutinized in ways not seen for generations,“ said Christopher Padilla, IBM vice president of government and regulatory affairs, in a statement. He added that as companies try “to navigate this moment,” the principles offer “an actionable framework to follow and so that, collectively, we can strengthen society’s trust in the ways that businesses impact policymaking.”