Government, stakeholders and interest groups influence US business, but the companies themselves remain in charge for now

Government, stakeholders and interest groups influence US business, but the companies themselves remain in charge for nowCommitment to corporate responsibility and sustainable practices by US businesses is in many respects enlightened self-interest. External influences in the form of interest groups, NGOs, peer companies or consumers have been a greater driving force for companies to become more engaged in corporate responsibility efforts than legislators or regulators. However, those relationships are evolving.

Notably, political and governmental institutions are less influenced by popular sentiment and pressure from NGOs, and corporate America has a larger voice in policy-shaping within the US. There are no laws currently that require US companies to discuss, measure or report their corporate responsibility activities, and neither are there rules on how to report such activities should a company choose to do so. There are also no federal or state regulations on corporate responsibility practices overall.

Companies and industry groups have had to determine which of the multitude of standards, certifications, labels and awards that rank sustainability and responsible business outcomes are most appropriate for their business. Companies have begun to turn to international standards such as the Global Reporting Initiative’s G3 standards or ISO guidelines to help provide vetted, trustworthy benchmarks and standards.

The federal government has shown interest in corporations becoming more socially responsible, primarily through volunteerism and philanthropy. And despite the lack of any specific federal regulation, a 2005 report from the US Government Accountability Office (GAO) found that there are 12 federal agencies that employ more than 50 programmes, policies and activities that either endorse, facilitate, partner or mandate corporate responsibility activities.

These programmes are not, however, designed for the purpose of creating more corporate responsibility activity – that is an ancillary result. Examples include the Department of Commerce’s training on corporate stewardship and the Overseas Private Investment Corporation’s mandate that companies must meet responsibility-related criteria to receive investment support from the US export credit agency.

Programmes created to help facilitate corporate-community engagement activity include the 1997 Presidents’ Summit for America’s Future, the Bush administration’s Businesses Strengthening America and the White House Office of Civic Participation and Innovation.

Interestingly, how corporate responsibility in the United States is interpreted is partially a function of the role that the federal government plays, or does not play, in society. For instance, the US does not have a universal federal healthcare programme and therefore provision of healthcare benefits to workers is an example of how a company is operating in a socially responsible fashion.

This and other employer “benefits” include scholarships for employees seeking higher education, financial assistance for adoption services and more generous paid leave policies than that mandated by law.

US companies must consider, however, regulations that impact sustainable practices and expectations among stakeholders – both those that are specific to their sector and those that apply to all businesses. Regulations can be categorised as industry-specific (such as banking’s Community Reinvestment Act), issue-specific (Clean Air Act) or financial (Sarbanes-Oxley Act). Although there is pending legislation on a number of issues, such as the Food Safety Enhancement Act and financial reform bills, the approach of federal regulation towards corporate responsibility issues remains a light touch.

Companies have noted that this lack of regulation is not without its downside. The absence of standards results in a lack of parameters on what companies should measure, acceptable levels of activity and benchmarking against other companies. Interestingly, in a recent Ethical Corporation survey, some US companies highlighted frustration at a lack of regulation relating to business responsibility, and some expressed the exact opposite, stating that rules get in the way.

Many US companies rely on industry associations to serve as their voice on topics relevant to their business, particularly within the regulatory environment. Companies within a particular sector share many of the burdens and risks that corporate responsibility programmes are hoping to mitigate. Although competitors in the marketplace, peer companies are sharing best practices and ideas for innovation in the field of responsibility.

Michael Jacobson, vice-president for corporate social responsibility at Intel, has noted increased collaboration in the high-technology industry. “We have the Electronic Industry Citizenship Council, which has helped companies collaborate on challenges we all face,” he says.

In addition, Jacobson notes collaborative efforts made in social impact areas of education with companies such as Microsoft and Cisco. “We want competitive differentiation, but also we understand that cooperation is necessary and valuable.”

Organisations at the national and local levels are being pressured by their memberships to provide education and guidance on sustainability-related topics. Associations have responded by moving sustainability up the agenda at annual conferences and developing certification in these areas for individual members. For instance, the Food Marketing Institute (FMI) is sponsoring a joint conference for its members on corporate responsibility, and including NGOs and stakeholder groups as participants to advance conversations and to exchange on relevant issues.

The relationship between government and corporations continues to evolve. Looking forward, some companies are now seeking greater clarity from federal legislation to help them benchmark and measure sustainability efforts around issues such as carbon reduction.

Other companies are now discussing how to marry their corporate responsibility platforms with lobbying for a continuation of light-touch regulation – for instance, a company may lobby against the reauthorisation of the Clean Air Act while stating that it is taking steps to reduce its carbon footprint anyway.

Non-profits – a local and national presence

The US is home to about 1.4m non-profit organisations and NGOs. Of these, about a third have gross receipts more than $25,000. The sector is growing and incorporates a diverse number of organisations, including charities (such as after school programmes or hospices), social clubs, trade unions, industry associations and advocacy organisations. Due to the size and nature of the US, the vast majority of NGOs are local, rather than national, in scope.

Locally or nationally, NGOs are growing as resources for companies that wish to learn about, promote or network with peers on sustainability and responsible business issues.

Nationally, Business for Social Responsibility is the leading NGO, with other organisations addressing particular areas within the field, such as the Ceres coalition (environmental sustainability) or the Hands On Network (employee volunteerism).

Peer organisations exist locally, such as New Hampshire Businesses for Social Responsibility to support the needs of small to medium-sized businesses in communities. Additionally, organisations such as chambers of commerce provide advocacy, education and promotion of good practice as a part of their suite of service offerings to members.

Advocacy-focused international NGOs, such as Amnesty International, Greenpeace and the Red Cross, are generally well established, recognised and trusted brands within the US. Tax laws on non-profit tax-exempt status preclude such organisations from engaging in direct political activity, such as advocating for a candidate or lobbying for legislation passage. However, such NGOs are sophisticated in conducting public awareness campaigns and organising consumers and shareholders on issues they care about.

Likewise, NGOs are evolving their expectations of and approaches to corporations, seeing them less as adversaries and more as potential allies. The Environmental Defence Fund’s work with Wal-Mart is a prime example of this.

Higher education – better learning

The late 1990s saw a shift in the role and expectations that students and the business community had for business schools to address the issues of corporate responsibility and sustainability within their curriculums. This evolution is partially a result of highly publicised corporate scandals, but also because students coming of age saw corporate responsibility not as an optional activity, but as a core value of how business should be done.

MBA programmes are responding, but corporate responsibility remains a niche subject. The Aspen Institute has studied the trends on business schools related to sustainability issues and finds that 69% of MBA programmes require students to take a course dedicated to business and society issues, yet just 7% of academics at the surveyed business schools have published scholarly articles in peer-reviewed business journals that address social, environmental or ethical issues.

Some business schools are taking advantage of this new area of study to create competitive differentiation for business school students and within the larger corporate community. Boston College created a centre for corporate citizenship in 1985 to meet the needs of business students and the corporate community through an organised and focused research facility.

The Haas school of business at University of California, Berkeley, created a centre for responsible business in 2003. Along with George Washington University’s institute for corporate responsibility, they are centres that train professors, students and corporate leaders in corporate responsibility.

Likewise, Harvard University’s social enterprise initiative aims to help create social value by the application of management skills in both the non-profit and for profit sectors.

Alyson Genovese, owner of Cause Solutions, is a consultant specialising in corporate social responsibility, community relations, employee engagement and stakeholder communications. She is based in the US state of New Hampshire.