Sustainability Corporate Social Responsibility Public Affairs
With demand for action on climate change now driving the mainstreaming of sustainability as part of core business strategy and operations, traditional service providers are being forced to rethink their offerings. The big accountancy, legal and strategy houses, management consultants, marketing agencies, PR and communications firms and government relations specialists are all working on how climate, sustainability and the broader corporate social responsibility (CSR) agenda can fit for them and their clients.
This Hawker Britton article focuses on the integration of sustainability and CSR with public affairs, a professional service area that typically comprises government relations, strategic communications and campaigning for targeted political outcomes. In Australia and internationally it’s a connection that is still in its formative stages, although the logic is simple. Companies which can engage constructively and add value to government policy-making initiatives on defining challenges – like climate change, energy security, water crises and public health – stand to gain influence, competitive advantage and an enhanced position in the community.
Global energy giant BP is a classic example of a corporate pioneer in this field – with its decade-plus championing of energy reform and greenhouse emissions reduction as business objectives. This includes helping governments to design and launch carbon trading schemes, after having declared climate change its ‘number 1 public policy issue’ in the late 1990s. In Australia, highly-successful companies that have made early forays into incorporating sustainability into their public affairs activities include Westpac in banking, Origin in the energy sector and Visy in recycling1.
To preview, the core arguments being made in this article are:
- Sustainability performance and positioning is increasingly being used by investors and others as part of their screening of businesses, with a growing focus on how companies shape, present and prosecute their public policy agenda in big-ticket community-interest areas such as climate, environment, health, education, safety and law and order
- Government relations and strategic communications, or lobbying and spin-doctoring to use more earthy descriptions, are as integral to achieving ‘good’ policy outcomes as they can be to ‘bad’ ones
- It is productive to see these public affairs strategies as essentially content-neutral processes that can be highly applicable to advancing the often complex policy formulations required to design and deliver sustainable solutions for major social, environmental and economic challenges
- For the pursuit of sustainability and CSR objectives, traditional public affairs needs to be widened to include greater transparency to and engagement with community-based stakeholders (who also are seeking to influence government policy and programs), and
- The practical path recommended for companies is to:
- Build a strong, consistent and open public policy agenda for your business
- Canvass your agenda and the reasoning behind it widely with diverse stakeholders including critics
- Take a flexible, problem-solving approach to make policy change ‘better’ rather than rigidly opposing change per se, and
- Support policy-makers by proactively and constructively contributing to the development and delivery of policy approaches and outcomes that are good for your business and can benefit society too i.e. find the policy ‘sweet spot’.
An era of scrutiny
The world of public affairs draws its fair share of criticism and scrutiny. Not everyone understands or likes it. Even within companies, the practice of ‘corporate relations’ or ‘public affairs’ is sometimes seen as mysterious, with hard-metrics focused business managers joking about the ‘dark arts’ of seeking influence and its sometimes opaque outputs. So it’s unsurprising that business and political watchdogs can react to corporate public affairs with suspicion or outright hostility over fears of covert activities and improper influence.
Such reactions logically follow two main paths. The first is a desire to regulate lobbying and related activity and force it into the open or even out of existence; the pragmatic second is to see that it inherently has value, and to seek to co-opt and adapt it to deliver better outcomes for society and the environment.
The idea that lobbying and spin-doctoring are just as easily associated with winning ‘good’ outcomes as ‘bad’ ones – and recognizing that perceptions of what’s ‘good’ or ‘bad’ in this context will depend on one’s corporate and personal interests and beliefs – might seem obvious. But it is worth examining from the perspective that corporate and industry lobbying is regularly the focus of public concern, including among advocates for causes like the environment, social equity, human rights, community health and well-being, and consumer protection.
In response to such concern, in recent decades many jurisdictions have seen increasing scrutiny and restrictions on political giving, the advent of formal registers for lobbyists and tightening of probity procedures for government procurement and tendering processes.
None of the above means that lobbying governments and campaigning to influence public opinion don’t have legitimate roles in a robust democratic system. To the contrary, they are tactics used constantly by major civil society organisations like environment groups as well as corporations, although the former argue they are deploying in the public interest rather than private interests. The riposte business needs in this contest is to show clearly how its policy prescriptions add value for society as well as the financial bottom line of a vested interest; with creating jobs and investment not enough on their own if they come with a high social or environmental price tag attached.
It’s more instructive to see public affairs as a set of processes that are content-neutral in and of themselves; and morally neutral as well assuming they are conducted ethically and legally. Rather than decrying use of these processes, it’s more useful to delve into the alignment or otherwise between the CSR public positioning a company takes through communications such as corporate sustainability statements, media releases and environmental policies on one hand, and its likely more discreet public affairs activities and affiliations on the other.
A key risk for any organisation, putting future value at stake, is being caught saying one thing to advance its public reputation, while doing another in the background to protect other perceived interests. For example, a car-maker publicly trumpeting green vehicle ambitions while privately lobbying against government increasing fleet fuel efficiency targets risks compromising its reputation, and may also be undermining its future competitiveness in a low-carbon emission, high oil-price market2 (of which we had a taste in 2008).
An international perspective
In the sustainability and corporate social responsibility context, these questions have been addressed in recent times in the UK by one of the world’s biggest and most influential environment organisations, WWF, in partnership with pioneering consultancy and think tank SustainAbility, and Brussels-based public affairs and strategic communications firm Blueprint Partners. Their 2007 paper is called Coming in from the Cold: Public Affairs and Corporate Responsibility.3
The UK and Europe have led Australia and America on CSR and corporate sustainability, so it is understandable that the issues were already being raised there two years ago. The paper’s foreward states: ‘It is our experience that for too many companies, corporate responsibility and corporate public affairs exist in two separate universes with little effort to establish common approaches or understanding between them. We believe that this represents a huge wasted opportunity to deliver greater value to individual companies and to society by developing more effective and strategic approaches to these two disciplines.’
Highlighting the investors’ perspective, the Coming in from the Cold paper draws a series of conclusions that help to frame why corporate sustainability and responsibility will increasingly connect with the public affairs agenda. These include changes in the operating environment such as technology forcing a more open communications reality on businesses, and society demanding more from companies in terms of sustainable practices – not just in regard to their direct impacts on the physical environment, but also how they perceive and influence the public policy one. In this light it forecasts a shift from activist pressure on businesses to investor pressure, from risk reduction motivation to protecting future value, and from tactical responses to core strategic ones.
An example of the paper’s thinking that resonates strongly following the global financial turmoil of 2008 is: ‘… market failure and the need for systemic change are also emerging as key areas of concern for some leading investors. This in turn is underlining investor interest in corporate public affairs activity. These investors single out businesses that are protecting future value through active shaping of policy frameworks to address key social and environmental issues, as exhibiting smart management.’
This echoes a familiar story. Efforts over the past decade to establish the business value case for sustainability and CSR have often focused on the ability to manage a variety of complex issues like environmental performance, workplace health and safety, community well-being, and stakeholder relationships in tandem with delivering financial success as being a proxy for good management skills overall. In the post-2008 era, in a world where financial recovery and climate change action need to co-exist, how much greater premium will appropriately skilled managers command with investors? Especially those who can demonstrate how they are creating long-term sustainable value for investors rather than transient short-term returns?
Putting theory into practice
Effective public affairs must deliver on a number of fronts. Key elements are to know what you want, who can help you achieve it, how you can get your case in front of them, what competing interests affect your submissions, and most importantly, how you can help policy-makers to credibly give you all or some of what you want. The latter point can include assembling significant third-party stakeholder support for what you are advocating, and providing practical guidance on how it can be delivered with public acceptance and policy integrity.
Getting all of this right is especially important in an era of reform-minded government, as is now the case in Australia, where the policy-making dynamic includes active reviewing of the status quo and wide consultation across the spectrum of affected interests. Merely talking to government is not the issue, and in most cases bluntly opposing any change is unrealistic. It’s cutting through and having impact on shaping policy change that counts.
To do this for sustainability – with its complex interactions between social, environmental and economic factors – requires engagement both directly with government, and also with other stakeholders such as NGOs, who in turn are putting their own agendas to the decision-makers in private and in public.
At the national level climate change, which is the pre-eminent sustainability issue of our times, is set to be one of the two main policy challenges for 2009; with the other being overall handling of the economy as recession threatens. The climate policy challenge, with the introduction of an emissions trading scheme by 2010 at its core, is a sweeping economic reform that affects state legislators as well, with major associated public policy reforms in areas such as energy efficiency, renewable energy, extended producer responsibility (EPR) for waste management and recycling, public procurement requirements, and R&D programs.
Change at this scale holds risks, but also is replete with business opportunities as restructuring and transitional arrangements unfold. Effective public affairs will mean being at the table and holding good cards – not only in terms of a business’ own operational performance and product set, but also in its marketing, its policy positioning and its advocacy.
What can your business do?
The practical path recommended for companies that want to create business value by aligning their sustainability and CSR endeavours with their public policy activities is to:
- Build a strong, consistent and open public policy agenda for your business. This should clearly identify where big-ticket social and environmental issues are relevant to the business’ operations and products e.g. health, law enforcement, community safety and container recycling for an alcohol beverage company; or climate change and energy security for an electricity utility.
- Canvass your agenda and the reasoning behind it widely with diverse stakeholders including critics. While you can’t expect to always win endorsement for your agenda, you will often gain valuable insights and ideas as you test your thinking and direction against those of others. If you can build alliances, even if only marriages of convenience, then you can approach policy-makers with third-party input or support to bolster your case.
- Take a flexible, problem-solving approach to make policy change ‘better’ rather than rigidly opposing change per se. Embrace the reality that the status quo often isn’t perfect and change is inevitable as society itself changes. The trick is to be part of the ‘change design team’ and to shape it to maximise advantage for your business in whatever ‘new order’ is arising e.g. tough new standards may ultimately protect your business from excessive competition by imposing significant barriers to entry that keep-out low quality or fly-by-night operators, and
- Support policy-makers by proactively and constructively contributing to the development and delivery of policy outcomes that are good for your business and can benefit society too i.e. find the policy ‘sweet spot’. Official policy-makers don’t have endless resources or a monopoly on good ideas. Companies that help them to make the case for change and put it into effect can open the door to long-term influence. While it is frequently possible to delay change by a public affairs strategy of determined opposition, as we have seen in Australia and the US in regard to climate change until recently, that may only put off the inevitable and extend damaging uncertainty.
If you have meaty issues, access to key decision-makers and their policy architects is always important. It allows organisations a chance to tell their story to a crucial audience. But they need to have a real story to tell, and it’s generally not enough to just complain about problems. Winning pitches are more likely to include solutions which can extend as far as building a case supported by hard data and drafting policy approaches and even indicative legislation.
Prima facie, policy prescriptions that will advance sustainability will benefit from good public affairs representation – lobbying, spin-doctoring and campaigning. However compelling arguments may seem to their advocates, the case won’t just be ‘made’ automatically on its merits in the absence of strong promotion. Active, positive and visible participation in the whole policy-making process by businesses that ‘get’ major social and environmental issues is the key to making sustainability, CSR and public affairs pull together. Done well, business and society will be better off.
* Rob Griggs (Associate) and Murray Hogarth (Consultant) advise Hawker Britton clients on public affairs strategies around climate change and sustainability. Rob has worked in senior positions in the NSW Premier’s Office and Public Service. Murray is formerly a Sydney Morning Herald environment editor and longtime corporate sustainability strategy adviser with Ecos Corporation. Contact them on (02) 9279 0200 or by email – [email protected] and [email protected]
1 Westpac, Visy and Origin were among the members of the original Business Roundtable on Climate Change (along with IAG, Swiss Re and BP Australia) formed with the Australian Conservation Foundation (ACF) in 2003. In April 2006 it released a major report outlining the business case for early action on climate change, which represented a public policy challenge to the official position of the then Howard Coalition Government.
2 A 2006 article in the Financial Times by Michael Massing, ‘The Curious Paradox of American Corporate Lobbying,’ argues that expensive US car industry lobbying against the Corporate Average Fuel Efficiency (CAFÉ) standards over more than two decades opened the door of the American market to their key Japanese rivals Toyota and Honda. While short-term success with stopping CAFÉ heartened Detroit, it led US manufacturers to focus on fuel-guzzling SUVs while the Japanese muscled up on smaller, more fuel efficient models, gaining longer-term advantage.