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Longer-Distance Relationship for Companies + Public Sector

Updated: Oct 24, 2023

We transferred a couple of boxwoods from the edge of our house further away to the edge of our front yard. My husband and I looped a wide circumference of scoops around the plant's roots. We underestimated how deep we’d need to dig to be able to get the full, main root structure out alive. It was a back-breaking project and when we freed that first bush, the whole street heard us holler in excitement. Corporate influence on government is placed too close to the house and is growing deeper. It will be hard work, but we need to move it further away while realizing we need it to survive.

There is a long list of ways companies influence the public sector

Many focus on just increasing transparency of companies’ donations to elected officials. That’s important. Also, the truest scope of how companies influence our country’s government – elected officials at every level, departments and services at every level - goes much further: hiring lobbyists, making financial donations to campaigns, making financial donations to organizations which transfer money to candidates and elected officials, insisting on apolitical internal dialogue, offering time off to vote, paying taxes, hiring accountants to reduce how much tax the corporation pays, under-paying workers so they rely on government programs, selling products to the government, and internal communications which undercut or disparage government’s effectiveness.

Major media and long-standing watch-dogs follow these issues

There are lots of places we can learn about the nuances of this web of issues. The attacks on the US Capitol on January 6th brought about a fresh round of scrutiny specifically on donations, both from major media outlets and from those who have watched the issue for a long time. This piece isn’t about the fluctuations in donations which is well-covered already. Here’s one article from HBR and one from Fast Company that are good. Instead, I’m interested in the wider scope of activities companies use to critique, influence, use, and sometimes contribute positively to the work of the public sector. Further, and what most would expect from me, is how that shows up in nonfinancial (or ESG) reporting. Not surprisingly, it could be better.

It's not impossible to find companies' reports of some of their activities

Many companies share reports on political engagements and donations. You can find them fairly easily on their websites. Here's one from Comcast and one from Capital One. There are also references to activities directly in some company's reports; VMWare is one example on page 43 of their ESG report. That’s positive. As the list above would hint, donations and lobbying are only one view of the inter-connected and deeply rooted web of activities. The individual reports cited are also siloed from all other reporting. As we observe such a rise in attention and regulation of sustainability reporting, it would seem to me that while we need the activities to move further apart, we need the reporting to move closer together.

Here are some signs that it is happening. The World Economic Forum’s Measuring Stakeholder Capitalism: towards common metrics has two examples. It includes data on taxes paid. It also includes text on lobbying behavior. The Corporate Knights guidance for 2023 includes a new KPI on political influence. Lobbying, political activities, and taxes all show up in the S&P’s CSA Handbook (formerly DJSI). What this tells me is that it’s on the list in various ways, but also feasible to avoid or bury.

Metrics that could serve as indicators of a company's political influence

The S in ESG metric I’ve analyzed the most over the past 15 years is Total Community Investment, or it’s old name total philanthropic contributions. It is very straightforward to find this number in a company's report. It’s not always straightforward to understand what each company has included or excluded in the total. We can learn from this when building future metrics.

What I picture when it comes to political involvement is related, but split into two numbers:

Total donations to influence legislation ($)

Total spent on FTEs or contractors to influence legislation ($)

Or Number of people (FTEs and Contractors) to influence legislation (#)

These focus on two specific activities from the longer list. They are best proxies to give those reviewing a company's actions an indicator of how they interact with the public sector. The narrative would then describe, briefly, what is included in each of those numbers. This is a good place to talk about the fact that some influence of legislation helps our country. The amounts of money companies spend on science, engineering, and many other fields that lead to innovations is huge. This knowledge and level of expertise may not be accessible to those writing legislation. For example, discovering a certain ingredient is harmful is useful information for public sector departments. Discovering a material which is more sustainable but still strong enough for infrastructure projects is useful information for public sector departments. Most people’s knee-jerk reaction to those comments is to point out all the ways companies have withheld information or used it to the advantage of making money rather than helping the public. Both of these things divergent realities are true.

Picturing the future

In the Better Next I imagine, the three sectors as we know them become more specialized in what they do best. They reinforce and contribute to each other’s growth and success as ethical decision-making becomes the default and people-oriented capitalism leads us to a prosperous future for all. It may take some up-rooting and moving around, but not with the expectation that any institution along the sectoral spectrum needs to die in the process.


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