In the recent Democratic debates, big business was called out as the source for many evils—maybe even all of them. And with good reason. Many criticisms of big businesses are legitimate. Some companies are tax dodgers, some pay low-level employees too little, some pay their CEOs and senior management too much, and virtually all pollute and contribute to climate change. Taken together, these criticisms are easily generalized to entire industries: big pharma, big tech, the fossil fuel industry. All painted as bad.
Several Democratic candidates are now focused on a deeper problem: the power that big business has to influence public policy. Lobbying and campaign contributions have become the source of power, and almost every big business is engaged. The equation is simple: more money invested equals more power to influence policy. So the bigger the business, the more they can invest and the more influence they have.
In a democracy, this power imbalance is dangerous. We can debate how dangerous, but we ignore it at our peril. There are too many examples of companies lobbying against the common good and public interest. Gun manufacturers lobby against stricter gun laws. Pharmaceutical companies lobby for stronger intellectual property rights and against government’s ability to negotiate prices. Fossil fuel companies, tech companies, agriculture companies: every industry has its agenda. Looking at the results, it’s easy to see that their efforts are paying off in preventing policy changes that the vast majority of voters want.
Why doesn’t this problem get more attention? One obvious reason is that it’s hard to prove. Lobbying and campaign contributions are notoriously opaque, hidden from public view. Companies aren’t required to disclose what they spend their lobbying dollars on, and campaign contributions are often shielded through super PACs. Some watchdog groups do their best, but the data they collect is general or anecdotal. Rarely do they come up with direct, damning evidence.
And that points to another reason why the problem is ignored: no obvious, easy solutions. This corruption of our government is systemic. Some of the Democratic candidates have good ideas for addressing the problem, like requiring a longer span of time between government service and lobbying (or even a lifetime ban), more accurate definitions of what constitutes lobbying, and even better pay for staffers on Capitol Hill to keep them from needing to chase the money.
But all these ideas seem to miss the root of the problem: companies have learned that they have power and influence. Marginal attempts to stem the tide won’t succeed. The tide will simply find other ways to break through.
Luckily, there is another tide growing within corporations themselves and among their stakeholders that could actually begin to turn things around. Increasingly, as employees and customers look for companies to behave better, we see encouraging examples like the walkout at Wayfair and employee-based campaigns at Amazon, Google, and Facebook.
One aspect of this trend is captured by the term “authentic.” More and more, stakeholders want companies they work for or buy from to be authentic: They don’t want the company to say one thing in its marketing and do the opposite in its operations and trade organization memberships or directly through its public policy interventions. And companies are listening. For example, Ben & Jerry’s, which has been a good company since its beginnings, recently announced an event that’s part of its campaign to reform the U.S. criminal justice system, and it clarified that the campaign is “not CSR, not cause marketing, but part of our larger, national campaign of business activism.” In other words, saying the right thing is no longer enough for authentic, responsible companies. They have to walk their talk.
Fossil fuel companies are attacked all the time for pretending to be green while continuing to invest in infrastructure that will burn the planet. The plastics industry is another example; even as it talks about the dangers of plastic pollution, it has already made investments in the U.S. to increase production capacity over the next 10 years by 40%. This type of inauthenticity has come to be known as green-washing. And stakeholders are increasingly critical of it.
Imagine how stakeholders would react if their favorite brands—maybe those that are not so bad—became completely transparent in their lobbying and organizational memberships. It would deepen the trust and loyalty they feel toward those companies and thereby deliver a powerful competitive advantage to them. Companies that can prove their authenticity goes as deep as their lobbying will build more loyalty than those that don’t.
There are many ways for a big business to stop being bad and be more authentically good. But lobbying is hidden. So for now, there’s little incentive for companies to stop being bad in that way. What could change the paradigm is if a few big businesses take the responsible step of cleaning up their lobbying and then publicize it. Adding transparency about lobbying to their list of good works could turn a not-so-bad big business into a truly good business. Once a few leading companies do it, others will need to follow.
Who’s going first?
Jeffrey Hollender is CEO of the American Sustainable Business Council, the leading business policy group representing responsible businesses. He was co-founder and CEO of Seventh Generation.