BUS604: Innovation and Sustainability

Businesses face a complex array of formal and informal public policy actors beyond (just) government. Business practices can be strongly influenced by citizen actions that bypass the formal institutions of government. Though they lack the economic clout and resources of industry as tools of influence, citizen groups do possess other tools. They can lobby and litigate, and they can get out large groups to demonstrate in public events and use exposure in the news media as a vehicle for getting their perspective heard.

Businesses are influenced by direct citizen activism and protest. Organized interests and nongovernmental organizations (NGOs) have been the source of influence. After their experiences in affecting public policy in the 1960s and 1970s, many citizen activists grew skeptical of the government's ability to respond rapidly and effectively and discovered they could often accomplish their objectives more directly and quickly. Citizen groups have both confronted and collaborated with corporations in order to foster change.

Finding that confrontation is often counterproductive and that government lobbying is protracted and ineffective, NGOs often turn to collaboration with business to resolve issues. Indeed, as both sides have matured and grown less combative, business and NGOs have learned to work together to resolve problems. There are many examples of such productive collaboration, the most prominent of which have emerged on the environmental front. For example, the Rainforest Action Network (RAN) has worked with Home Depot, Lowe's, and several timber companies in an initiative to protect old-growth forest. RAN combines elements of activism and even militant protest along with peaceful collaboration.

The EDF is an example of an NGO working cooperatively, in contrast to a confrontational approach, with corporations. The EDF was an early actor in this way. In November 1990, the Fund began to work with McDonald's to help the company phase out its polystyrene clamshell food containers. It was a collaborative effort to significantly reduce McDonald's negative environmental impact by cutting its solid waste. It was the first major partnership between an environmental group and a Fortune 500 company in an era when environmental and business interests were often at odds. EDF and McDonald's worked together to develop a new solid waste reduction plan. The initiative eliminated more than 300 million pounds of packaging, recycled 1 million tons of corrugated boxes, and reduced waste by 30 percent in the decade following the initial partnership, and this was all achieved at no additional cost to the company.

Beyond the traditional political tactics, NGOs also have developed new tactics to pressure business. Ralph Nader pioneered the use of the shareholder resolution to protest such corporate actions as discriminatory hiring, investment in South Africa, nuclear power, environmental impacts, and corporate campaign donations. Since the 1970s, religious organizations, most prominently the Interfaith Center on Corporate Responsibility, have been the chief sponsors of such resolutions. More recently, they have been joined by mainstream shareholder groups, such as large institutional investors and pension funds, in calling for major changes in corporate governance and more recently for more attention to businesses' environmental footprint and contribution to greenhouse gas emissions and global warming.

Businesses have to also understand the importance of another actor in the business and public policy sphere - the news media. The media provides important functions for both society and business. For example, it influences the public policy agenda by filtering the various events and interest-group areas of attention and it can serve as a sort of "watchdog" over both business and government exposing any unethical practices. Business must constantly monitor the media and be ready to respond. In particular, since the media are usually a pivotal actor in any corporate crisis, company "crisis management" plans must include steps for dealing appropriately with the media and other critics.