What Impact Do Politicians Have On Corporate CSR?

With politicians like Donald Trump and Boris Johnson leading the United States and United Kingdom respectively, it may seem foolish to look to them for leadership on issues pertaining to corporate social responsibility, and yet new research from San Francisco State University suggests that’s exactly what CEOs are doing.

The study suggests that business leaders are less likely to follow their values when they agree with the incumbent president. This perversely leads to greater investment in corporate social responsibility (CSR) when they disagree with the president.

The researchers studied CEO behavior and the CSR activities of their organizations from the mid 1990s to the mid 2000s. The analysis found that liberal CEOs were more likely to engage in CSR when they believed the values inherent in them, such as environmental conservation or diversity, were under threat from the president.

“Republican presidents aren’t as interested in those values, so business leaders think, ‘We need to do more to promote and protect these values,'” the researchers explain.

Threatened values

When the values of political and business leaders conjoin however, the investment in CSR fell by around 18% on average. The researchers posit that this is likely because they feel more confident that the government will take responsibility for things, so they don’t have to do so much themselves. As such, they funnel their investments into boosting corporate performance instead.

The researchers continued their exploration to examine whether politicians implicitly encourage poor corporate behavior, such as increasing pollution or removing policies designed to protect minorities. Thankfully, no such evidence materialized to suggest that the values alignment between political and corporate leaders influenced this.

Nonetheless, the findings do shed an interesting, if somewhat surprising, perspective on the way CSR investments may fluctuate depending upon the political environment.

“You think that the people who are committed to social responsibility will stay committed regardless of the context,” the researchers explain. “[CEOs] may change their stance if the context changes.”