Mixing Business with Politics: Does Corporate Social Responsibility End Where Lobbying Begins? Alvise Favotto, University of Glasgow Kelly Kollman, University of Glasgow 1

Overview Research Question: – How [if at all] do firms incorporate information about their political engagement in their CSR disclosure? Motivation: – CPA scholarship: Firms attempt to influence government policy in favourable ways through activity such as lobbying, campaign finance etc. – Private CSR governance: Firms voluntary engage in CSR programmes aimed at improving the relations they have on the societies in which they operate – Very little work on the interaction of these two modes of political behaviour 2

Overview Research Question: – How [if at all] do firms incorporate information about their political engagement in their CSR disclosure? Theoretical background: – Private CSR governance: Increasing number of firms entering voluntary CSR schemes Compliance with schemes is likely to vary depending on issue covered (Anner 2012) – Implications for transparency on political activity reporting? – Business management literature: Models CPA-CSR relation in terms of alignment (De Hond et 2014) Mixed evidence on decision-making alignment – Implications for alignment of CPA disclosure in CSR reporting? 3

Methods and Data Content analysis of the CSR reports – 100 TNCs (50 US and 50 German) at 3 points in time ( ; ; ) – Firms are drawn from Compustat Database – Two sub-samples are roughly matched in terms of firm size and mix of sectors – Time periods represent formation of sustainability field. – German / US comparison examines two different CSR traditions A self-generated coding frame: lobbying arena; lobbying areas mentioned; firm’s position; integration Complement quantitative approach to TNC norm reception and practice with qualitative textual analysis 4

Lobbying Reporting by German and US Firms over Time 5

Average Integration by German and US Firms over Time 6

Average Lobbying Areas Coverage by German and US Firms over Time 7

Aggregate Lobbying Areas Coverage over Time Sector100%40%77% Taxation0%13.33%38.89% Climate Change0%26.67%33.33% Other Env.0%26.67%38.89% Labour reg.0%13.33%22.22% 8

Lobbying Areas Coverage by German and US Firms over Time Sector 0%20%57.14% Taxation 0% 14.29% Climate Change 0%40%57.14% Other Env. 0%40%35.71% Labour reg. 0% 21.43% Sector 100%83.33%90.91% Taxation 0%33.33%54.55% Climate Change 0%33.33%18.18% Other Env. 0%33.33%40.91% Labour reg. 0%33.33%22.73% GermanyUSA 9

Average Area Position Disclosure by German and US Firms over Time 10

Findings A growing number of firms give an account of lobbying activity in their CSR reports, indicating they consider (at least rhetorically) their public policy influence to be a CSR issue. US firms appear to be more likely than German firms to report on their lobbying activity especially in recent years. Level of transparency is growing yet remains limited. The majority of firms are reluctant to report on the details, and particularly their position on lobbying issues (or carefully select ‘safe’ issues). German firms are more likely to (rhetorically) align their account of lobbying activity with relevant CSR issues than US firms. 11

Findings German firms discuss their political activity as part of engaging in stakeholder dialogue on CSR issues Part of our stakeholder dialogue is also to participate actively in the political process, where we become involved and present our positions and viewpoints – either in direct dialogue with politicians or via our work with associations. Merck KGaA (2013 – p. 20) US firms use CSR reports instrumentally for communicate their position As a retailer, importer, health-care provider and employer of approximately 375,000 team members by the end of 2013, we play an important role in informing policy makers about many legislative issues. We advocate at all levels of government, with think tanks, NGOs and trade associations to ensure that the impact legislative and regulatory issues have on our business, industry, communities and team members is well understood. Target (2013 – p. 95) 12