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Interests groups advocate for public policies that serve the desires of their members and further the mission of their organizations e. Business efforts to influence public policy and government include not only individual company efforts but also business associations. These associations act collectively to promote public policies in the best interest of business in general and also in the interest of specific industries and localities. Examples of business associations engaging in efforts to influence public policy include the US Chamber of Commerce, the National Association of Manufacturers, the state-level business and industry associations, and the local chambers of commerce.

Since the Toxic Substances Control Act took effect in , the Environmental Protection Agency EPA has tested only two hundred of the eighty thousand chemicals in commerce and has regulated only five.

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The American Academy of Pediatrics in called for an overhaul of the thirty-five-year-old federal law governing toxic chemicals in the environment, saying it fails to safeguard children and pregnant women. Jerome Paulson, lead author of the policy statement. Individual businesses and different business groups differ on many public policies.

We find it dismaying that the Chamber neglects the indisputable fact that a decisive majority of experts have said the data on global warming are compelling and point to a threat that cannot be ignored. In our view, an intellectually honest argument over the best policy response to the challenges of climate change is one thing; disingenuous attempts to diminish or distort the reality of these challenges are quite another…I fear it has forfeited an incredible chance to play a constructive leadership role on one of the most important issues our country may ever face.

In contrast to the US Chamber of Commerce, the United States Climate Action Partnership USCAP was a group of businesses and leading environmental organizations that came together to call on the federal government to enact strong national legislation to require significant reductions of greenhouse gas emissions. USCAP had issued a landmark set of principles and recommendations to underscore the urgent need for a policy framework on climate change.

On the other side are those who deny that there has been significant climate change. Climate change denial is a set of organized attempts to downplay, deny, or dismiss the scientific consensus on the extent of global warming, its significance, and its connection to human behavior. Climate change denial has been mostly associated with the energy lobby and free market think tanks, often in the United States. A nongovernmental organization NGO is an organization that is not a private company and does not have formal affiliation or representation with government.

These are interest groups see the preceding definition , and they often try to influence private business behavior either directly by persuasion or protest or indirectly by being influential in shaping public policy. There are currently thirty thousand to forty thousand NGOs globally, and that number keeps expanding as the groups gain support and legitimacy. This includes many environmental organizations.

There are many NGOs influencing the operating context for sustainable businesses. Table 3. Figure 3. Since businesses are strongly affected by public policies, it is in their best interest to stay informed about public policies and to try to influence governmental decision making and public policy.

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There are different general ways that businesses view and act on their relationship with government. Some have argued that this was the prevailing dominant mainstream business view in the aftermath of the Great Recession at the end of the first decade of the twenty-first century. Another business perspective on government is that government should favor businesses and incentivize business performance and investment because businesses are the main source of jobs, innovation, and societal economic well-being, and therefore government should support businesses with grants, tax credits, and subsidies.

A third general view of businesses and government relations is with business in partnership with government in addressing societal matters.

State–Business Relations as Drivers of Economic Performance

This is in contrast to government being the regulator to ensure businesses act in a socially responsible manner. These views are not mutually exclusive. For example, the same solar business can use some of its interaction with government to try to maximize the benefits, such as favorable tax credits, it receives from government and at the same time work in partnership with government to achieve a social purpose, such as reducing carbon emissions, and then try to minimize its tax obligations.

Sustainable businesses, such as the companies presented in the case study chapters in this textbook—such as Stonyfield Yogurt, Oakhurst Dairy, and Green Mountain Coffee—tend to focus on their responsibility to the environment and societal impact and also tend to recognize that government policies and programs are often necessary to help them achieve their objectives and therefore are inclined to try to work with and even partner with government to achieve desired ends.

It is always important for sustainable businesses to understand how their efforts to achieve profits and to serve a social purpose are both strongly influenced by government policies, and it is always important for sustainable businesses to manage their relationships with government local, state, national, and international effectively. Once a business has an understanding of how government affects their operations and profitability, it can formulate strategies for how best to interact with government. There are three general types of business responses to the public policy environment—reactive, interactive, and proactive.

Reactive responses involve responding to government policy after it happens. An interactive response involves engaging with government policymakers and actors including the media to try to influence public policy to serve the interests of the business. A proactive response approach entails acting to influence policies, anticipating changes in public policy, and trying to enhance competitive positioning by correctly anticipating changes in policy.

For most businesses, a combination of the interactive and proactive approaches is the best approach. In meeting challenges from nongovernmental organizations NGOs and the media, businesses may respond in a variety of ways, including the following:. When business is in a reactive response mode, it most often engages in confrontation of its adversaries. When it assumes an interactive response mode, it participates in dialogues with NGOs and the media and develops partnerships or coalitions to advance new policies and programs.

When business behaves in a proactive manner, it anticipates future pressures and policy changes and adjusts its own internal corporate policies and practices before it is forced to do so. While a reactive stance may sometimes work, it often only delays needing to engage in a more interactive or proactive way. An interactive or proactive approach is usually a better way to meet political and societal challenges while also protecting the reputation of the firm.

After discussions with RAN, Home Depot agreed to sell only lumber that was certified as grown from sustainable forests. Businesses often engage in a variety of tactics to influence government policy. This includes lobbying, political contributions, and interest group politics. Businesses lobby in different ways.

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This can include lobbying of Congress and state legislatures and executive branch agencies directly through its own government relations specialists, through an industry trade association, through consultants, or through a combination of all those avenues. For businesses, it can include owners and investors, employees, customers, suppliers, and all members of society affected by the organization. Business lobbying has a strong influence on public policies. There are more than 1, private companies in the United States with public affairs offices in Washington, DC, and more than 75 percent of large firms employ private lobbyists to make their case for policies that can benefit them.

This includes more than 42, registered lobbyists in state capitals across the nation. Business may engage in reactive defensive lobbying defending its own freedom from government regulation or interactive lobbying partnering with interest groups on policies that the firm can benefit from. Businesses can also choose to engage in social lobbying, examples of which include chemical companies with the best environmental track record joining environmental NGOs in lobbying for an increased budget for the Environmental Protection Agency EPA and retailers wanting to address consumer concerns joining interest groups in pressuring the Consumer Product Safety Commission to adopt more stringent product safety standards.

Corporations showing a willingness to join such public interest coalitions can gain reputational rewards from NGOs, the media, and public policymakers. In While oil, gas, and utility companies spent most of that money, renewable energy lobbying efforts were also sizable. Businesses also use campaign contributions to support their position and to try to influence public policies that can help them increase profits. Seven of the ten largest corporations in the world are oil companies, based on revenues. Their access to funds for lobbying and campaign contributions gives them a significant voice in the political system and on policies that can impact sustainable businesses.

There are a range of avenues a company might use in making political contributions. The most transparent and legitimate is that of forming a political action committee A private group organized to elect political candidates or promote a particular policy or political cause.

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PAC to which voluntary contributions of employees are amassed and then given in legally limited amounts to selected candidates. Not surprisingly, larger firms in regulated industries, or in industries exposed to greater risk from changing public policies, such as oil companies in during and after the British Petroleum BP Gulf of Mexico oil crisis, use PACs more often than other firms.

Beyond contributing directly to political candidates, firms can also advertise on ballot measure campaigns, and those contributions can come from corporate assets and are subject to no legal limitations.

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Federal Election Commission ruled that the government could not ban independent political spending by corporations, as well as labor unions and other organizations, in candidate elections. Business response can include participation in interest group politics. Interest groups play a key role in all democratic systems of government.

However, as an interest group is a group of individuals organized to seek public policy influence, there is tremendous diversity within interest groups. Business is just one of many interest group sectors trying to influence public policy see the discussion previously mentioned. Businesses will encounter interest groups that may support or conflict with their position on an issue. 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.

Public Policy and Regulation

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. 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.