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Executive strategy: On business and democracy
by Kevin Sweeney - 9.28.07

It’s a bit absurd to describe business and government as separate societal sectors these days. Individual businesses and trade associations have greatly influenced national and state elections, laws and regulations. The U.S. Chamber of Commerce spent more than $200 million lobbying in 2006, and Altria Group (NYSE: MO) and General Electric (NYSE: GE) both spent close to $100 million. It’s safe to say that all of America’s largest companies engage with governments on a regular basis.

The same cannot be said about many of the small and mid-sized companies trying to offer more sustainable products and services, a fact that begs a few questions. Can these kinds of companies engage with governments? Should they attempt to do so? One can easily make a case that these are precisely the companies that should be talking to government officials, directly and often.

Companies trying to forge a sustainable path face all kinds of government roadblocks, most of which don’t look like roadblocks to those enforcing them. When this is the case, company leaders should speak up. They can ask to meet with legislators or regulators to explain their unique challenges and suggest alternative regulatory approaches.

Executive StrategyApparel manufacturers have been frustrated by regulatory guidelines for care labels, which push companies to tell consumers to wash garments in warm or hot water, even though cold water would do just fine. Those rules only began to change when innovative apparel industry leaders made calls and sent notes.

This is a useful example because it shows there are other motives for engaging with government beyond the assumed primary motivation of greed. It proves such engagements can be simple and direct. A phone call and a suggestion can lead to a meeting. A meeting sometimes leads to change. It’s worth the time and effort.

Companies can try to sell their products and services to government agencies, competing directly with all other sellers of the same products and services. Or they can push for regulatory changes to require government agencies to buy more sustainable products, a move that would clearly give their company an advantage over traditional manufacturers. Solar panel manufacturers are doing this in many states and at the federal level. If a company sets a higher environmental standard with its own manufacturing, it can push to make this the new regulatory standard. The change would benefit society and also give the company a competitive advantage. That’s a reasonable two-for.


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