McCain and Obama on corporate responsibilityJuly 2008
EP examines the policy plans on corporate responsibility that have been revealed by the two US presidential contenders in the early days of their race to the White House
Barring the possibility of a huge business scandal breaking in the run-up to the November elections for US president, corporate responsibility is likely to play a minor role in the campaigning of Democrat hopeful Barack Obama and his Republican opponent John McCain. But that's not to say the matter will be ignored altogether.
Already both candidates have come up with policy proposals likely to alter business behaviour in a number of areas, among them climate change, executive pay and corporate lobbying. Of these, climate change has so far taken centre stage. Interest in the subject might be expected from Obama, who shares a party with Al Gore, but McCain has also been vocal on climate change. Both candidates support a cap-and-trade system to reduce greenhouse gas emissions by business, but there are differences in approach. Obama would aim to impose an 80 per cent reduction in such emissions by 2050 on a 1990 baseline, while McCain proposes a less challenging 60 per cent over the same period.
Crucially, the Republican would (at least in the early stages) allocate carbon credits to companies for free rather than auctioning them, as Obama would do. Many scientists and environmentalists favour Obama's approach, which could create revenues of $30billion-$50bn (£15bn-£25bn) a year to fund research into alternative energy.
Both candidates have made loud noises about the need for companies to improve energy efficiency, with McCain going so far as to say that doing so must be 'a critical national goal'. However, Obama has initially come up with the firmer promises - to improve energy efficiency across the US by 50 per cent by 2030. Obama would also establish a goal of making all new buildings carbon neutral, or producing zero emissions, by the same date.
Both men support greater use of biofuels (to the dismay of some green campaigners), but Obama has talked tougher on oil companies, pledging a windfall profits tax. McCain, by contrast, promises a 'gas-tax holiday' that could save motorists $6.8bn on fuel duty over the summer months of June, July and August.
Although McCain is an enthusiastic free-marketeer who wants to cut corporation tax from 35 to 25 per cent and to extend free trade, he's not been afraid to condemn business for its excesses, and has warned that 'in a free market, there must be transparency, accountability, and personal and corporate responsibility'. He has been critical of 'extravagant salaries' awarded to senior executives, and has condemned the 'reckless corporate conduct' that led to the credit crisis. The Arizona senator has yet to propose any concrete policies, but he has taken a tough position on corporate lobbying by supporting restrictions on business contributions to political parties and pushing for better disclosure of how candidates and campaigns are funded.
Here too Obama has taken a more interventionist stance, warning corporate lobbyists that 'their days of setting the agenda in Washington are over' and claiming to have refused business funding for his campaign. If elected, the Illinois senator has pledged to create a public 'contracts and influence' database of how much federal contractors spend on lobbying, what contracts they get, and how well they complete them.
McCain has so far been relatively quiet on other social and environmental measures that relate to business. Obama, by contrast, would create a Credit Card Bill of Rights to stop financial services companies 'exploiting consumers with unfair practices', set up a national programme to promote flexible working, increase government incentives for telecommuting, and provide businesses with money to help them hire more staff with disabilities, using programmes developed by the drug store chain Walgreens and hotel group Marriott as a model.
He has also mooted the possibility that the US would not sign trade deals with nations that fail to meet environmental and safety standards, reserving his harshest attacks for the North American Free Trade Agreement. US withdrawal from this key trading arrangement with Mexico and Canada is unlikely, but the political energy devoted to it focuses attention on the role of the private sector in poverty alleviation, particularly in Latin America. This is likely to lead to additional support from the US government for private-public partnerships that promote social and economic development in the region. The Bureau of Democracy, Human Rights and Labor at the US Department of State already funds such work in six Latin American countries within the agricultural, apparel and electronic products sectors (EP9, issue 7, p3).
It is early days in the campaign, and McCain may still have some policies up his sleeve, but the evidence suggests that Obama has CSR closest to his heart. Whether that will win votes remains to be seen.
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