Business Professor Tom Lyon ’81 Tackles Corporate Accountability

Analyzing obscure trends like greenwashing (a deceptive marketing tactic where a business falsely promotes its products or services as environmentally friendly) and corporate accountability is Tom Lyon ’81’s specialty. Lyon, a professor at the University of Michigan Ross School of Business, studies how major companies disclose information to the public concerning their environmental footprints and how their level of honesty impacts society.

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Lyon ’81

University of Michigan

Recent decades have seen an evolution in the ways businesses, both large and small, relate to the greater community. Years of activism in areas as divergent as environmental research, civil rights, and organized labor have coalesced into the drive for Corporate Social Responsibility (CSR). While the subject is multifaceted, it refers to a shift of corporate priorities from shareholders exclusively to a wider array of stakeholders; employees, customers, everyday citizens, as well as investors. CSR concerns such things as a company’s environmental footprint and its promotion of economic equality.

In some cases, these objectives have moved beyond the corporate world and have been reflected in public policy. In 2017, however, the movement was dealt a blow when the Trump administration announced its intention to withdraw from the recently negotiated Paris Climate Accord, an international agreement with defined goals for reducing greenhouse gases. In 2021, the Biden Administration officially renewed its commitment to the agreement.

In the U.S. today, a lack of clear accountability standards allows companies to surreptitiously avoid responsibility — often through greenwashing by promoting their CSR initiatives to maintain the status quo. “In the last two to three years, there’s been an explosion of interest in greenwashing in the media, and I think that’s because there’s been an explosion of new greenwashing activity in the corporate world,” says Lyon.

This trend came as a surprise to him. A decade ago he expected a decline in greenwashing, but the recent trend prompted him to coauthor a May 2023 article titled “No End in Sight? A Greenwash Review and Research Agenda” for Organization & Environment.

In the piece, Lyon discusses a new form of greenwashing called future washing, which is rooted in the net-zero commitments made by many companies to eliminate all fossil fuel emissions by a targeted date.

“Net-zero plans will typically have a date of 2050, so we have 27 years in which something is supposed to happen,” Lyon says. “But there’s no possible way to document if the firm is going to achieve those reductions.” Casting the target date so far into the future allows current executives the luxury of procrastination and the means to personally avoid accountability, he adds.

The antidote is to link CSR to Corporate Political Responsibility (CPR), Lyon says. CPR demands a higher degree of transparency regarding a company’s political activities, such as the funds spent on lobbying and campaign contributions, and the objectives of those efforts.

Companies must then make their stated CSR goals compatible with their political strategy, and make that information public. This will enable them to promise only what they can deliver while building credibility with the public. The challenge for executives and managers will be to creatively promote sustainability while maintaining profitability.

These principles illustrate a nontraditional approach to the role of the corporation in society. Lyon points out that goals such as racial equality, a long-term perspective on corporate decisions, and the elimination of partisan gerrymandering reflect a progressive social/political agenda.