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How should companies respond to populist politics?

It seems to me that Anglo-Saxon capitalism and globalisation has failed millions of people.

In two recent episodes (one barely needs to name them as the Brexit vote and the US election result) many of these citizens decided to vote decisively in protest, for what they hope is change. When you have little to lose, you are more likely to do radical things.

My view is that these significant occurrences have taken place because seventeen years of uninterrupted economic growth from 1990 to 2007, enabled by global markets and migration, both created and masked the structural educational and employment problems in the UK and US which have lead to both Brexit and Trump.

Anglo-Saxon capitalist societies screwed up, left people behind, tried to ignore them, failed to fix their increasingly obvious problems, and then finally, gave them a chance to kick back. And boy, did they do that.

The motivations of both Brexit and Trump voters have been cast as cultural as much as economic, despite the fact that in the recent past, citizens in the UK and US have traditionally voted more with their wallets than their prejudices. This may now have changed to a certain degree. (I accept that there are some who my dispute my conclusion here)

This aside, we are, where we are. To the question at hand.

That being, “How should companies respond to populist politics?”

If we narrow the focus here to the US and UK (I hope fervently that the forthcoming German, Dutch and French elections do not force future analysis to widen beyond Anglo-Saxon capitalist system nations) let’s consider what the big business response should be to these recent events.

Firstly, we’re already in a time of turmoil in the UK, and by some association, the EU, over Brexit. And about to be in an equally or larger state of tumultuousness across the pond in the USA.

Shareholders of big companies, and boards, don’t like this kind of thing, as we know. The temptation can be to immediately freeze key areas of spending, such as travel, hiring, marketing and new operations or expansion. That’s happened post-Brexit, and may well happen to some degree after this past week’s US election.

Once companies and markets then realise economic armageddon isn’t happening this week, month or even year, things start to ease up a little. We saw this post Brexit, but caution abounds, as it should do.

Then comes the bigger question for large companies who have made public commitments to sustainability. This is, simply, how do we respond to the new political environment? That’s the strategy question. The tactical questions then come thick and fast afterwards.

For example, if the Paris Agreement on climate change is kiboshed by a Trump administration, what does that mean for company climate targets and advocacy?

If political ideology leads to more gas fracking, more coal and a short term approach to “cheaper” energy, (it’s only cheaper if you don’t factor in real and dangerous externalities) what does that mean for your policies and practices around renewables?

If political appointees cancel laws that protect human rights, or gut institutions designed to defend them, how do you respond as a company?

These are just some of the questions that will be being debated in boardrooms and in middle and upper management in large companies over the next few years.

In my view there is only one legitimate response to consider.

If sustainability and respect for human rights is “in the DNA” of your company, as so many claim, your decision, as a collection of executives deciding how your company behaves, is a simple one. You must live your values. Or be brutally honest that you never really had any beyond making money and cancel your commitments.

Now, no company will do the last point above. But should they fail to live their values and not be honest that they didn’t really care all along, consumers, campaign groups and activists will make sure the world is aware of their their uncaring approach or their hypocrisy.

So let’s assume the vast majority of big business that is committed to sustainability and human rights wishes to live their values and doesn’t plan to jump cynically on a short term “anything goes’ deregulatory bandwagon. I think that’s a fair call.

In that case, what now? What will living your values look like?

Aside from maintaining and improving on your existing sustainability and human rights plans and objectives, it’s also going to be about being increasingly vocal and engaged in the political debates and decisions that could easily de-rail two decades of progress on more ethical supply chains and tackling dangerous climate change.

How companies, via their executives and activities, do this, will demonstrate how serious they really are about sustainability in general, and their own beyond this next five year period of uncertainly and disruption.

Stakeholders will be keeping a close eye on which companies live their values, and which never really meant them anyhow, and are content to merely go with the political flow.

You know who your friends are when times get tough.

Employees, communities, business partners, long term investors, social media and campaigning activists, journalists and many others, will be ready in the coming years to reward those businesses who show they mean it, and punish those who do not.

Business adores re-framing challenges as opportunities (“right-sizing” is one example). We’re faced with serious predicaments as of 2016, that’s as clear as day.

How companies respond in the face of them, will show us all just how serious they are about helping make the world a better place, and enhancing the legitimacy of their role in doing that, along the way.

 

1 Comment

  1. martin summers

    The response by big business to the growth of populism should begin with a recognition that calls for protectionism have gained traction because business has done almost nothing to win hearts and minds on the benefits of foreign goods, labour and capital. Quoting GDP growth rates and making general assertions about the benefits of global trade doesn’t cut it.

    The sustainability community has shown little interest in these issues. I can’t recall a single sustainability report, communication, speech or programme that has made the case for global flows of capital, goods, services and labour. Fair trade or certified trade is celebrated but the general case for trade has been neglected.
    The benefits of global supply chains have indeed been celebrated but typically solely in terms of the benefits to poor communities in the developing world.

    A huge opportunity has been missed. These stories of supply chains could have linked to a bigger narrative about how global supply chains benefit the developed world; for example, explaining – with case studies – why imported components and raw materials have made it economically viable to continue manufacturing in developed countries, preventing the wholesale offshoring of, say, car manufacturing.

    Business leaders and their sustainability, communications and government affairs teams should recognise the very high material impacts that heavy restrictions on foreign labour, goods and capital could bring.

    This should create the rationale for investment in sustained and properly funded advocacy programmes and sustainability communications that address the justifiable concerns of politicians and the people who feel left behind by what has been sold to them as economic progress.
    It should also prompt companies and governments to invest more in preparing workforces and communities for economic restructuring.

    Business has been ineffective in building a widespread appreciation of the enabling economic, social and institutional conditions for its survival, let alone its long term success. It now faces the consequences of its failure to do so.

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