Democracy — now a material sustainability issue for business in the United States?
Given the riot in Washington D.C. last week, the ongoing undermining of election trust, and incitement of the mob by some mainstream Republican politicians it’s good that some of America’s largest corporations put a pause on political donations. The speed with which business Chambers condemned both the riot and, in some cases, its political enablers was also encouraging.
Democracy, authoritarianism, and the rule of law matter for business. Despite the myths, authoritarian leaders destroy economies far more often than they build them. There is a clear relationship between the rule of law and economic success. But many trends globally and in the United States are moving in the wrong direction: falling trust in public institutions; increasingly hyper-personalized political information/mis-information undermining shared societal truths; and a rise in extreme, divisive and authoritarian politics. While much is driven by purely political focused actors, much is driven or enabled by changes in our economy, new business models, and sophisticated communications technology that are very profitable.
A further complication for business: both customers and employees increasingly expect them to speak up about pressing social issues but appearing to be partisan not principled will upset other major constituencies. The country is terribly divided right now.
How to respond? Going back to business as usual once passions cool or memories fade is not the right path; the negative trends predate and will outlast this flare up. Nor is complete disengagement desirable; business has a lot of expertise and a useful point of view that can help government serve society better.
A proactive approach is needed. One that shifts the question from “should we donate?” to “how can we strengthen the democratic environment that sustains our business?” Three actions can take business much of the way.
1. First, recognize that a well-functioning democracy and the rule of law affect the financial performance of many businesses and that they are under threat. Put it on the agenda in your business as an issue to be managed and reported on. Like other sustainability issues (think climate change, water security and the skills gaps) exposure to a weakening democracy may be a slow burn but when it begins to bite it can have a major financial impact.
2. Second, identify both your potential exposures and contributions to the issue. Assessing your exposure will tell you how much you need to worry. Assessing your potential contribution will open possibilities to make a difference. This will vary greatly by industry and company. Social media platforms like Twitter and Facebook for example are exposed to risks of disgruntled users leaving their site as well as regulation of their current business models. They have the potential for a huge contribution through how they design their algorithms. This will be very different from a national retail chain or major employer who may also face risks from a divided community of customers and employees, but who may be able to make a contribution in terms of how they communicate to these large audiences.
3. Third, come together with other businesses and civic actors to share perspectives, and propose common standards or even smart regulation. Business is already doing this in regard to ‘ethical AI’ and the STEM skills taught at school. It may be time for business to include the impact on democracy on their work with AI and school curriculums. Collective and individual action will be needed for substantial impact.
Polling taken immediately after the riots showed a staggering 20% of voters, and 45% of Republican voters, supported the storming of the US Capitol. This issue is not going away. More than a pause, now is the time for US business to reassess not just its political engagement but how to have a positive impact on democracy — a precious public good that is essential for businesses’ and the Republic’s long term success.
Connect with me about sustainability for business at www.DAReSocialImpact.com
