Social responsibility may no longer be a choice

Editorial: Having securitised businesses’ loans and paid their wage bills, it’s not inconceivable the government will decide it wants something in return.

by Adam Gale
Last Updated: 07 Jul 2020

In the first month or two of the lockdown, there was an extraordinary feeling of solidarity in this country. We were all in these fearful times together. As video calls blurred the lines between work and home, rigid professionalism gave way to liberating vulnerability, as we shared those fears with colleagues. When we asked people how they were, there was sense that more than ever we actually meant it.

In one of these conversations, London Business School professor Rob Goffee pointed out that the last time we experienced such a cultural phenomenon was in the Second World War - the famous Blitz Spirit. Out of that experience of solidarity and colossal shared sacrifice came the NHS, which was both an extension of wartime policy and the fulfilment of a promise that things wouldn’t just go back to the way they were before.

Could we experience, asked Goffee, an equivalent radicalism after COVID-19? This needn’t be a radical institution like the health service. If we’re imagining what could happen after the pandemic, it’s not beyond the realms of possibility for there to be a shift in the social contract between business and society, a unilateral change in terms to the corporation’s licence to operate.

We saw early on that the general public was quite intolerant of businesses like Sports Direct owner Frasers Group and JD Wetherspoon that it deemed to be putting profits before the public good or the wellbeing of employees.

At the same time, we have a government that has shown a willingness to ignore the business lobbies, most notably over Brexit, and that now has a strong moral claim on so many businesses, having securitised their emergency loans and paid their wage bills via the furlough scheme.

It’s not inconceivable that the government will decide it wants something in return. Years after the financial crisis, bankers recalled being presented with the terms of their bail-out packages by Western governments. The general tone of their recollection was disbelief that more wasn’t being asked of them by the state. There is no reason to assume the same thing will happen again.

Continuing the thought experiment, what might the state ask of business in the future? Could worker representation on boards be an idea whose time has come? Will low wages for low-skilled workers - whom we now know as essential workers, the ones who bore the brunt of the infection risk and kept the economy going - be acceptable while executive pay remains at historic highs? Will there be an expectation, in an age of economic nationalism, that UK-based businesses invest in Britain first?

Robert Kaplan, Harvard Business School professor and senior adviser to global impact firm Palladium, makes the case that now is exactly the time to think more deeply about the social impact our investment decisions will have. This isn’t just because it would preempt a potentially more demanding state. The idea of investing to develop ecosystems in impoverished local communities, Kaplan says simply, “looks like it’s going to become more important because these impoverished local communities are going to be in our countries.”

Perhaps it’s wishful thinking that the pandemic will lead to a golden era of business ethics, or the rejuvenation of some of the poorer regions of the country. We’ve had years to work on doing the right thing, in the social responsibility of our investments, in our actions on climate change as well as in the inclusiveness of our cultures. (The recent Black Lives Matter protests, which marked many firms out for virtue-signalling hypocrisy, have only illustrated how far there is to go there.)

Perhaps nothing much will happen at all, once the dust has settled, and the state will continue to look upon business primarily as providers of prosperity, jobs and tax income. But given the enormity of this crisis - which is far from over - don’t bet on a return to business as usual. 

Image credit: Peter Byrne/WPA Pool via Getty Images

This article is from the digital special edition of Management Today magazine


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