Is now the time for Business to reconsider its relationship with Democracy?
An Interview with Andrew Edgecliffe-Johnson
In case you missed it, we recently interviewed Andrew Edgecliffe-Johnson, US Business Editor at the Financial Times, as part of our Jericho Conversations series.
Until 2018, Andrew was US news editor, directing all US coverage and helping steer the FT’s strategic evolution to a digital-first newsroom. In his reporting and commentary, Andrew has charted the emergence of a new corporate consensus around the role purpose-driven businesses should play in society, and the pushback from sceptics worried about corporate overreach, greenwashing and “woke capitalism”. His past roles over 24 years with the FT in New York and London include global media editor, deputy news editor and editor of its management features section.
The business community can no longer avoid engaging with the thorny issue of democracy, both in terms of whether democracy functions in ways helpful to social and environmental developments and how businesses themselves should behave as democratic actors. The two are clearly linked. Matthew Gwyther asked Andrew about Business’ unique relationship to Democracy.
Thank you for joining us (if you did), and sorry you missed it (if you didn’t!). It was a great conversation. Below we’ve captured some of the best bits from the webinar or you can listen to the podcast here:
The pressure and friction on Business to engage in Democratic issues
“More and more business leaders around the world feel that they have been forced to take a more democratic and social role because governments aren’t doing it well. Look at how much governments have outsourced in recent years – provision of education and training; healthcare in the US; pensions but also how we will get plastics out of rivers. There is already a tacit admission that the private sector should be doing a lot of this stuff and also an inherent friction because no one has elected them to do these things”.
“We talk about the party of business (conservatives/republicans) but I struggle to understand who that is now in either the US or UK. There is a serious conversation about changing incentives in our democratic institutions.”
Where is the real power for change?
“Agendas in the public and private sectors will always be fundamentally different – Paul Polman has to keep tens of thousands of employees, board members and consumers sweet. When we choose between products as consumers it is perhaps democratic. Walmart for example, on their ESG agenda, does a dizzying amount of things. I’ve come to the view that if you want to change the world, do you stand outside Westminster or wave a placard outside of the annual meeting of Walmart, HSPC etc?”
“Where accountable power lies right now is in the corporate sector. We might feel very queasy about this, particularly on the left but we have to understand big companies as power players on these issues.”
What’s going on in corporate America at the moment? Voluntary vs. enforced action.
“With the politicisation of climate, ESG and inclusion there is a genuine debate happening about the financial and fiduciary benefits of responsible capitalism. There is no longer a trade-off between doing the right thing for shareholders and other stakeholders – I think this has been the case for most companies now”.
“They [Business] are doing this in large part to mitigate risks – to avoid unfavourable headlines and Twitter campaigns – but also with a long-term eye on how they attract young consumers and employees that they want”.
“On the example of Starbucks and the unionisation of their workers, I think this is a test case of the tension between voluntary and enforced action. We are living through a very interesting uptake in union activity in the UK for example and a newfound pressure from below with empowered employee groups who don’t think twice about calling the boss an idiot”.
What questions should Business be asking itself first?
“I think of it in 3 buckets:
(1) Relevance – the company has to have a point of view. Where are they based? But also, if what we do is provide healthcare to women then we would want to say something about the supreme court abortion decision?
(2) Review the internal culture – do employees trust their concerns will be heard by senior management? Do they have the ear of HR or the CEO?
(3) There is a bigger question, the health of the political ecosystem and what can they be doing to change the incentives within it?”
Is Democracy good for Business?
“We’ve all had a flashback this year to 1991 and the fall of the Iron Curtain and then since the Russian invasion of Ukraine, putting businesses operating there in an impossible position – it doesn’t look so great now to be sending tax cheques to the Kremlin every year. I think the overwhelming consensus in the business world is that democratic stability is preferable. The average multinational would probably prefer to be working in democratic environments.”
“In the US we’ve seen companies line up behind get-out-and-vote campaigns but I think there have been opportunities for businesses to wade in on securing the vote that they have missed. I think so many ESG and Governance questions, in particular, come down to what is in the major companies' self-interest. Often, they’re not very explicit about this and I think they could be, putting your cards on the table is a good starting point.”
“I rarely speak to a CEO without them using the word ‘purpose’ or ‘mission’ and a successful CEO these days is trying to motivate their people by encouraging it’s people to believe that selling their product is improving the world”.
Are larger brands more exposed to the pressure exerted by the public through social media?
“It’s absolutely true and big businesses are much more polarising than small ones. Trust in small businesses is through the roof and in big businesses it’s about 18% in the US. I think the larger brands are getting better at understanding what’s noise and what they need to respond to.”
Do we really want Business playing this role?
“One question we should ask is which businessperson are we thinking of when we suggest we want business more involved in democracy? Do we want Zuckerburg more involved in freedom of speech?”
“On both sides of the Atlantic, there has been an all-consuming debate about regulating big tech and the narrative around Big Tech has changed dramatically – the lack of accountability in these companies, and suppression of certain political viewpoints.”
How does business earn its right to be at the table?
“Business at its best is competent and functional – we are looking at a future of multi-stakeholder partnerships where large corporations need to work with policymakers, NGO’s and academia. Business has money and also the capability to bring it to the table. When we talk about money, we rarely talk about how much tax businesses should pay and that’s another conversation.”
“Competence is so important and legitimacy is too. It’s a delicate thing to navigate and what all of this comes back to is a huge debate about what the role of business should be in within society. We are fumbling our way to a new social contract and it will inevitably be fraught – the balance of power has changed as corporate power has grown and that’s what we are all here to figure out.”
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About #JerichoConversations
Jericho Conversations is one of a number of initiatives that spontaneously emerged during the first COVID lockdown – part of a determination to use moments of crisis to pivot towards a better, fairer, more equitable and sustainable future for all. By popular demand, we have reignited the series to help find surprising and refreshing solutions and insights into a world in constant flux. Each conversation – led by an expert speaker – is designed to keep Jericho communities engaged and thinking about “what comes next?” for business and society.
This latest conversation is part of Jericho’s work to launch a new Business and Democracy Commission in the New Year. We will ask difficult questions, break new ground, explore whether there is a new consensus and set out practical steps for a more effective corporate and business role in this fast-changing democratic and political context. Please do get in touch if you would like to find out more.
