13 October, 2016

The response of US Presidential candidate Donald Trump’s campaign to the latest sexual harassment allegations includes the following: “It is absurd to think that one of the most recognizable business leaders on the planet with a strong record of empowering women in his companies would do the things alleged in this story”.  Amid the reports of abuse that seem to have tipped the campaign into spiraling decline, it’s important to remember that Trump’s support has ridden, in large part, on the image he sells of himself as a successful businessman.

Looking beyond the election business leaders will face a crossroads.  Will they pursue a winner-takes-all approach?  One epitomized by Trump, and also reflected in the type of business model that has led to the recent resignation of Wells Fargo CEO John Stumpf, after employees striving to meet targets opened about two million accounts for customers who had never asked for them.  Or will they grasp the opportunity to forge a more responsible and inclusive approach to their business?

Candidates’ views on the role of business in our everyday lives have been an important thread throughout the election cycle. 

Bernie Sanders ran on a ticket focused on making the economy work for the 99%, not the 1%.

Critiques of Clinton’s close ties to Wall Street and pressure from the Sanders camp have moved her somewhat in that direction too.  She has adopted elements of the Roosevelt Institute’s recommendations “Re-write the rules”: an economic policy agenda that focuses on long-term growth over short-term profits, and addresses structural economic discrimination (of course questions remain about the extent she would implement these in office).

Donald Trump has also presented himself as the champion of – if not the 99% (too inclusive) – the struggling middle-class, all the while touting his own credentials as a billionaire businessman.  Yet his own business practices demonstrate precisely what needs changing, rather than provide any sign that he would bring reform.

He has presided over boom-bust casinos that have left decimated local communities in their wake, faced allegations of exploiting immigrant workers and secured massive tax breaks. When in the first Presidential debate Clinton said that he had been rooting for the collapse of the housing market to make money off it, his response was, “That’s called business, by the way.”

The electorate is tired of business as usual, recognizing that it is not working for the majority.  Yet this widespread disillusionment can be easily manipulated – a similar dynamic to that at play in the UK’s “Brexit” vote to leave the EU.

Many factors fuel this disillusionment.  Despite recent advances in job creation, about 43 million Americans are still officially classified as poor.  Meanwhile the wealthy – well beyond a certain Presidential candidate – creatively avoid paying taxes on a massive scale, as the Panama Papers revealed.  Sixty nine of the largest 100 economic entities in the world are businesses, not states, and the influence of companies over government has reached an all-time high.

There is also a growing sense that international trade deals are creating too many more losers than winners.  As the New York Times put it recently: “The anti-trade backlash, building for years, has become explosive because the global economy has arrived at a sobering period of reckoning.”  Among the features of proposed deals such as the Trans-Pacific Partnership are clauses that enable companies to sue governments for decisions that are unfavorable to their business – even decisions that seek to protect workers, consumers, and the environment.

This period of reckoning can be an opportunity.  Now is the time to broaden the purpose of the corporation. From a narrow focus on profit, to an entity that provides goods, services and decent jobs and is accountable to a wide range of stakeholders as well as its shareholders.  As President Obama emphasized in his UN General Assembly speech last month, we need to find a different path from “soulless capitalism that benefits only the few.”

He captured the need to tackle inequality, recognizing that “economies are more successful when we close the gap between rich and poor, and growth is broadly based”.  Closing that gap, he added, means “respecting the rights of workers so they can organize into independent unions and earn a living wage.”

There are already several movements underway that point to the right road ahead.

Over 900 US companies have registered as B-Corporations, choosing under legislation in 30 states to put social benefit on a level with profit-making in their articles of incorporation.  Workers across the US are organizing to demand living wages.  Witness the successes of the Coalition of Immokalee Workers in pressuring big brands to ensure decent pay for tomato pickers in Florida, and the nationwide “Fight for 15” campaign in securing increases in the minimum wage.  Important investor-facing initiatives have emerged to rate companies on social impact, such as Just Capital and the Corporate Human Rights Benchmark.  Leading companies themselves are gradually recognizing that their long-term success requires respecting the rights of their employees, as well as others impacted by their operations and throughout their supply chains.

Progress is still piecemeal, and the challenge – as demonstrated by the levels of frustration among the US electorate – is enormous. 

But maybe one day soon we’ll see the majority of companies provide decent wages, pay their fair share of taxes, and make a positive contribution to society, and be able to say: “That's called business, by the way.”