Reframing Corporate Responsibility: The New Rules for the Trump Era
by Raz Godelnik, Co Director MS-SDM
What makes a responsible company? How you define it? And how you differentiate a responsible company from an irresponsible one? These questions have always been difficult, but they are becoming even more challenging in the Donald Trump era.
As we enter a new era where nothing is taken for granted and almost every building block of our lives seem to be challenged, it is time to rethink corporate social responsibility (CSR) and what a responsible company is. Unfortunately, the old answers we gave to this question, as good as they may have been at the time, are no longer valid. What used to be considered responsible is just not good enough these days.
The best way perhaps to understand where we stand and what it means for corporate responsibility is to take a note from the world of resilience, which is defined by the Stockholm Resilience Center as “the capacity to deal with change and continue to develop.”
I want to add another concept, which I believe will be helpful to the conversation – systems state. The Resilience Alliance explains the terms in ‘Assessing resilience in social-ecological systems: Workbook for practitioners (Version 2.0)’:
“Systems can change over time and may eventually shift into a different system state. The term “system state” refers to a set of social and ecological variables that can fluctuate and create either stabilizing feedbacks that keep a system in a particular state (e.g., a clear lake) or amplifying feedbacks that push the system toward a new configuration and system state (e.g., a murky lake).”
I believe that the Trump era can accelerate some of the processes that already make our world more volatile, uncertain, complex and ambiguous (VUCA).
The concern is that this administration could transform us from the current “system state” to an alternate one that is far less desirable. It’s not that the current state is necessarily desirable, but we definitely don’t want to transition to a less desirable system. The authors of the Workbook for practitioners explain how this transition can happen:
“Often the transition between [system] states can be slow and gradual, but at other times it can be abrupt. Being aware of critical thresholds between system states can potentially provide advance warning of impending change as well as opportunities for preventing undesirable shifts in system states. In most cases, people become aware of thresholds only once they have been crossed and environmental benefits disappear, with no obvious way of returning to the way things were.”
I believe the critical thresholds between the current system and a less desirable one are the key here. These thresholds, both social and ecological, become more critical now than ever as it looks like every day provides a new challenge for them. If we want to avoid a decline to a less favorable system state, we need to protect these thresholds and make sure we don’t cross them.
Therefore, protecting the critical social and ecological thresholds of our current system should receive the highest priority. It should also be the litmus test for companies that want be considered responsible. Responsible companies will be the ones protecting these thresholds and generating stabilizing feedbacks that will help steady this rocking boat. Companies that don’t will by default create amplifying feedbacks and hence should be perceived as irresponsible.
One can ask: What’s so new about it? Isn’t corporate responsibility already about taking into account social and ecological considerations when doing business? The reply is that while none of it is really new, the pressures we expect to see on the thresholds change the rules of the game. They require companies to take a clear stance on issues and the type of feedbacks they want to create.
Take for example the president’s immigration executive order (aka the travel ban), which gave a good example of the pressure on social thresholds in the Trump era.
The CEOs of companies like Starbucks, Lyft, Airbnb, Apple, Netflix and others provided an unequivocal response, making it clear they disagree with the executive order. In some cases, companies offered measures to support people who were directly impacted (Airbnb and Starbucks, for example) or financial support to organizations like the ACLU (Lyft).
Some CEOs responded more carefully. “’This executive order is one we do not support’ became the language almost universally adopted by CEOs,” Andrew Ross Sorkin wrote in the New York Times on Monday. Others remained silent, likely not because they don’t have an opinion, but because they fear retaliation from the president or their customers.
So what about companies like Disney, PepsiCo, Walmart and others that didn’t release any public statement showing their disapproval of the executive action? Or companies like General Motors or IBM that released weak statements stopping short of showing their disagreement with the measure?
While these companies have many CSR credentials and were considered responsible to some degree or another up until now, I don’t think they should be called responsible anymore. It’s not that these companies have changed; it’s the context that has changed.
The Trump era requires clarity and commitment. Yes, this may be somewhat difficult” Corporate responsibility is at its core a manifestation of shades of grey due to the belief shared by many (myself included) that we won’t be able to achieve any progress by evaluating companies through ‘black or white’ criteria. After all, no company is 100 percent responsible, just like no company is 100 percent irresponsible. All companies are somewhere on that range with their activities and policies.
While companies will continue to land somewhere on this range, they will need to be tested against clearer criteria that assesses their actions and their words when it comes to critical thresholds. Only those that fully commit to protect these thresholds should have the right to be called responsible companies.
Our job now as citizens and stakeholders is to clarify to the business sector which social and ecological thresholds we prioritize and expect them to protect. It should be more like the 10 Commandments rather than the GRI standards to make sure companies understand what we demand from them — and that we’re paying attention to whether they meet our requirements or not.
Then the real job will be to make sure companies are held accountable. They must understand that the rules of corporate responsibility have changed in the Trump era, and they need to adjust accordingly — whether they like it or not.
So what’s the threshold you care most about in the Trump era? Feel free to leave a comment with the one you’d like to ensure companies protect.
Image credit: Flickr/badlyricpolice
**This article was originally published on Triple Pundit.**