Lobbying for Good: How Business Action Groups Can Help Save Capitalism

Summary

posted on 30th August 2019

Democratic capitalism has improved the world immeasurably, but today many feel that the system isn’t working. For business, that presents a threat – but also an opportunity.

A wave of populists are seeking to harness public outrage at a system that no longer seems to deliver. Despite their anger, people are looking to business leaders to take action on the big issues: tax avoidance, executive pay, and climate change. Businesses should join forces with each other and use their lobbying muscle to demand real reform.

The Context: While democratic capitalism has been an epochal force for good, there are glaring problems. Inequality is rife, and business is seen as a major driver thanks to soaring executive pay and tax avoidance. Globalisation has created areas of localised decline, undermining the relationship between business and local communities. And the ever increasing urgency of climate change brings unclean business practices into the spotlight. At the same time, unscrupulous politicians on all sides are riding this wave of anger, and tearing up the global rules-based order. The threat to business is clear and significant.

The Threat: Half of working-age Brits believe “capitalism doesn’t work for people like me”. Executive pay, tax avoidance and environmental impact are among the public’s top concerns about business. And people increasingly want governments to take matters into their own hands – 80% want more action from government on unethical business, and half of these want strong action even if businesses are technically operating within the law.

The Opportunity: But business remains better trusted than government, and three-quarters of us want CEOs to take the lead on change rather than waiting for government to impose it. It is in the interest of business to renew its contract with society – before it’s too late.

The Rise of Purpose: The best businesses have developed an authentic sense of purpose; one not just siloed in CSR programmes but permeating and informing entire institutions. Firms like Unilever and Richer Sounds are showing the way. But to change the direction of public opinion on capitalism, business needs to go much further – a topic we will explore in more detail in a forthcoming report.

Business Action Groups: Businesses which understand the need for change on the big issues – tax, pay and climate change – but which believe they cannot risk being first-movers (or are legally prevented from acting) should instead work together to lobby for a fairer capitalism. They should redirect their lobbying and CSR budgets to form Business Action Groups which work across sectors and campaign for sensible but ambitious reforms. By working with their competitors to call for change, businesses will not only avoid putting themselves at a competitive disadvantage but can also maximise their lobbying muscle. In the UK and US, businesses should come together to lobby for changes to company law so that directors must act in the interest of employees and wider stakeholders as well as shareholders. And Business Action Groups should be formed around the big issues driving public anger – tax, pay and climate change.

Individual Authentic Action: But a push for collective action must not come at the expense of what businesses can do individually. They must also put purpose at the heart of their business models and build authentic relationships with their workplace, marketplace and wider community.

Download the full report here.

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