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THE (IL)LEGITIMACY OF BUSINESS IN THE SOCIAL SECTOR

Updated: Oct 16, 2023

At one moment, he and his company are applauded for getting involved in a policy dilemma. The next, he is condemned.





This is a situation that many CEOs will increasingly recognise. Think of Emmanuel Faber, the former CEO of Danone who drove the company, too far in the minds of some, towards a strong environmental consciousness and was subsequently removed. Or The Walt Disney Company’s CEO, Bob Chapek, who took a position earlier this year on Floridian legislation that restricted teaching about sexual orientation and gender identity in its schools, who was lambasted first for not taking a view and then for taking one (and punished by the Florida state government).


I could go on.


In the case of Faber and Chapek, they led their organisations to take a position, within their businesses, with respect to a broader policy goal.


Musk has gone further in becoming an actual actor in a policy dilemma.


Musk’s donation of Starlink systems to Ukraine has had a significant impact on that nation’s ability to fight the war directly, and indirectly, through maintaining the Ukrainian peoples’ resilience.


Intended or not, Musk has become a principal actor in the conflict. We don’t typically expect private sector leaders to do this; it is, instead, the remit of governments.


He is far from the first to do this. Other companies have also taken on traditionally governmental roles. Pharmaceutical companies and multinational companies with wide and effective distribution channels took on de facto health and transportation roles during the early years of the Covid pandemic. NGOs have long taken responsibility for providing education and health services historically the remit of government. None of this is new.


What is changing is how much of it is now taking place and its potential consequences (i.e. war or peace, life or death).


This trend towards private involvement in public good is being exacerbated by us, by you and me, by our societies. Having become resigned to our government’s ineffectiveness or inefficiency or, in fact, complete lack of interest, more and more populations expect their corporate sector to step up on environmental and social issues. Increasingly, we expect our businesses to take on the role of governments and step into the policy domain.


However, we did not vote these CEOs in and neither can we vote them out if we don’t like them (other than to not buy their products or services). They don’t have the innate legitimacy of democratic governments. They have no lawful mandate.


We, the public, aren’t in a position to affect Musk’s choices. We can’t sanction him. We, and Ukraine, are susceptible to his whims, whether we agree with them or not.


We, as societies, need to think very carefully about whether we want to give private sector entities this kind of power. They will always retain some influence through the resources they have at their disposal, but are we really comfortable with handing them more?


This is what we do when we expect CEOs to take positions on social or environmental policy. And when we ask them not just to speak but to act, we are going a step further. We are giving them permission to take actions that affect our lives and with which we might not subsequently agree.


In time, I guarantee that we will find ourselves reaching out to our governments again to put in place guidelines that restrict this influence.


I am not, for a moment, suggesting that corporations shouldn’t have a set of values by which they act. I applaud such leaders who are willing to publicly both define and defend those values in word and deed. In so doing, they will reap many benefits and some costs besides.


I do question however, whether it is appropriate to empower them to take over roles that are better addressed by our government leaders who, in the end, we can remove if we disagree with their actions.


Thus, I suggest it would be better, albeit difficult and at times horribly inefficient, to reinvest the time and energy required to change our government policy instead. Rather than ask Musk to provide internet access to Ukraine, we should be asking our governments to take responsibility for so doing. As someone who has spent time in both government and the private sector, I’m pretty sure both parties would thank us.

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