America is seeing levels of populist discontent unknown since the early 20th century. Like then, the public mood today is best summed up in the words of the movie Network—people are “mad as hell and aren’t going to take it anymore.” This current environment is a product of massive structural shifts in the economy and years of rising income equality and marked by a steep rise in anti-corporate sentiment.
The challenge that this resurgent populism represents for businesses is new: today’s grievances come not only from the left but also from parts of the conservative movement. Voters on the left and right increasingly believe that the game is rigged against their interests. Absent strong action on pressing issues such as income inequality, corporate America will cede the floor to those with far-reaching ideas, which will alarm many corporate leaders, whether it’s higher tariffs, restrictive immigration laws, or worker representation on boards—all examples that have already been implemented or are being discussed by policy-makers on both sides of the aisle.
At the same time, our research shows there is paradoxically a high expectation of corporations to take on big problems. While Americans do not generally trust businesses’ intentions, they do trust businesses’ capabilities, certainly more than they trust those of governments. Accordingly, people are looking more and more to corporations to use their scale and expertise to take on societal problems.
Corporate leaders may consider themselves familiar with this kind of pressure and how to respond to it. From the emergence of corporate social responsibility as a framework for self-regulation in the 1960s through Michael Porter’s introduction of the idea of “shared value” between businesses and society, CEOs now often take for granted that “giving back” is important to their bottom line.
The problem is, voters understand this logic, too and are now instinctively cynical about it. Our research finds they see such initiatives as ineffective or cosmetic. CSR can easily be caricatured as superficial distraction from companies’ negative effects in the world, whether in terms of employment practices, damage to the environment, or infringing on people’s privacy. It looks increasingly outdated when big questions are being raised about the fundamentals of capitalism itself.
In this context, some companies have tried to adapt with corporate-advocacy initiatives on social issues. For the right brand with the right culture, these kinds of initiative can indeed motivate and inspire—especially with younger people. Yet in our deeply tribal times, involvement in social advocacy is more often than not likely to repel half the country, not something that’s viable for most mass-market brands.
In the meantime, cynicism toward corporations is becoming increasingly intertwined with cynicism about capitalism itself, intensifying the complexity of the challenge for businesses. Many business leaders are fearful or in denial about the need to respond more forcefully to these shifts. But there’s no going back. Unless they reestablish a basic level of trust, corporations will face increasingly hostile operating environments and rising support for regulatory measures that risk stifling their ability to invest and innovate.
And the level of social ambition required for reestablishing that basic level of trust is higher than ever. As we’ve seen in our polling, nearly two-thirds now expect companies to invest significantly in social initiatives, even if the company won’t benefit from them, a significant departure from Porter’s thinking on creating shared value between business and society.
Fundamentally, populist hostility toward corporations is rooted in the particular desires for dignity and respect in our working lives. CEOs need accordingly to prioritize thinking about how they can make their companies engines of economic mobility, enterprises that can recognize, cultivate, and advance talent regardless of formal education or the informal advantages of privileged backgrounds.
The hostility is also driven by a widespread anxiety that we won’t be able to give the next generation a better life. Now, nearly 4 in 10 Americans believe the standard of living for the average family will get worse over the next 30 years. Americans accordingly want businesses to make meaningful efforts to restore confidence in the future—by creating jobs and training programs but also in more innovative ways, such as initiatives to link the classroom and the workplace.
Business leaders have long understood the consequences of ignoring their investors; now they have to anticipate the deeper consequences of ignoring the public at-large. The only way business leaders can credibly play this broader role is by starting to model, now, in their own enterprises, what a sustainable and vibrant future should look like.
This may not feel like an urgent priority to CEOs when considered against the daily challenges of running their business. However, business leaders may soon find that if they do not lead, those with bolder ideas will increasingly provide a new set of thornier challenges with which those leaders are forced to contend.
Victoria Esser is a managing director at the Glover Park Group and previously served as assistant secretary of public affairs in the U.S. Treasury Department under President Obama. Graeme Trayner is managing director of Insight at the Glover Park Group.