emocratic and market institutions are undergoing their most severe crisis of confidence in decades, deeply rooted in the general decline of trust among citizens, governments, and businesses. This crisis is exacerbated by COVID-19. Given the scope and seriousness of the pandemic and its economic and social fallout, governments alone cannot address the long-standing challenges that the health emergency deepened.
As the engines of economic growth and key societal stakeholders, businesses have a unique opportunity to play a constructive role in shaping the post-COVID-19 recovery and its systemic ramifications. Trust in businesses and the economic institutions in which they operate is essential to the broader legitimacy of democratic and market systems. By acting in constructive and collaborative ways, businesses can strengthen trust in their communities, which will be crucial in the coming years to ensure strong economic recovery post-COVID and counteract a recent backslide in support for liberal democracy.
Journal of Democracy founder Larry Diamond warned in a 2015 article of a “growing danger that the [democratic] recession could deepen and tip over into something much worse.” COVID-19 intensified this threat and the world is witnessing the “much worse” scenario today. Many countries are experiencing accelerated erosion of political and economic freedoms and institutions through poor governance, weak rule of law, lack of transparency, and authoritarian-leaning responses to COVID-19 that enable corruption, cronyism, and abuse of power. Large flows of public funds toward post-pandemic rebuilding efforts in particular create additional corruption risks when injected into already fragile governance ecosystems with pre-existing issues that strains societal fabric.
Businesses have an important role to play in countering democratic and economic erosion. They must embrace good governance and transparency in their own operations and promote systemic integrity that safeguards a level playing field. They can convene citizens, amplify voices that might otherwise be ignored, and help facilitate greater trust in other public institutions. Businesses, with their networks and often unique resources, can lead by example and they can demand broader accountability and equality. For instance, the U. S. Chamber of Commerce is changing its congressional scorecard to encourage lawmakers to work across the aisle and stand for immigrant and minority rights.
The future of democracy and inclusive markets depends on the private sector to provide leadership in helping rebuild social trust. In its work with partners around the world, the Center for International Private Enterprise (CIPE) has seen good examples of local business communities taking on the leadership role and working together with governments and other stakeholders in response to the long-standing issues as well as new challenges created by COVID-19. For example:
• In Nigeria, the Niger Coalition of Business and Professional Associations (NICOBPA) secured the local supply of essential goods and services such as pharmaceuticals and food items to limit the impact of the lockdown.
• In Afghanistan, the Herat Chamber of Commerce and Investment (HCCI) launched a survey committee to assist Herat Food Bank in distribution of food by registering and developing a database of needy families throughout the province.
• In Tunisia, the Arab Institute of Business Leaders (IACE) proposed solutions to the COVID-related problems of local businesses, while continuing to conduct advocacy virtually on previously identified priorities that remain essential for the country.
In addition to prompting local business communities into action, the COVID-19 crisis also served as a growth-trigger for some sectors. This is especially true of the digital economy, which has seen plenty of innovation during the new reality of telework and social distancing. This trend is expected to continue even after the immediate health emergency is over and digital solutions are likely to be more robustly incorporated into core business strategies going forward.
The COVID-19 crisis is a tipping point in bringing into focus what a responsible business should look like and how to balance the essential profit motive of business activity with the equally fundamental imperatives of social solidarity and compassion. As a former CEO of Unilever and current Chairman of the International Chamber of Commerce and Vice-Chair of the United Nations Global Compact Paul Polman put it, “Coronavirus is an acid test of stakeholder capitalism.”
As part of its mission, CIPE helps to capture and disseminate successful models from its work to support economic freedoms around the world, with the emphasis on how to build economies that are inclusive of women, youth, and marginalized groups. The trust in democratic and market systems overall will continue to dwindle unless there is a greater degree of public confidence. Marginalized groups must have a realistic path to become full economic citizens in their countries. Pakistan, Jordan, and Papua New Guinea are among the many countries where business communities are helping women get a stronger voice in policy debates.
Examples of solid progress and successful approaches are important to inspire tangible action for change and are especially needed in the era of disinformation where illiberal actors advance a negative narrative of democracies and markets failing to meet the needs of their citizens during COVID-19. Such efforts must be accompanied by active leadership from businesses: from those in the Fortune 500 to small and medium enterprises throughout the Global South.
a global affairs media network
Businesses Must Build Trust to Drive COVID-19 Recovery
Photo by Max Bender via Unsplash.
September 29, 2020
D
emocratic and market institutions are undergoing their most severe crisis of confidence in decades, deeply rooted in the general decline of trust among citizens, governments, and businesses. This crisis is exacerbated by COVID-19. Given the scope and seriousness of the pandemic and its economic and social fallout, governments alone cannot address the long-standing challenges that the health emergency deepened.
As the engines of economic growth and key societal stakeholders, businesses have a unique opportunity to play a constructive role in shaping the post-COVID-19 recovery and its systemic ramifications. Trust in businesses and the economic institutions in which they operate is essential to the broader legitimacy of democratic and market systems. By acting in constructive and collaborative ways, businesses can strengthen trust in their communities, which will be crucial in the coming years to ensure strong economic recovery post-COVID and counteract a recent backslide in support for liberal democracy.
Journal of Democracy founder Larry Diamond warned in a 2015 article of a “growing danger that the [democratic] recession could deepen and tip over into something much worse.” COVID-19 intensified this threat and the world is witnessing the “much worse” scenario today. Many countries are experiencing accelerated erosion of political and economic freedoms and institutions through poor governance, weak rule of law, lack of transparency, and authoritarian-leaning responses to COVID-19 that enable corruption, cronyism, and abuse of power. Large flows of public funds toward post-pandemic rebuilding efforts in particular create additional corruption risks when injected into already fragile governance ecosystems with pre-existing issues that strains societal fabric.
Businesses have an important role to play in countering democratic and economic erosion. They must embrace good governance and transparency in their own operations and promote systemic integrity that safeguards a level playing field. They can convene citizens, amplify voices that might otherwise be ignored, and help facilitate greater trust in other public institutions. Businesses, with their networks and often unique resources, can lead by example and they can demand broader accountability and equality. For instance, the U. S. Chamber of Commerce is changing its congressional scorecard to encourage lawmakers to work across the aisle and stand for immigrant and minority rights.
The future of democracy and inclusive markets depends on the private sector to provide leadership in helping rebuild social trust. In its work with partners around the world, the Center for International Private Enterprise (CIPE) has seen good examples of local business communities taking on the leadership role and working together with governments and other stakeholders in response to the long-standing issues as well as new challenges created by COVID-19. For example:
• In Nigeria, the Niger Coalition of Business and Professional Associations (NICOBPA) secured the local supply of essential goods and services such as pharmaceuticals and food items to limit the impact of the lockdown.
• In Afghanistan, the Herat Chamber of Commerce and Investment (HCCI) launched a survey committee to assist Herat Food Bank in distribution of food by registering and developing a database of needy families throughout the province.
• In Tunisia, the Arab Institute of Business Leaders (IACE) proposed solutions to the COVID-related problems of local businesses, while continuing to conduct advocacy virtually on previously identified priorities that remain essential for the country.
In addition to prompting local business communities into action, the COVID-19 crisis also served as a growth-trigger for some sectors. This is especially true of the digital economy, which has seen plenty of innovation during the new reality of telework and social distancing. This trend is expected to continue even after the immediate health emergency is over and digital solutions are likely to be more robustly incorporated into core business strategies going forward.
The COVID-19 crisis is a tipping point in bringing into focus what a responsible business should look like and how to balance the essential profit motive of business activity with the equally fundamental imperatives of social solidarity and compassion. As a former CEO of Unilever and current Chairman of the International Chamber of Commerce and Vice-Chair of the United Nations Global Compact Paul Polman put it, “Coronavirus is an acid test of stakeholder capitalism.”
As part of its mission, CIPE helps to capture and disseminate successful models from its work to support economic freedoms around the world, with the emphasis on how to build economies that are inclusive of women, youth, and marginalized groups. The trust in democratic and market systems overall will continue to dwindle unless there is a greater degree of public confidence. Marginalized groups must have a realistic path to become full economic citizens in their countries. Pakistan, Jordan, and Papua New Guinea are among the many countries where business communities are helping women get a stronger voice in policy debates.
Examples of solid progress and successful approaches are important to inspire tangible action for change and are especially needed in the era of disinformation where illiberal actors advance a negative narrative of democracies and markets failing to meet the needs of their citizens during COVID-19. Such efforts must be accompanied by active leadership from businesses: from those in the Fortune 500 to small and medium enterprises throughout the Global South.
