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The entire government to businessmen?

Whether due to the legacy of classical Greek philosophy or to the influence of Augustinian Catholic thought that separated the private commercial sphere (profit-driven) from collective decisions in pursuit of the common good, many of us have become accustomed to dissociating political power and public definitions from market influences. That separation may have made sense in the era of the great empires, nation-state building, and independence processes contesting colonialism of the 20th century when authorities had the resources, capabilities, and legitimacy to emerge as the almost exclusive source of national welfare. But today, when corporations such as Apple, Microsoft, or Amazon each have a market value that surpasses the GDP of Brazil, Russia, Canada, or Spain – all members of the select and wealthy G20-, it is difficult to defend such division, as well as to exempt the business vanguard from a more decisive role than the production of goods.

The growing attribution of capacities and responsibilities to large companies for the destiny of the societies in which they operate and their environmental, climatic, ethical, and social consequences is part of a process of gradual recognition of the power and competencies of corporations. These potentialities not only reflect a situation of parity or even superiority with conventional political institutions to generate and distribute impacts where they operate. They also portray the perceived inability or disinterest of the traditional public power (government, state institutions, parties, or Parliament) to manage problems for which market agents (as well as organized civil society) are projected as much more capable of providing satisfactory answers.

This explains the growing public expectation of socially and environmentally responsible business behavior. A study by the consultancy firm Market Analysis, together with the global network of independent pollsters WIN, which interviewed more than 33,230 people in 39 countries, reveals that 7 out of 10 adults in the world consider it extremely or very important to be aware and informed about the social and environmental corporations’ governance actions. 

In major Latin American countries such as Brazil, Mexico, and Argentina, this proportion reaches 80% or more. Although in a somewhat lower proportion, Chileans and Colombians also exceed the global average in ranking knowledge about corporate performance in sustainability. But the importance of awareness goes beyond abstract speculation: just over 6 out of 10 adults worldwide admit that corporate socio-environmental behavior shapes their purchasing preferences or adherence to brands.

Voting with one’s pocketbook by choosing product and service providers with better ethical and sustainable credentials is known as “political consumption” and could be a transformative force capable of extending citizen action beyond the formal spheres of the ballot box, party militancy, or street protest. This would occur because the power and capacity for the social and environmental influence of corporations require influencing them where – in fact – it is possible to shape their behavior: their financial health, their market share, and their reputation among consumers and other stakeholders.

The favoring of firms with citizen governance that respect the environment instead of poisoning it, or that extend the rights of their employees and share economic benefits among suppliers, over those that ignore good socio-environmental practices, contributes to building a more humane, open, and inclusive society.

Why, then, does this new form of activism and construction of a progressive agenda not materialize by promoting a new social order that extends good governance on a more massive scale? The Market Analysis/WIN study also reveals the suspicions surrounding political and business actors in the region, stimulating paralysis where there could be opportunities for progressive mobilization.

In the 39 countries surveyed, only 1 out of 5 people believe that most companies operate seriously with social responsibility and sustainability. On the contrary, 40% believe that, for the most part, companies seek to appear to be governance – in short, pure marketing. In Latin America, excluding Brazil which, besides having a more complex corporate structure, has a tradition of strong and visible debates and institutions dedicated to the propagation and recognition of the so-called corporate citizenship and ESG (environmental, social, and governance) principles, only 10% trust in the sustainable commitments of the business world (half the world average).

The current scenario combines strong expectations of corporate commitment to the common welfare on the part of citizens, coupled with their willingness to reward or punish firms based on their socio-environmental performance and low credibility in the altruistic and prosocial behavior of companies, which represents a real challenge. On the one hand, this combination redefines and consolidates who are the new major players in the challenges facing our countries, materializing a shift in expectations that major problems will be directed toward companies instead of concentrating all faith in the traditional political institutions and the State. On the other hand, this situation generates a flow of pressure and demand whose concentration is frustrated by disbelief about the true intentions of corporations. The possibility that corporate action may be seen as opportunistic rather than genuine, in addition to frustrations with the formal political system, may open the door to radicalized or anti-system expressions. Disbelief in the possibility of achieving progressive advances also through market channels in the face of failed States or paralyzed governments such as those that characterize Latin America, together with the corporate behaviors that feed or justify this perception, could frustrate the proposal of a lasting model of responsible development.

Translated from Spanish by Janaína Ruviaro da Silva

Autor

Fabián Echegaray es director de Market Analysis, consultora de opinión pública con sede en Brasil, y actual presidente de WAPOR Latinoamérica, capítulo regional de la asociación mundial de estudios de opinión pública: www.waporlatinoamerica.org.

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