In an era plagued by declining trust in traditional institutions, companies must take on a heavy responsibility: to become the credible and authoritative social actors that citizens desire.
Delving into the latest trust indexes, it becomes increasingly clear that companies must enhance Corporate Social Responsibility (CSR) and assume a role that while contemplating profit must inform policy makers. As trust in governments, media and nongovernmental organizations erodes, a vacuum emerges that threatens social cohesion as policy intermediation struggles. Distrust generates polarization. Only 20 percent of people would be willing to live in the same neighborhood as someone who disagrees with their views, and people now fear for their economic future without safety net according Edelman Trust Barometer 2023. Only 40 percent of respondents say they and their families will be better off in five years, down 10 points from 2022. It is in this compassion gap that companies have the opportunity to reengineer and align to a societal context that requires their competences to close the "trust gap."
At the heart of this redefinition of the role of the customer-firm relationship, which is no longer solely profit-driven but focuses on customer happiness, which in turn points to profit, is the imperative for companies to embody transparency and integrity. Disclosure of crucial information about business operations, supply chains, and decision-making processes is critical to rebuilding trust. Companies are no longer just faces of a business: they must have opinions, inform causes related or tangential to the core business, and be clear on social implications.
Democracies are delicate constructs. The Democracy Index by the Economist Intelligence Unit (EIU) provides an interesting snapshot on how democracies can slide into a more flawed system. The four constituencies – governments, corporation, NGOs, Media-- are critical contributors to perform five essential activities to democracy: electoral process and pluralism, functioning of government, political participation, political culture, and civil liberties. According to EIU 2022 Democracy Index, close to half of the world’s population (45.3%) live in a democracy of some sort. Only 8%, however, reside in a “full democracy,” compared with 8.9% in 2015, before the US was demoted from a “full democracy” to a “flawed democracy” in 2016.
Thus, companies possess the resources and influence to tackle head-on the most pressing societal challenges. Climate change, income inequality and social justice require concentrated efforts. By becoming more extroverted and revisiting old processes dealing with institutions, companies have in modern times a call to action to become a source of competence. The pursuit of profit cannot overshadow the imperative of social responsibility.
The time has come for companies to reassess the societal context in which they operate one characterized by JP Morgan’s CEO statement that governments need help. This path, however, requires a disruptive cultural and organizational change by companies. The IRG (Influence Relevance and Growth) approach respond to this need.