Corporate Diplomacy or How to Make a Difference in The Trump Era

28 Mar 2017

cldt«In a time when trust in Government is decreasing, citizens are becoming growingly receptive to Corporate Leadership. Now is the time for corporations to demonstrate their initiative»

Carlos Luca de Tena

Senior Consultant, Public Affairs at LLORENTE & CUENCA.

Today, more than half of the world’s 100 largest economies are corporations. Multinationals are not only wealthier than many countries, but more influential too. While government reach is generally limited by national borders, business influence is increasingly transnational, transversal and capable of impacting global governance. Furthermore, political leadership comes and goes, but multinationals last for generations.

In a time when trust in government is decreasing – see Brexit, Colombia or Trump – citizens are becoming growingly receptive to corporate leadership. Multinational firms thus have the opportunity of creating value while building trust. They can serve as ambassadors that offer services that communities need or that advance social and societal issues that may not be a priority for governments.

2ycorrelationConfidence in government might be low, but the link between policy and business is getting stronger: while corporate power is growing, we are witnessing a paradoxical politicisation of businesses and markets. Multinational corporations, especially global equities, are increasingly impacted by politics and policy and cannot just ignore the public sphere anymore.

This graph is empirical evidence of the connection between business profits and politics. Globalisation and the digital economy have changed the rules and are bringing governments, businesses and the civil society closer. This is why multinationals should engage in corporate diplomacy in a way that goes beyond lobbying. Self-interest and short-term profit maximisation are no longer a sustainable strategy for corporations who aim at delivering economic and social value. Instead, collaborative leadership is the most fitting answer to today’s challenging global problems.

Corporate diplomacy and collaborative leadership require an interdisciplinary approach that involves leadership, strategy, governance and sustainability with outreach, communications and collaboration as a link. This requires working with others, even unlikely allies, on occasion. Social policy, foreign issues and businesses have traditionally played in different fields; however Public Affairs and Communications professionals now have a duty in taking an interest in public diplomacy as well as inspiring engagement and collaboration.

This approach can encourage international corporations to take responsibility in solving global problems and can be mutually beneficial since bringing the public perspective into a company’s conversation is a particularly effective strategy in terms of strengthening advocacy efforts. A recent example of this is the long list of firms who joined forces to support the legal fight against President Donald Trump’s travel ban, showing how the American tech industry is increasingly engaged in political issues.

Another area in which companies can make a difference is sustainable development. The newly elected US President has questioned the reality of climate change and appointed global warming sceptics. Progress made under the Obama years in this area, such as the UN Paris Agreement, is therefore at risk. At the same time, however, some corporations have committed to ambitious sustainability objectives, demonstrating that there is an opportunity for corporate leadership and forward thinking – an opportunity to invest and innovate while decreasing emissions, waste generation or energy use.

As citizens become increasingly receptive to corporate leadership, now is the time for organisations, especially multinational corporations, to demonstrate their initiative, advance issues and prove their commitment to not only serve but also advocate for their customers and communities. Public Affairs and Communications professionals have a key role in encouraging organisations to engage in corporate diplomacy and guide them through this new political environment.