How business can build trust under the Biden administration
Updated: Jun 11
With priorities set, it’s time to prepare for what comes next in policy During his first 100 days, President Joe Biden focused on restoring trust in government while making vaccines available to all Americans and kick-starting the US economy. His attention has now turned to an infrastructure bill that goes beyond the traditional ideas of bridges and roads as infrastructure and focuses more broadly on the scaffolding of American life — everything from broadband access to a national electric vehicle charging system to American jobs. These policy areas are unfolding against a backdrop where diversity and inclusion (D&I) and societal unrest are changing how companies engage with policymakers and shifting the role that business plays in society. The perfect storm of the pandemic, racial inequities, climate change and changing stakeholder expectations has meant that most organizations can no longer remain as bystanders to societal issues that affect both their customers and their employees. In this era of eroded trust, business has emerged ahead of government and other entities as the most trusted institution, according to the 2021 Edelman Trust Barometer. How companies choose to act will determine whether they build on this foundation of trust or squander it. Business leaders have an opportunity to continue building trust with stakeholders, while also shaping policy and managing the risk to their businesses. These moves can help businesses prepare ahead of potential government action:
Engage with policymakers now. There is likely a limited amount of time for the Biden administration and Congress to accomplish significant legislative action before focus turns toward the 2022 election cycle, creating an even more challenging legislative environment. The policymaking machinery may appear to move slowly, but when action comes, it could come quickly. Companies should be modeling out how proposed policies could affect their operations and be aware of potential pain points. The time is now for business leaders to share their viewpoints so that policymakers consider their perspectives.
Focus on the specifics. It’s easy to miss some of the finer points of proposed legislation. For example, some companies may believe that the infrastructure bill doesn’t directly affect them, but the proposed legislation goes well beyond the repair or expansion of transportation. It could have wide-reaching, direct implications for other industries, including telecommunications and energy. It also could have implications — regardless of industry — for the corporate tax structure if the Biden administration succeeds in paying for the plan as proposed. This new aspect of human infrastructure that the bill focuses on leaves room for business leaders to emphasize how they can create American jobs and how their investments benefit the American economy.
Take climate initiatives seriously. If your company is not already measuring its environmental, social and governance (ESG) metrics, it likely should be. While the US has flip-flopped in and out of climate initiatives for decades, the Biden administration is weaving climate metrics into every department of government and making it a priority for all industries. Companies should not only have clear, concise metrics of their climate impact, but also consider an ESG strategy that goes beyond current standards and incorporates into their financial reporting structures the oversight of climate risks to their business. ESG metrics should include investor-grade reporting to clearly articulate your story to your stakeholders.
Boost your diversity and inclusion (D&I) initiatives. Stakeholders of all kinds are looking to companies to be leaders in diversity. Building a culture of belonging and accelerating your D&I efforts can lead to improved access to capital from institutional investors, increased employee recruiting and retention, as well as an enhanced brand and reputational value with customers. This is also an opportunity for your company to prepare for potential new ESG disclosure requirements. The Securities and Exchange Commission (SEC) is considering a proposal from Nasdaq to require board-level diversity disclosures, and Congress is looking at similar measures.
Don’t lose sight of the China dynamics. The Biden administration has indicated that China is a strategic competitor. And a recent executive order evaluating the supply chain put an emphasis on the potential upsides of moving key supplies to — or closer to — the US or allied countries. While policies pushing onshoring or nearshoring of corporate infrastructure haven’t become law just yet, companies should be evaluating potential risks in their supply chains. The focus on China is also leading to calls from policymakers for increased investment in American innovation. Companies should look for opportunities that may exist for business as bipartisan efforts advance in Congress to address competition with China through government investment.
As business leaders have become a more trusted source for their stakeholders, they have an increased opportunity to influence policy as the administration moves beyond the first hundred days. This will not only help them, but the societal issues that affect their customer base and employees.
Author: Roz Brooks
US Public Policy Leader, PwC US