The Social Side of Teaming Up: Corporations have a fine line to walk when joining the government in ESG issues.

• Author: Langerman, Peter
• Position: RED CORP, BLUE CORP?

If boards of directors and senior managers have not already examined their relationships with government entities from a "big picture" perspective, now is the time to get serious about the endeavor, and I don't just mean laws and regulations that might fall under a compliance rubric. In an environment where societal and even judicial expectations of corporations have gone beyond maximizing profits, corporations need to reexamine their relationships with government entities to move closer to a form of partnership with government, rather than seeing government as an adversary. I am not suggesting the French or German model of "golden shares" or supervisory boards with government representation, nor am I suggesting anything close to the Chinese model, where corporations are in many respects viewed as agents of the state. Rather, I am referring to the articulation of goals that are consistent with important societal issues of the day such as climate change, diversity in the workplace, economic opportunities and even the preservation of our democratic institutions.

As is often the case in politics, economics and stock market behavior, useful and appropriate ideas get pushed to an extreme and lead to excesses that must be addressed. And the pendulum may swing to the opposite extreme, again requiring a major course correction. The history of American capitalism to an extent reflects these moves, including the dynasties of Carnegie and Rockefeller; Teddy Roosevelt's "trust busters;" the rise of national unions; Milton Friedman's capitalist manifesto and the "greed is good" mantra; massive corporate dislocations in traditional industries such as the steel and auto industries; the growth of IBM and Microsoft along with government efforts to stymie them; and the more recent dominance of Facebook and Amazon followed by calls to restrain and regulate.

In August 2019, we saw significant changes in the messaging from the Business Roundtable, which certainly represents the mainstream of domestic corporate philosophy--the group seeks to "move away from shareholder primacy ... to include commitment to all stakeholders." Whether this shift was just a defensive move in reaction to pressures building in society or a forward-looking pivot, this statement inherently recognizes the need to acknowledge, work with and partner with other constituencies, including government. Social media has in many ways democratized the pushback against corporate domination and...