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When the Public Affairs Council (PAC) board convened in Los Angeles, CA last month, executives from the country’s largest corporations depicted a new era of business where nearly every dimension of their operations is beset by public affairs concerns. A robust debate around best practices, emerging trends and looming threats cemented the notion that everything at the intersection of business, government and society—even the very definition of public affairs—is being reexamined.
Three key themes stand out:
No longer are public affairs confined to regulatory or legislative matters. The hyper-partisan political environment, the rise of social justice movements, the fractured geopolitical landscape, the war for talent and the backlash against “corporate wokeness” – all under the microscope in a 24-hr news cycle and across social media – have exploded the public affairs profession in scope and significance. Public affairs considerations intrude on almost every aspect of a company’s business – from sourcing and supply chain management to product development and manufacturing, employee relations and benefits, talent recruitment, corporate communications, marketing, legal compliance, IT and data security, even facilities. While it may be possible, it’s no longer prudent for companies to act within any of these core business domains without first considering how those actions will land in the public square – at the crossroads of media, society, politics and public policy.
While some companies have elevated and connected their public affairs functions into the core of their business operations – giving government affairs, public policy and communications leaders a seat at the table – many have not. In too many cases, public affairs remains stranded in one or more siloes, taking direction from above, or even operating in a vacuum and at cross-purposes with the rest of the business. In today’s environment, public affairs must be integrated throughout our organizations. Because public affairs analysis should inform business decisions just as much as business decisions should inform public affairs strategy.
Today, geopolitics isn’t just about the clash or cooperation between world powers. It’s not just about foreign governments, their laws or their aggressions. In the digital age, geopolitical power is infinitely distributed. It spans governments, business, media and the increasingly empowered masses of digital citizens primed to praise or pillage on command.
For companies to get—and stay—ahead in this age, it’s not enough to monitor foreign markets, elections and regulations. They must also track culture, media and the vicissitudes of public opinion. The head and tailwinds generated by these forces—both internationally and domestically—are just as consequential to a company’s reputation and success. When geopolitical tensions spike, corporations—and not just the multinational ones—are now expected to speak, act and even influence outcomes.
From China to Ukraine, the business community endured its share of geopolitical shocks in 2022. PAC member companies that were prepared—that knew their exposures and had already pressure tested responses to different geopolitical scenarios—were able to move quickly, avoid traps and in some cases, take leadership positions and outpace competitors.
The results of the Public Affairs Council’s most recent pulse survey were clear: social issues will stay on corporate America’s agenda, regardless of whether executives want them there. More than half of the respondents polled said that business should be involved with everything from environmental sustainability to ending discrimination by gender and race. Even when broken down by political party, more than half of Republicans—whose elected representatives have increasingly denounced “corporate wokeness”—supported corporate involvement in most major social issues, with the notable exceptions of voting and abortion access.
Whether poll respondents are speaking from the point of view of a consumer or an employee may be relevant. While both constituencies carry significant sway, several PAC members hypothesized that we overestimate the importance of a company’s position on social issues when it comes to consumer decision-making while we underestimate the weight of those positions when it comes to employee decision-making. And in an era when the war for talent is so fierce, the employee view on social issues may be the view that companies ought to examine most closely.
Irrespective of employee, consumer or even shareholder views, there was broad consensus that companies should lead with their values when it comes to speaking out on social issues. And they should not allow political threats to deter them from pursuing ESG agendas that are simply good for business—whether that’s investing in a more environmentally sustainable supply chain or fulfilling a commitment to diversify their workforce.