David Ryan is the Managing Director of Edelman Smithfield Canada
The stress of the pandemic has frayed the social and economic fabric of Canada. We have witnessed an erosion of trust in Canadian institutions, including business, which has pushed our faith in the free market to breaking point.
In mid-February, the Edelman Confidence Barometer revealed that nearly half of Canadians believe capitalism has failed and that a third of us are betting on a more centralized economy. Even by our most socialist standards, this is a big admission and a harsh rebuke to Canadian business and the economic and political system that underpins it.
Is it right? Not really. Business hasn’t been easy lately either. Does this mean that we are playing with communism or on the verge of anarchy? Also no.
However, it is a stark warning that far too many Canadians believe the current system is failing them, and they want to see changes that correct the fundamental inequalities that have crept into our economy and our society, and which have been exacerbated by COVID-19. pandemic.
We can’t say we weren’t warned. The red dashboard light has been flashing for a while. The same Trust Barometer has been telling us for years that our expectations of business leaders and businesses are changing and that those expectations weren’t being met.
In early February, that red engine light gave way to a cacophony of truck horns, in Canada’s capital and at border crossings across the country. The ‘freedom convoy’ may have started as a protest against vaccination mandates, but it has grown into something much bigger and more belligerent, a lightning rod for pandemic frustration and condemnation of the system many thought it had. left behind them.
Our governments will have to take up this challenge. But the challenge is not theirs alone, and it is unreasonable to think that government alone can restore trust in the system. The trust gap is a mile wide and just as deep.
Canadians expect our CEOs and the companies they lead to fill that void and give them a reason to believe in the system again. They are now telling us – questioning their faith in capitalism – that the price corporations could pay for not heeding that call is a rejection of the economic and political system that has allowed them to thrive.
While that sounds extreme, that’s actually what Canadians are telling us, whether answering polls or honking their horns on Wellington Street in downtown Ottawa. Their trust has been shattered and they are questioning everything.
Is it fair to expect companies to close this trust chasm and restore trust in the system? Maybe not. But it’s fair to say that Canadians expect more from businesses beyond their direct economic contribution to society. They want to see corporations embrace the global shift to stakeholder capitalism, where the purpose of business has become much broader than the traditional definition, where employees and the community have increased importance, and where the interests of shareholders don’t always come first.
To their credit, many of our business leaders have been listening. They respond to the changing expectations of Canadians as well as changes in the free market system that now place greater value on environmental, social and governance initiatives. We see these changes appearing in different ways: bigger and bolder ESG programs, more aggressive net-zero commitments, active campaigns to tackle wage disparity, more ambitious community investments, more generous corporate philanthropy and CEOs using the power of their companies to find innovative solutions to societal challenges, which has really made a difference during the pandemic.
Harvard economist Joseph Schumpeter coined the term “creative destruction” to describe how entrepreneurship and relentless innovation would eventually destroy elements of the status quo, forcing us to adopt a new way of doing things (or latest iPhone). Professor Schumpeter, although a strong believer in the long-term benefits of the free market, also believed that capitalism was doomed to be replaced by socialism. The juries are still discussing it.
That said, the idea that companies have an insatiable appetite to innovate and evolve should give us hope. In different ways and with varying degrees of aggression and anger, Canadians tell us that they fear the system is failing them and that the status quo is no longer an option. Our governments are reacting to this, and businesses will have to too.
Business, much more than government, was built for this kind of change.