Corporate Leadership as the ‘Fourth Branch of Government’: How Boards Can Build Public Trust

Of last year’s many crises, one in particular could reshape the role corporate boards play in society: the crisis of declining trust in authority. The COVID-19 pandemic, societal upheaval, and extensive proliferation of misinformation over the past 12 months have caused publics around the world to lose faith in authoritative bodies—namely, government, media, and long-standing institutions.

In the context of the trust deficit surrounding these organizations, business has consequently gained the advantaged position of being widely trusted by the populace to lead on key societal issues.

Indeed, the Edelman Trust Barometer, which surveys over 33,000 people in 28 countries to annually uncover the state of trust, found for the 2021 report that 86 percent of people believe CEOs should speak out and lead on societal issues, while 68 percent believe that CEOs should “step in”when government fails to fix societal problems. In comparison, trust in public institutions has dropped to record lows in many countries, leaving business the only entity currently viewed by most people as both competent and ethical. Individuals have more faith in their direct employers than businesses overall, netting stable or increased trust over the past year in a majority of countries surveyed. Even certain groups known for their mistrust in government institutions rated CEOs highly, Edelman found; for example, in the United States, 61 percent of supporters of former President Donald J. Trump say that they trust their CEOs, while only 28 percent say that they trust political leaders.

Mistrust of authority has wide-ranging negative impacts, from threatening the prospects of mass vaccination against the deadly coronavirus to discrediting the outcomes of democratic elections. Corporations have long invested in the physical and financial infrastructure necessary for society to prosper. Now, they are increasingly being called upon to rebuild the less-tangible pillars of social stability, such as confidence in facts and science to nonviolent civil discourse. As their companies are instilled with the trust of diverse groups of people, corporate boards are in a unique position of authority to effectively support societal stability.

This new role for business has prompted some commentators to dub corporate leadership the “fourth branch of government.” Over the past year alone, businesses especially in the United States have taken on new responsibilities in responding to the pandemic, a national reckoning on racial justice, and the most volatile post-election period in living memory. The enhanced power of corporate leaders was most prominently on display after the attack on the US Capitol on Jan. 6, when scores of companies pulled political funding from politicians accused of undermining America’s democracy. But corporate actions in the name of societal stability have gone far beyond US politics. A growing number of corporate leaders have begun to actively invest in vaccine confidence. Examples range from Google’s pledge of $150 million toward vaccine education to Anheuser-Busch Cos.’ decision to replace its customary Budweiser Super Bowl ad with an investment in vaccine awareness. These moves help the companies boost their own reputations while playing an important role in promoting societal stability—and thus, the bedrock conditions that allow businesses to prosper.

Conversely, when corporate leadership declines to take an active role in promoting societal stability, the effects can range from public relations catastrophes to poor financial performance. Just in the last year, there have been several high-profile instances of multinational corporations reacting to political and societal instability in ways detrimental to their reputations and bottom lines. In Jan. 2021, a large, international consulting firm with a presence in Eastern Europe found itself on the defensive when a local office managing partner’s internal correspondence leaked, showing that the partner actively dissuaded his employees from engaging in public demonstrations against kleptocracy and the abuse of state power, both in person and through displays of support online. Closer to home, two major leisure and food brands in the United States saw their public images under assault after top leadership engaged in campaigns alleging massive voter fraud conspiracies. In this era of extreme political polarization, public health crisis, and fragile social cohesion, it is further incumbent on business leaders in the United States and worldwide to promote fact-based messages and policies while also acting responsibly to protect their reputations and bottom lines.

Whether they like it or not, this new era has forced corporate leadership around the world under a political and public relations microscope. Amid this heightened scrutiny, corporate boards can take proactive steps in their approaches to volatile political and socioeconomic environments. Leadership may consider implementing board oversight of or policy direction for public statements from management in situations where security or political dynamics entail operational and reputational risks. As we have seen over the past year, these dynamics are present both in the United States and abroad. More specifically, in this particular moment, corporate boards may wish to consider forward-thinking measures to aid in the promotion and facilitation of the mass COVID-19 vaccination campaign in the regions in which their businesses operate. These measures can include actions as simple as publicly encouraging employees to get the vaccine or offering company facilities as staging sites for vaccine administration. Public trust in corporate responsibility as the “fourth branch of government” has never been higher, creating both risk and opportunity as business leaders reshape their roles in modern society.