COVID-19: Bailouts should lead to reform of business around helping society to flourish - expert comment
20 April 2020
"The unprecedented reshaping of the relationship between the private sector and the state that is currently taking place, with governments stepping in as buyer and lender of last resort, means the introduction of a social licence framework must now be given serious consideration.
"Society needs a mechanism via which it can assess and, if necessary, redress, moves by firms which have taken state aid. For instance, should a supermarket be allowed to pay out £900 million in dividends to investors while simultaneously accepting a £585 million pay out from the government in terms of Covid-19 related tax relief, and should a major broadcaster be able simultaneously to utilise state-backed furlough schemes for staff whilst awarding highly lucrative long-term incentive plans (LTIPs) to directors (worth, in one instance, £3.2 million to a single individual)?
"The firms that survive this crisis will need to articulate quickly and clearly how they intend to contribute to the future flourishing of society, how they will repay all those individuals whose tax payments are being used to save the private sector.
"Companies need to quickly rediscover the Enlightenment thesis of ‘doux commerce’ – the idea that trade can and must contribute to the good of all – and demonstrate how they will act, not just to return to profitability and revenue for shareholders, but to repay the trust placed in them by the populace. Recognising that we are all in this together means recognising that it can’t just be business as usual once we are out of lockdown."