The corporate heads who don’t speak up against bad government policies might think they are being constructive by going with the flow, but they don’t do anyone any favours in the long run, including themselves.
The first time I saw a bunch of CEOs from large energy companies lined up behind politicians who were announcing measures highly damaging to their industry I was gobsmacked. Why would these executives be supportive about policies that would ultimately put them and their employees out of a job? As for a “bigger picture” perspective, why would these senior, knowledgeable folks want to appear OK with governments severely hobbling and ultimately killing an industry that makes such a large contribution to government coffers and the economy? By seeming to be supportive of these bad government policies, these corporate executives were lending credibility to governments and measures which did not deserve any credibility at all.
In trying to answer these questions, it is important to understand the symbiotic relationship between large corporations and governments. Large companies usually have achieved some type of preferential treatment from governments, in the form of subsidies, tax advantages, discounted hydro rates, generous government procurement contracts, etc. Heads of large corporations often know politicians personally and socially as they travel in the same elite circles. From the politician’s standpoint, a cozy, well-compensated corporate Board seat or two is always an attractive and lucrative way for politicians to spend their time following their retirement from politics.
Small- and medium-sized businesses very rarely enjoy such privileges. In fact, smaller firms often end up funding the subsidies larger firms enjoy via the taxes they pay as well as higher rates for electricity and other costs that fall proportionately more heavily on them than they do on large corporations. And small businesses will never be able to offer those cushy Board seats that politicians covet.
CEOs are also likely to have generous severance arrangements with the companies they head up, such that they will not personally suffer financially from a decline in the business’ fortunes. Their employees are usually not so lucky, however. Senior executives are also often taking advice from marketing or public relations departments that tend to recommend the “going along to get along” approach more often than not, as it is the least controversial and less likely to cause blowback for them. All in all, support from corporate executives for a particular government approach should never be assumed to be an indication of good policy, but rather a statement on the close large corporate-government relationship.
By not pushing back against policies harmful to their businesses, CEOs also enable governments to concoct even more bad policies down the road. In the energy industry, this has culminated in the so-called “just transition” following carbon taxes, tanker bans on the west coast, heavy-handed and confusing regulatory standards, emissions caps, plastic bans and the “Clean Fuel Standard”, among others.
The CEOs who don’t speak up against bad government policies might think they are being constructive by going with the flow, but they don’t do anyone any favours in the long run, including themselves. Other corporate heads go along with these bad policies in public but say something else in private, which is dishonest and misleading. If they truly believe an approach is negative and harmful, they should have the courage to say so publicly and run their business accordingly.
Fortunately, a number of brave corporate leaders have begun to speak out against many of the damaging and impractical energy policies being inflicted by governments, such as punitive taxes and regulations that greatly increase costs for businesses and consumers, so-called ESG (environmental, social and governance) regimes that are devastating for smaller firms and costly for all businesses, the “just transition” and other “woke” measures. Much of this has come about as businesses gain experience with implementing these policies and realize they were sold under false pretenses.
Let’s hope it’s the start of a trend.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.