Coronavirus is a shock - and it can be a spur

With the coronavirus, everything is up in the air.It is forcing us to rethink the relationship between business, the state and society.This blog is based on a letter that I wrote to the Financial Times in response to an article by Jonathan Ford on 'stakeholderism'.The letter was printed on 16th March.

Jonathan Ford rightly points out that 'Stakeholderism is not a magic wand we can wave over the economy' (Inside Business, Monday 9th March).As the coronavirus is showing, there are no silver bullets to deal with complicated real-world problems.

Companies on their own cannot provide substantial protection to stakeholders and solve the problems of people and planet.They will of course have their own motives for taking action. And when they have market power, it is important to look beyond the PR and understand how this can be used and abused.

Government and regulators, however, are not the only answer to addressing today's pressing social and environmental challenges. Yes, laws and regulations are clearly vital to shape the operating context for business.Measures such as building standards and carbon taxes are crucial to deliver key social and climate goals at the scale and pace of change needed.However, in the face of significant disruption and radical uncertainty, policy and regulation can lag behind the tech and science.And be out of step with social expectations.

Governments and regulators are indeed more accountable.But accountability can come in different ways.Engagement with local stakeholders – particularly democratically elected representatives in communities – and decentralised decision-making are important. Companies can play a key role here. After all, they, and their employees, are part of society. But stakeholder engagement needs to be meaningful.When there's a mismatch of power and knowledge this often isn't the case.

Fleshing out how roles and responsibilities need to change on all sides is crucial if we are going to tackle challenges such as inequality and the climate crisis.Reshaping corporate governance and institutional arrangements, so that the risks and rewards from change are shared in a fair way, is vital not just for the legitimacy of business – but also to maintain trust in policy and regulatory frameworks.

This doesn't require a magic wand.Rather a laser-like focus on delivering social and environmental outcomes, trusted assurance processes and creating a culture and space where difficult conversations between stakeholders, companies, regulators and policy makers can take place.

The coronavirus, through its immediate shock to the system and the recognition that no side can tackle this alone, should be a spur to action.A spur to galvanise policy makers, regulators and companies to work together to take action for the wider common good.