Business Leadership in the Great Fragmentation: Part 1

July 27, 2022
  • Aron Cramer portrait

    Aron Cramer

    President and CEO, BSR

Editor's Note:

It is obvious that we are living through a time of profound and accelerating change. Our world has been rocked by a series of disruptions: COVID-19, war and social conflict, rollback of rights and democracy, and now high inflation and the risk of recession. These developments have jolted society, and business.

To help our 300+ member companies navigate this volatile environment, we're releasing a series of blogs over the coming weeks to build insight into how to shape business approaches that address this unique moment. Following last week's piece on changing expectations of business in protecting rule of law, rights, and democracy, today's piece is the first of two blogs on the role of business in combating societal fragmentation. 

We’ll conclude with a deeper dive look into how BSR’s 2025 strategy can help your company to navigate these turbulent times—and how you can collaborate with our global network to push us further, faster, to achieve a more equitable, just world for all.

The recent US Supreme Court hearing that overruled Roe v. Wade is yet another reminder of the profound divisions plaguing the United States. The decision has caused states to take wildly different approaches to women’s rights, business to face the question of how to respond, and a society at each other’s throat.

As momentous as this decision is, it is but one example of the many ways that the world is fragmenting: politically, economically, environmentally, and culturally. Signs are everywhere: growing conflict between illiberal governments and liberal democracies, generational splits regarding the value of market capitalism, and culture wars in the US and many parts of Europe. 

This fragmentation is driven by a set of interconnected and accelerating factors, which present not only serious risks to human progress, but also a massive challenge for business. This is particularly true for those of us advocating for more just and sustainable business. 

Sources of Fragmentation

To understand—and address—our current context, it is essential to understand the six interlocking factors that are accelerating fragmentation. Each is potent, and taken together, they reinforce and amplify each other, creating challenges that metastasize by the day. 

  • The Digital World: Digital technologies and social media are both sources and enablers of fragmentation, with three key elements. First, social media enable communities of interest to gather in ways they never could in the physical world. While this is not inherently negative, the phenomenon is clearly corrosive. Second, disinformation and misinformation are turbocharging the digital communities’ embrace of their own realities, untethered to fact. Finally, the rise of the “splinternet,” with multiple walled off internets replacing the initial vision of a single, connected web (e.g., the Great Firewall of China and the “Putin-net”), prevents universal access to information, fostering further division.  
  • Social Progress…and Backlash: The rise of #MeToo and Black Lives Matter and increased recognition of LGBTIQ+ rights are, on balance, leading to more equitable societies, with greater awareness of the structural inequities that plague us. There is also a powerful backlash, resulting in expressions of hate and violence. Business is increasingly being pulled into these culture wars, with competing claims of “woke capitalism” from the right and expectations from many, including the rising generation of employees and consumers, that business speak out for social justice. 
  • Income Inequality: Our societies also continue to face income inequality that both reflects and reinforces fragmentation. According to the New York Times, the CEO-to-median-worker pay ratio in the US reached 339-1 in 2021, a tenfold increase from the late 1960s. Coming at a time of structural change and dislocation, this fuels extreme distrust, as well as populist movements from both right and left. Brexit, Trump, and Le Pen all galvanized widespread political support, often expressed through and with fear and xenophobia, by capitalizing on income inequality as proof that the system is rigged for the benefit of the wealthiest, leading to further social division.  
  • Political and Geopolitical Division: Political divisions within and between countries are also on the rise. The recent French parliamentary elections spread votes across four coalitions, including two that are far to the right and left. The US has been mired in gridlock for two decades. “The Great Sorting” of populations has created urban and rural political divides in Europe and North America. The same is true globally, with sharpened geopolitical tensions. Russia’s invasion of Ukraine, China’s increasingly muscular nationalism, and competition between liberal democracies and illiberal regimes are creating a more politically volatile environment than we have seen since in decades. 
  • Social Impacts of Environmental Collapse: Human-caused environmental collapse also fuels fragmentation. The direct impacts of climate change already are more than enough for society to manage. The second- and third-order effects of climate change, however, are sparking additional social division. Climate refugees are adding to human migration, both to Europe from Africa and the Middle East and to the US from Central America, exacerbating already sharp divisions over migration and contributing to further xenophobia. The sheer scope of the energy transition, with the undeniable fact that there will be winners and losers, and pitting historical emitters against vulnerable nations, also magnifies fragmentation. Whether and how to act is also politicized, especially in the United States, where one political party has systematically—and cynically—denied climate science.
  • Maximalist Thinking: Finally, these factors, which are powerful enough on their own, are also amplified—and at times weaponized—by the troubling rise of maximalist thinking. Various communities see “their issue,” whether climate or equity or democracy protection as the issue of existential importance. No matter how legitimate—indeed important—their vision and objectives, this kind of thinking has contributed to an environment in which tribes of reformers fail either to achieve their goals or to build needed coalitions. As Ford Foundation President Darren Walker put it recently in The New York Times, “[W]e are mired in a culture of absolutism and tearing ourselves apart at the seams. Everything right now, it seems, is black or white, all or nothing, perfect or unacceptable.” Indeed, if every cause is presented as an existential threat, advocates will retreat to their own corners, many others will simply tune out, and the consensus needed to make progress is rendered impossible.

Each of these developments has immense significance for business. Taken together, they are reshaping the expectations of customers, employees, and other stakeholders; the ways business communicates; and the policy environment shaping crucial issues from climate to employment to reporting and disclosure. 

In Part 2, we will spell out how business can respond to reduce these sources of fragmentation and adapt their activities to address them.

Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.

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