Executives must now walk the talk

Governments have blown the dust off the playbook for dealing with financial and economic meltdowns. State support will need to go further than a few rate cuts. That will give business a reciprocal obligation to help the society it depends on. CEOs fond of polishing their credentials for corporate responsibility must show they can walk the talk.

There are some eye-catching examples already. Luxury giant LVMH is repurposing its perfume factories to make hand sanitiser. Alibaba cofounder Jack Ma is sending surgical masks to the US. A generous response makes sense. Reputations are at stake. Profiteering will be noticed and remembered. Businesses well placed to help can work with the state to spread essential supplies.

Companies in the front line of fighting the disease face dilemmas. Pharmaceutical groups lost money developing vaccines in response to past epidemics. Now they are reluctant to shoulder risk without public or charitable funding. Pooling resources is one way to overcome a collective action problem. The UK’s GSK is offering rivals free use of its immune response-boosting agent, for example.

Financially strong businesses face tricky choices. State-approved rescues have toxic form. The decision of Lloyds in 2008 to buy struggling rival bank HBOS was a disastrous mistake. But there are happier precedents. The fashion industry reveres Chanel’s Karl Lagerfeld for preserving craft skills by saving ateliers from collapse.

Business must adapt in ways rarely seen outside wartime. Banks are exhorted to pass on rate cuts, employers to treat workers well and big firms to pay promptly. Businesses claim to serve society, and shareholders. Now they can prove it. /London, March 17

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