The story of Canada is one that has historically been a bright spot in the Northern Hemisphere. With a well-educated population, a stable financial services sector and regulatory system, as well as competitive corporate tax rates, we’ve always punched above our weight, and have enjoyed a history of attracting high-paying investments from companies who value our highly-skilled workforce, safe cities and inclusive society.
Last year changed the game. The new U.S. administration had a mandate to introduce a protectionist agenda to address an economy that has limped along for the last 10 years. This agenda has included deep corporate tax cuts and a push to repatriate capital – and jobs – to the U.S., namely by tightening up trade agreements. Canadians have become understandably worried that we’re going to move from a period of extraordinary economic growth to a financial slowdown, with business investment and productivity continuing to decline, exacerbated by hikes in the minimum wage and electricity prices in Ontario, as well as increased regulation.
Some prominent Canadians are arguing that Canada must immediately address the erosion of our competitive position with the U.S.; that we cannot continue to persist with tax rates and regulations that sharply diverge from our neighbour to the south if we are to attract investment and employment. Canadians will have to debate if we can drop taxes to U.S. levels and maintain our social safety net, but that will take time.
Fortunately, there is another chapter to pen in this story, and it’s one we can control immediately. Despite the current economic realities, we are still a country that’s respected around the world. These measures of societal good – from our inclusiveness to our well-educated citizens and beyond – are key elements of our brand as a country, and it’s catapulted global companies headquartered here to become the most trusted in the world, according to this year’s Edelman Trust Barometer. That trust afforded to ‘Brand Canada’? It’s an opportunity – but only if we act on it.
It is helpful that Prime Minister Trudeau proudly waves the flag. However, this is a chapter that Corporate Canada must write. Historically, business has ignored the core attributes of Brand Canada in favour of a focus on strong financial performance. But this can no longer be the case with the current economic realities that we face, from the newly-introduced U.S. tax reforms, to a questionable future with NAFTA, to lack of progress on the Canada-China trade talks, and so forth. As Andrew Coyne correctly points out, “What are we doing to compensate on other fronts? You can only boast about how well our banking sector survived the financial crisis so many times.”
With increasing demands that businesses look beyond the short-term interests of shareholders, Corporate Canada needs to do a better job of defining what Brand Canada is, and must take the lead in telling that story. It’s not just a race to the bottom to try and match U.S. tax rates; it’s about making a stronger case for Canada by competing on our values and our sense of purpose. As Larry Fink wrote in his annual letter to CEOs: “Without a sense of purpose, no company, either public or private, can achieve its full potential. It will ultimately lose the license to operate from key stakeholders…Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change?”
As noted in the Trust Barometer, 64 per cent of the global general population say CEOs should take the lead on change rather than wait for government to impose it. Furthermore, companies must show commitment to the long term; 56 per cent agree that companies that only think about themselves and profits are bound to fail.
A values-based commitment would lift Canada’s position as an example to the world. We’re already seeing how this approach can and does attract investment: Amazon Canada recently shortlisted Toronto for its second headquarters, and our bid touted openness to immigration, a well-educated and diverse talent pool, our high quality of life without having to offer tax incentives or other financial subsidies.
Business leaders of Canadian-headquartered firms can no longer ignore what must be done to continue to grow and prosper despite the economic uncertainty swirling around us. Beyond themselves, they should also consider engaging employees born outside of Canada or who have extensive family networks abroad to forge connections around the world and share the Brand Canada story.
We must remind customers, employers, suppliers and foreign corporations and governments about the Canadian brand advantage, what we stand for as a nation and society and why they should have confidence in doing business with us. When Canadian business leaders do step up to better define and tell the Canadian story, together we’re bound to create the positive conclusion we’re all seeking.