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The 2 best ways to hold companies to their climate commitments



With the US presidential election weeks away, we have the tempting possibility of a viable political solution to the looming climate crisis. If elected, a Biden administration may deliver sweeping climate legislation. But there is no guarantee of what that might ultimately look like or when it will happen. And under the current administration, the Department of Energy has started referring to natural gas as “molecules of US freedom.” Not quite the prelude to a carbon tax, a policy Republicans have shown some support for.

So where is immediate, needle-moving action on climate change going to come from? We need corporations to step up.

Some appear to be doing so. For example, BP may finally be making good on its decades-old promise to move “Beyond Petroleum.” This August, it announced it would cut oil production by 40 percent in the next decade and reach net-zero emissions by 2050.

It now joins hundreds of others in setting science-based targets for cutting emissions. A group of nearly 300 companies, ranging from automotive to apparel, have committed to reducing their emissions by 35 percent, a substantial goal given that these companies currently account for more emissions than France and Spain combined.

For their part, tech giants are seemingly in a sustainability arms race. Last year, Amazon pledged to buy 100,000 electric delivery vans as part of its effort to go carbon neutral by 2040. Not to be outdone, this summer Microsoft committed to go carbon negative by 2030 — and to remove enough carbon from the atmosphere to offset all of its historical emissions. Microsoft is part of Transform to Net Zero, a group of private companies including Maersk, Unilever, and Starbucks committed to achieving net-zero global emissions no later than 2050.

This latest slate of climate commitments has elicited both cynicism and hope — hope that change at this scale can make a difference, but also cynicism about whether these commitments are real.

We’re two impact investors, and we think what’s too often missing from the conversation is that to make corporations sustainable, we must first make them accountable.

As we describe in our new book, Accountable: The Rise of Citizen Capitalism, this requires two things. First, accountability requires mandatory, standardized social and environmental metrics, built off the template of our mandatory, standardized financial reporting system. And second, it requires a more aggressive culture of engagement from citizens to hold corporations to account — in our capacities as consumers, employees, voters, and, yes, shareholders.

In all, 137 million Americans own stock, either directly or through an investment fund — that’s 15 million more people than voted in the last national election. We can use that position as shareholders to push companies to our long-term interests and our deeper values.

As impact investors, we’re often met with skepticism that private companies can be oriented around the public good. We helped launch Bain Capital’s impact investing fund, and now one of us leads Two Sigma Impact, a fund that invests in companies to generate good jobs. We’ve seen the power of building companies around a deeper purpose as the broader impact investing field has grown to $715 billion under management.

But we’ve also seen every hollow promise and dead-end trend in this movement. It doesn’t help when companies adopt a posture of social responsibility without actually becoming more responsible. In the fight to reform capitalism, we risk winning the battle of ideas and losing the war of substantive action.

Facebook CEO Mark Zuckerberg on a computer screen with the Facebook logo.
Depending on whom you ask, Facebook is either one of the most or least environmentally responsible companies.
Mladen Antonov/AFP/Getty Images

We need metrics to separate greenwashing from measurable progress

In 2018, Chevron announced it would invest $100 million that year in lowering emissions through its new Future Energy Fund. The same year, it invested $20 billion in traditional oil and gas. It’s hard to argue that you’re committed to change if you’re spending 99.5 percent of your budget doing the same old thing.

For those who put their faith in corporate social responsibility (CSR) as a panacea for our ailing society, we have the unfortunate reality: This kind of allocation of efforts is not uncommon. Superficial public commitments on issues like sustainability and diversity are much easier for companies than substantive action.

Corporations publicize every climate-conscious dollar they spend, with press releases, glossy reports, and expensive advertising. Eighty-six percent of S&P 500 companies now issue sustainability reports of some type, up from only 20 percent in 2011. They talk about the importance of the environment. They talk about focusing on all of their stakeholders: employees, customers, and communities. They talk about corporate citizenship and shared prosperity. They talk.

But the average company spends just 0.13 percent of its revenue on CSR. Corporations may dominate our world, but not through their CSR departments. CSR is often small and superficial, a Potemkin village constructed to appease capitalism’s critics. It is far easier for business leaders to sign on to lofty statements like the Business Roundtable’s on the purpose of a corporation or the Davos Manifesto than publicly commit to specific environmental or social targets.

New climate targets like BP’s make news not just because they are important and specific, but also because they have been historically rare. Many companies still fail to disclose their emissions, and despite the progress noted above, few have set reduction targets. Measurement of environmental, social, or governance (ESG) performance is notoriously unreliable. Companies self-report without external verification. Nearly all decide for themselves the style, format, and content of their reporting rather than following a common framework.

Look up the five largest companies in the world by revenue, and every list will be the same. Look up the most socially responsible, and there’s no agreement. In 2018, only one company made it into the top five of both Barron’s 100 Most Sustainable Companies and Newsweek’s Top 10 Green Companies.

If we look at a company’s credit rating, there is an almost perfect correlation between how different ratings agencies evaluate them. But between a company’s various ESG ratings, the correlation may be zero. Depending on whom you ask, Facebook is either one of the most or least environmentally responsible companies, and Wells Fargo is either one of the best or worst governed.

This makes holding companies to their commitments difficult and benchmarking across companies almost impossible. It also impairs our ability to connect environmental or social performance to financial performance, a critical need if we are to convert more corporations to this approach.

Compare this Wild West of ESG reporting with the staid and standardized world of financial accounting. In the United States, all public companies comply with Generally Accepted Accounting Principles, which are set by the Financial Accounting Standards Board as overseen by the Securities and Exchange Commission and audited by private accounting firms such as Ernst & Young and PricewaterhouseCoopers. It’s an alphabet soup of accountability, but for the most part, it works. Though each company is unique, all financial statements are reported according to the same standards and thus can be reliably compared against one another

We need mandatory, standardized, audited ESG metrics for large public companies. This is an area where government and industry can work together to create more accountability, as they already do on financial reporting.

There are hopeful moves in this direction elsewhere: The European Union is currently considering a set of common standards, while many of the emerging standards bodies in the ESG world like the Sustainability Accounting Standards Bureau and the Global Reporting Institute recently committed to work together to create comprehensive reporting metrics. The World Economic Forum also followed up the Davos Manifesto with its recommendation for a common set of metrics.

These sorts of clear standards are key for keeping companies on track. Last year, Irving Oil, which operates Canada’s largest oil refinery, abdicated its climate targets, silently removing commitments from its website. As part of Irving’s backtracking, the company changed the metrics by which it would be judged, choosing instead a muddier system that would allow it to claim progress despite higher emissions.

This is the risk with voluntary commitments: They’re voluntary. Nothing stops corporations setting voluntary targets from voluntarily resetting them. What if the next CEO of BP is less committed to clean energy? To hold corporations accountable, we need mandatory, independent metrics by which to judge them.

An American flag hangs in front of NRG Energy's Joliet Station power plant on May 7, 2015 in Joliet, Illinois.
NRG Energy’s Joliet Station power plant in Joliet, Illinois, shown in 2015.
Getty Images

All investors can and should demand “stakeholder capitalism”

But better metrics will only get us so far. Who, exactly, will be holding these corporations to account? While some corporate leaders say they are more focused on society and the environment, there is one stakeholder group they cannot ignore: shareholders.

In a capitalist society, the capitalist is king. Unless investors and shareholders support these transformations, they will ultimately be perpetually superficial or only temporarily substantive.

Take the case of NRG, one of the largest power producers in the US. NRG suffers from sustainability whiplash. The public company sells electricity across the country, and under its former CEO David Crane, NRG began to transform. In a 2014 letter to shareholders about climate change, Crane wrote, “The day is coming when our children sit us down in our dotage, look us straight in the eye … and whisper to us, ‘You knew … and you didn’t do anything about it. Why?’”

And so NRG announced it would cut its carbon dioxide emissions by 50 percent by 2030 and 90 percent by 2050 — real commitments that would lead to substantive change.

But in 2017, Crane found himself deposed when the activist hedge fund Elliott Management forced him out. Elliott named new members to the board of directors, including a former Texas energy regulator who had called climate change a hoax. Two years later, NRG announced it was once again accelerating its carbon emissions goals. Today, the sustainability section of its website is bannered with the feel-good slogan, “Becoming a voice and an example of change.” They’ve got that right.

After he lost his job, Crane reflected that there’s all this “happy talk coming out of the senior ranks of major pension funds, sovereign wealth funds and university endowments about investing their money in a climate positive way,” but when it came time to make hard choices, he found only “money managers who are, at best, climate-indifferent.”

Elliott was able to force change at NRG because it owned part of the company. That’s how ownership works in a capitalist economy. But Elliott didn’t own the whole company. The fund owned only 6.9 percent of the shares. Even with its partner — the private investor Bluescape Energy Partners — it could speak for only 9.4 percent of the ownership.

Where were the other 90.6 percent of shareholders? Where were all the shareholders who cared about climate change, about the long-term viability of carbon power, about the need to transform our electrical grid? Why didn’t they speak up, supporting Crane and forcing Elliott to back off?

Without the support of these other shareholders, NRG’s transformation could not last.

As investors, we’ve seen how corporate leaders are pulled in opposite directions. Boards and shareholders want companies to hit their quarterly profit targets, while customers and other stakeholders want more sustainability and social responsibility.

Against these conflicting demands, the rational response from business leaders is hypocrisy: Say different things to different audiences and then continue to serve the priorities of shareholders — those bringing the money — above all. This enables companies to pacify reformers without sacrificing investors. It’s easier to fake good works than good returns.

But here too we are beginning to see hopeful progress. Climate Action 100+ is a group of investors representing over $47 trillion in assets and committing to use their power to push companies toward better disclosure and management of climate risk. Chris Hohn, who runs a $30 billion hedge fund in the United Kingdom, has publicly committed to voting against directors who don’t improve pollution disclosures and dramatically reduce greenhouse gas emissions. They join other shareholder activists like Ceres, As You Sow, and the Interfaith Council for Corporate Responsibility.

These organizations recognize that focusing on sustainability is not just the right thing to do, it’s also actually in the best interests of most shareholders. Many critics of capitalism frame the problem as shareholders benefiting at the expense of stakeholders, but that misunderstands the interest of a vast majority of shareholders.

Of the 137 million Americans who own stock, the median shareholder is 51 years old with $65,000 in a retirement account. The median shareholder won’t withdraw that money for decades. If they’re invested in index funds, they likely hold thousands of stocks worldwide. Their economic interests — let alone their moral or political ones — aren’t best served by maximizing quarterly earnings at specific companies today. They’re best served through policies and practices that ensure the long-term, sustainable development of the global economy in a safe and stable climate.

With more and more investors joining the fight, there is greater potential for corporations to take the historically radical change required to make meaningful progress and greater potential to hold them accountable even when such progress is no longer in the best short-term interests of corporate managers.

Restoring trust with accountability

Nearly two-thirds of people worldwide want CEOs to lead on change rather than to wait for government. At the same time, two-thirds of people don’t trust most of the brands they use. Four out of five don’t trust business leaders to tell the truth or make ethical decisions. No wonder recent climate targets have been met with equal parts cynicism and hope.

This distrust doesn’t exist with smaller businesses. Three out of four people have very little or no confidence in big business, but the opposite is true for small companies: Three out of four people trust them. This is partly because externalities don’t exist in the same way for small, local companies. If a local company pollutes the river or fires its workers, it’s their river they’ve polluted and their neighbors they’ve let go.

It’s also because there’s greater accountability at the local level where, measured or not, local stakeholders have a better sense of each company’s impacts.

We’re also seeing more small businesses embrace explicit social and environmental goals through the B Corp certification process. This process allows stakeholder-minded companies to opt in to a rigorous set of standards. Certification is still voluntary, but it approximates the sort of accountability that mandatory metrics would provide. In our experience, adherence to these standards makes for better companies overall — both socially and commercially. There are currently more than 2,500 B Corps in over 50 countries, most of them very small.

To make meaningful progress toward sustainability, we must restore the trust that smaller companies have and larger corporations have lost. And to do that, we need better accountability — from mandatory metrics and engaged stakeholders, shareholders included.

Just because corporations are stepping up doesn’t mean the rest of us should be stepping down. It is up to us to hold them accountable through the laws we choose to pass, the jobs we take, the products we choose to buy, and the demands we make on them as investors. To the threadbare question of, “Can companies do well by doing good?” we have our answer: It’s up to us — as voters, consumers, employees, and savers — to decide.

Are these climate commitments harbingers of a new era of capitalism? Or just the latest collection of hollow promises? Only time will tell. But with an uncertain political future in a country suffering from heat waves, wildfires, and hurricanes exacerbated by climate change from coast to coast, time is running out for corporations to do what must be done.

Michael O’Leary and Warren Valdmanis are the co-authors of Accountable: The Rise of Citizen Capitalism. They were on the founding team of Bain Capital’s impact investing fund. Valdmanis is now a partner with Two Sigma Impact. The opinions expressed are their own and do not reflect the views or opinions of their employers.

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Nearly 6,000 civilian casualties in Afghanistan so far this year



From January to September, 5,939 civilians – 2,117 people killed and 3,822 wounded – were casualties of the fighting, the UN says.

Nearly 6,000 Afghan civilians were killed or wounded in the first nine months of the year as heavy fighting between government forces and Taliban fighters rages on despite efforts to find peace, the United Nations has said.

From January to September, there were 5,939 civilian casualties in the fighting – 2,117 people killed and 3,822 wounded, the UN Assistance Mission in Afghanistan (UNAMA) said in a quarterly report on Tuesday.

“High levels of violence continue with a devastating impact on civilians, with Afghanistan remaining among the deadliest places in the world to be a civilian,” the report said.

Civilian casualties were 30 percent lower than in the same period last year but UNAMA said violence has failed to slow since the beginning of talks between government negotiators and the Taliban that began in Qatar’s capital, Doha, last month.

An injured girl receives treatment at a hospital after an attack in Khost province [Anwarullah/Reuters]

The Taliban was responsible for 45 percent of civilian casualties while government troops caused 23 percent, it said. United States-led international forces were responsible for two percent.

Most of the remainder occurred in crossfire, or were caused by ISIL (ISIS) or “undetermined” anti-government or pro-government elements, according to the report.

Ground fighting caused the most casualties followed by suicide and roadside bomb attacks, targeted killings by the Taliban and air raids by Afghan troops, the UN mission said.

Fighting has sharply increased in several parts of the country in recent weeks as government negotiators and the Taliban have failed to make progress in the peace talks.

At least 24 people , mostly teens, were killed in a suicide bomb attack at an education centre in Kabul [Mohammad Ismail/Reuters]

The Taliban has been fighting the Afghan government since it was toppled from power in a US-led invasion in 2001.

Washington blamed the then-Taliban rulers for harbouring al-Qaeda leaders, including Osama bin Laden. Al-Qaeda was accused of plotting the 9/11 attacks.

Calls for urgent reduction of violence

Meanwhile, the US envoy for Afghanistan, Zalmay Khalilzad, said on Tuesday that the level of violence in the country was still too high and the Kabul government and Taliban fighters must work harder towards forging a ceasefire at the Doha talks.

Khalilzad made the comments before heading to the Qatari capital to hold meetings with the two sides.

“I return to the region disappointed that despite commitments to lower violence, it has not happened. The window to achieve a political settlement will not stay open forever,” he said in a tweet.

There needs to be “an agreement on a reduction of violence leading to a permanent and comprehensive ceasefire”, added Khalilzad.

A deal in February between the US and the Taliban paved the way for foreign forces to leave Afghanistan by May 2021 in exchange for counterterrorism guarantees from the Taliban, which agreed to sit with the Afghan government to negotiate a permanent ceasefire and a power-sharing formula.

But progress at the intra-Afghan talks has been slow since their start in mid-September and diplomats and officials have warned that rising violence back home is sapping trust.


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Classic toy tie-up: Etch A Sketch maker to acquire Rubik’s Cube



Spin Master Corp., the company behind the Etch A Sketch and Paw Patrol brands, has agreed to acquire Rubik’s Brand Ltd. for about $50 million, tying together two of the world’s most iconic toy brands.

The merger comes at a boom time for classic toymakers, as parents turn to familiar products to entertain kids stuck in lockdown. Like sales of Uno, Monopoly and Barbie dolls, Rubik’s Cube purchases have spiked during the pandemic, according to the puzzle maker’s chief executive officer, Christoph Bettin. He expects sales to jump 15% to 20% in 2020, compared with a normal year, when people purchase between 5 million and 10 million cubes.

By acquiring Rubik’s, Toronto-based Spin Master can better compete with its larger rivals, Hasbro Inc. and Mattel Inc. All three companies have pivoted to become less reliant on actual product sales, diversifying into television shows, films and broader entertainment properties based on their toys. Spin Master CEO Anton Rabie said he wouldn’t rule out films or TV shows based on Rubik’s Cubes, but he was focused for now on creating more cube-solving competitions and crossmarketing it with the company’s other products, like the Perplexus.

“Whoever you are, it really has a broad appeal from a consumer standpoint,” Rabie said in an interview. “It’s actually going to become the crown jewel; it will be the most important part of our portfolio worldwide.”

Hungarian inventor Erno Rubik created the Rubik’s Cube in 1974, a solid block featuring squares with colored stickers that users could twist and turn without it falling apart. It gained popularity in the 1980s and has remained one of the best-selling toys of all time, spawning spinoff versions, international competitions of puzzle solvers, books and documentaries.

The toy has been particularly well-suited to pandemic conditions. During lockdowns, parents have sought to give kids puzzles that boost problem-solving skills useful in math and science careers. Normally, toys tied to major film franchises are among the most popular products headed into the holidays, but studios have delayed the release of major new movies because of coronavirus. So classic products are experiencing a mini-renaissance.

“The whole pandemic has really increased games and puzzles,” Rabie said. “But whether the pandemic existed or didn’t exist, we’d still buy Rubik’s. It’s had such steady sales for decades.”

Rubik’s CEO Bettin said it was the right time to sell the company, with the founding families behind it ready to move on. London-based Rubik’s Brand was formed out of a partnership between Erno Rubik and the late entrepreneur Tom Kremer, while private equity firm Bancroft Investment holds a minority stake in the company.

Early on, Bettin felt Spin Master was the right home for the puzzle toy, he said. Spin Master, which was started by a group of three friends in 1994, has expanded through the purchase of well-known brands, including Erector sets and Etch A Sketch. Rabie says he works to honor the “legacy” of those products, which Bettin cited as a key reason to sell the brand to Spin Master over larger companies that were interested.

“It was important for us to not be lost in the crowd, and to be sufficiently important and cared for,” Bettin said. “And there’s a balance between being with someone large enough to invest, and agile enough to ensure you are key part of their plans.”

Spin Master won’t own Rubik’s Cubes in time for the holiday season – the transaction is expected to close on Jan. 4. At that time, the company will move Rubik’s operations from a small office in London’s Notting Hill neighborhood to Spin Master’s new games operations center in Long Island.

Some of Rubik’s Brand’s 10 employees will be part of the transition, but they won’t stay permanently, Bettin said.


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To compete with China and Russia, America needs a new era of multilateralism



With Election Day looming, American progressives yearn for an about-face from President Trump’s foreign policy — perhaps nowhere more so than when it comes to US multilateralism.

Multilateralism — working with other countries both through large international institutions and looser coalitions toward common goals — has been a pillar of American foreign policy since World War II.

From the creation of the United Nations and NATO to President George W. Bush’s Iraq War “coalition of the willing” and President Barack Obama’s negotiations alongside Russia and China on the Iran nuclear deal, America has rarely operated alone.

But Donald Trump changed all that.

The Trump administration’s approach truly has been America First equals America Alone. Trump pulled the US out of the Iran nuclear deal, the Paris climate agreement, the United Nations Human Rights Council, and the Trans-Pacific Partnership (TPP). He’s in the process of exiting the World Health Organization (WHO). He’s repeatedly questioned the value of NATO and mused about withdrawing from it.

Yet, amid calls to reprioritize “international cooperation, not competition,” progressive aspirations cannot paper over the real geopolitical frictions that will persist post-Trump. Just as conservative efforts to desert multilateral institutions are self-defeating, so too is the belief that international cooperation will blossom after November 3.

American progressives should seek to reengage in multilateral institutions, from the WHO to the UN. But they cannot forget that those institutions remain competitive zones where democracies must defend their values against authoritarian rivals.

Multilateral cooperation has never seemed more urgent — or more lacking

Covid-19 is only the latest instance in which the Trump administration is truculently set against the world, not just withdrawing from the WHO but also refusing to join the Covax initiative, a historic, global multilateral effort to ensure that all countries, rich and poor, will have access to a novel coronavirus vaccine if and when one or more become available.

Amid the pandemic-induced economic crisis, congressional Republicans seek to dismantle the World Trade Organization (WTO), all while a trade war batters American consumers and farmers. The last of the major US-Russia nuclear arms control agreements teeters on the verge of collapse, and both North Korea and Iran continue to improve and expand their nuclear and missile programs.

Given this bevy of undoubtedly self-injurious policies, it is understandable that some progressives are calling on a potential Biden administration to undertake a “fundamental re-envisioning of the United States’ role in the world,” emphasizing international cooperation.

But a desire for the United States to rejoin international institutions and agreements should not be synonymous with a belief that global cooperation will define a post-Trump world.

That belief naively and recklessly ignores a stark reality that has become all too apparent in recent years: Multilateral institutions have become one of the primary battlegrounds where the unfolding international clash of systems between democratic and authoritarian regimes is being waged.

Authoritarian countries like China and Russia know this fact well and are skilled at manipulating and exploiting international institutions to serve their own ends. The United States used to understand this fact, too, once upon a time, but it seems to have forgotten it lately.

It’s time for America to remember. It’s time for America to start using these institutions to punch back.

Hope that shared threats will outweigh geopolitical divides is not new

An American belief that international organizations could “help depoliticize controversial issues by treating these as neutral, technical challenges” underlaid the building of global institutions following World War II.

More recently, the early Obama administration viewed the “challenges of a new century” — countering violent extremism, nuclear nonproliferation, climate change, economic growth, and pandemic disease — as common ground around which international stakeholders would rally.

In both instances, however, cooperative visions foundered on the shoals of geopolitical differences.

Neither in 1949 nor in 2009 could shared “problems without passports” outweigh the equally immediate threat posed by liberal, democratic norms to authoritarian regimes. As the Brookings Institution’s Thomas Wright has written, a resurgence in geopolitical rivalry was “rooted in a clash of social models — a free world and a neo-authoritarian world — that directly affects how people live.”

That clash stemmed not only from traditional military frictions, but even more basically from the threat that open, democratic societies pose to the stability of authoritarian regimes.

Increasingly, those authoritarian regimes are striking back. Senator Elizabeth Warren has described a “belligerent and resurgent” Russia and a China that has now “weaponized its economy,” both of which seek to undermine open, democratic societies. Similarly, Sen. Bernie Sanders has outlined a future contested between “a growing worldwide movement toward authoritarianism, oligarchy, and kleptocracy” and “a movement toward strengthening democracy, egalitarianism, and economic, social, racial, and environmental justice.”

Consequently, while dangers like Covid-19 threaten everyone, differences between democratic and authoritarian regimes can yield contrasting responses. Take, for instance, something as basic as using technology like smartphones and apps to aid in contact tracing in the fight against Covid-19. As Vox’s Dylan Scott explains:

In the United States and across the world, smartphone applications are seen as a promising option to automate some of the work that health workers have traditionally been asked to do. Namely, they could silently track which people we’ve been in contact with, and if one of those people tests positive for Covid-19, our phone would send us a notification letting us know about our potential exposure.

But the data collection needed to do this quickly becomes entangled in concerns surrounding “digital authoritarianism,” where illiberal regimes employ such tools to “surveil, repress, and manipulate domestic and foreign populations” alike. The Chinese Communist Party’s use of this public health crisis to expand the scope of its surveillance and control shows that even when the world can agree on a common challenge, solutions may diverge based on a regime’s values.

Thus, even amid areas of international cooperation, a degree of vigilance is required to defend democratic interests. By no means is cooperation entirely foreclosed — which is why the Trump administration’s rejection of the Covax initiative is misguided. Nonetheless, democracies should not mistakenly believe that unalloyed cooperation in the face of every shared challenge advances their interests.

How to stand and compete from within …

While the United States cannot be starry-eyed about multilateral engagement, it also can’t afford to be cavalier as to its value — as Republican leaders increasingly are.

Not only does the United States confront a true peer competitor in China, making allies more necessary than ever, but the key domains of that competition — from trade and investment flows to advanced technologies and communications infrastructure — are already deeply enmeshed in multilateral institutions.

Authoritarian leaders understand this emerging dynamic.

Russia, long skilled in multilateral diplomacy, has amplified its efforts to shape international institutions, as President Vladimir Putin declares “the liberal idea” has “outlived its purpose.” Likewise, China, in seeking “reform of the global governance system,” looks to realign the world to better support the CCP’s illiberal rule at home — including its persistent surveillance of its citizens and the internment and forced “reeducation” of Uighur minorities.

Thus, rather than use cooperative mechanisms like Interpol for the intended purpose of catching criminals, Russia and China have focused on abusing the system to pursue political dissidents. Authoritarian leaders do not hesitate to twist international institutions to defend illiberal behavior beyond their own borders, such as the Russian head of the UN Counterterrorism Office striving to legitimate Chinese human rights abuses in Xinjiang.

As Beijing and Moscow lead the charge to redefine global norms, democracies must meet that challenge. From privacy rules for artificial intelligence to norms for combating transnational corruption, international standards set abroad will not remain overseas.

As the 2020 Hong Kong National Security law demonstrates, if authoritarian actions at the national level can reach into democracies around the world, so will global rules set by illiberal states. Consequently, the United States and like-minded partners must compete in international institutions to defend the values that underpin open societies.

That competitive posture does not necessitate withdrawal from international organizations, as some conservatives have preached. As Kori Schake of the American Enterprise Institute recently argued, “it is a ridiculous solipsism…to believe that if we stop participating in international cooperation and institutions that that cooperation stops happening.”

Instead of shifting the locus of competition to more advantageous ground, by withdrawing from these institutions, the United States merely cedes influence in the very arenas where the essential debates are occurring. Rather than isolating authoritarians to increase democratic states’ leverage, the United States is cutting itself off from the partners it needs.

So long as more universal forums, such as the UN International Telecommunications Agency, are where relevant standards are set, then active participation is called for. Abandonment only opens space for authoritarian powers to press their agendas.

This is perhaps nowhere clearer than the juxtaposition of the sidelining of Taiwan in the WHO against the March 2020 election for head of the obscure, but important, World Intellectual Property Organization (WIPO).

Despite Taiwan’s robust performance in managing Covid-19 — with only seven deaths thus far — Beijing has continued to block Taipei’s participation in WHO meetings, hampering sharing from that success. The Trump administration’s response? Only to throw up its hands and complain about China’s influence as it heads for the WHO’s door.

Conversely, in the March election to lead WIPO, the UN organization charged with protecting intellectual property, the United States chose to show up and take a stand. Recognizing the impact of Chinese-based intellectual property theft and cyberespionage, the Trump administration, in a rare moment of diplomatic engagement, rallied a near 2-1 vote in favor of the US-supported candidate against the Chinese alternative.

The message is clear: The United States leaning into a coordinated diplomatic push can make all the difference.

… and from without

Simultaneously, continuing to participate in universal institutions like the UN or WTO does not preclude pursuing new multilateral innovations to better defend democratic societies.

A decade ago, proposals for a “concert of democracies” or a “global NATO” stalled. Mistrust in the wake of George W. Bush’s “coalition of the willing” in Iraq coupled with a fear that being seen to push the expansion of Western-style democracy would alienate rising powers from India to Brazil, scuttling such efforts. Why needlessly stir the pot in a world where cooperation on shared transnational threats seemed critical and the march of liberal democracy appeared inevitable?

However, the current international landscape differs vastly from then. New institutions to enhance democratic societies’ defensive coordination may have seemed unnecessary a decade ago but should be seen in a different light today, when authoritarian regimes pose a real challenge to the liberal model.

Thus, today’s version — what Edward Fishman of the Atlantic Council and Siddharth Mohandas of the Center for a New American Security have called “councils of democracies” — would aim to protect democracy at home, rather than justify its forcible expansion abroad. In doing so, the United States and its democratic partners should neither pull up the drawbridge from universal bodies that include authoritarian actors nor remain beholden to those institutions, as they constrain democracies’ ability to better cooperate in their own defense.

Fortunately, US Cold War strategy offers lessons on managing that balance. Importing a Cold War strategy lock, stock, and barrel for current challenges would undoubtedly be mistaken. Nevertheless, that history reveals democracies are not forced to choose between more universal organizations like the UN and more values-based ones like NATO. Rather, working at times through narrower groups grounded in a shared belief in liberalism and democracy can enhance the position of open societies in those larger bodies.

For instance, instead of being caught between abandoning the WTO — a folly few other states would join in — and continuing to struggle along with the system’s real limitations and abuses, the United States could work outside the system to build leverage within it.

Here, as Jake Sullivan of the Carnegie Endowment for International Peace and Kurt Campbell of the Asia Group have outlined, a forum convening democratic states to build shared norms and standards on 21st-century economic issues — digital tax, data privacy rules, etc. — could be “layered over the WTO system.”

Such a combination would not only create a space to build the norms that democratic societies need for managing 21st-century governance challenges, but also maximize their leverage within the WTO to raise standards across a global economy.

At the same time, democracies should work in values-based coalitions to promote democratic security in increasingly strategic areas of international finance, advanced technologies like 5G and artificial intelligence, and battling transnational corruption. To protect democratic ideals, there will be times when it is necessary to exclude those who would seek to undermine them.

Today’s threats and circumstances may not require a global expansion of a formal alliance like NATO. Nonetheless, deepening ties between democratic societies will be essential on issues from sharing best practices on countering disinformation to maintaining information systems that appreciate values of transparency, accountability, and respect for individual privacy.

Here, the United Kingdom is an example of an early mover on what’s possible. Against rising concerns over cybersecurity and espionage from Chinese 5G leader Huawei, London has begun exploring a potential democracies-only grouping to better secure 5G communications technology, alongside other national security supply chains.

5G is only one illustration of a range of issues at the intersection of advanced technologies and the evolving digital economy where democracies must set the international rules if they are to maintain values such as privacy and free speech for their own citizens.

Thus, steps such as closer transatlantic coordination on investment security — reviewing foreign purchasers and investors in US or European companies — and export controls for new technologies emerge as essential in maintaining a lead in tomorrow’s technologies, in order to shape their use around liberal principles.

Fundamentally, as democracies increasingly compete with an economically powerful China and revanchist Russia, their best defense rests in recognizing that not only are democracies more competitive together, but that a gap in the armor in one is likely a gap for all.

A contest that cannot be wished away

In only four years, President Trump has left the United States embattled on nearly every front. An urge to trumpet international cooperation as a departure from his administration’s ceaseless antagonism is understandable.

However, in considering a world post-Trump, progressives must separate his disastrous policies from the structural reality of a growing clash between open and authoritarian societies — a contest that cannot be wished away.

Democracies must reengage multilaterally, but without losing sight that shared challenges do not necessarily beget shared solutions. Good-faith efforts at cooperation must be tempered by vigilance against authoritarian leaders who will not hesitate to use multilateral institutions to roll back and undermine liberal values in order to “make the world safe” for authoritarianism.

Given that reality, assertive measures are necessary to close ranks with other like-minded partners to defend democratic values in a more interconnected, but more contested, world. A post-Trump foreign policy may open the door for the pursuit of progressive goals; but they will have to be fought for abroad as much as at home.

Will Moreland is a foreign policy analyst focusing on US alliances and multilateralism. Previously, he served as an associate fellow with the Brookings Institution’s Project on International Order and Strategy. Find him on Twitter at @MorelandBW.

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