Public affairs not only protects the value of a company, but it also creates it. It builds trust and strengthens social legitimacy.
How much time do you spend on Public Affairs? Is it part of your C-suite agenda, or do you ignore it because you have no time? Ignoring or “no time” – this is not a good idea.
Technological acceleration, geopolitical volatility, and societal activism have blurred the line between public and private spheres. Social media amplifies distrust in institutions, while concerns about sustainability and social justice have led to corporate conduct becoming a matter of public scrutiny.
At the same time, governments are reasserting influence. Regulation is tightening. State intervention is rising. And the expectation that companies align with national and social priorities has never been higher.
Public affairs has shifted from tactical to existential
In this context, public affairs has become the strategic nerve center connecting a company’s internal priorities with its external reality. It enables CEOs to anticipate policy shifts, interpret social signals, and maintain a company’s “license to operate” in an increasingly politicized marketplace.
From Reactive to Strategic: A CEO Imperative
Too many CEOs still see government as “background noise”—an unavoidable but peripheral factor to real business. They are aware of their top customers and market vulnerabilities, but not of their local representatives or key contacts in regulatory institutions.. They delegate policy engagement to lobbyists and move on. This mindset is no longer sustainable. Government policy can now alter shareholder value as quickly as a competitor’s innovation. Price controls, tax regimes, trade restrictions, data localization rules, and sustainability mandates can redefine an industry overnight.
It’s about corporate survival, legitimacy, and leadership.
A well-timed, well-informed conversation between a CEO and a policymaker can clarify how regulations translate into real-world impact, including jobs created, taxes paid, and communities supported. Not all elected officials have first-hand experience with running a business; thoughtful engagement and discussions with industry representatives can profoundly influence their understanding and decision-making.
Public Affairs – Yesterday and Today.
Let’s take a step back: two decades ago, corporate affairs functions primarily monitored legislation, issued alerts, and sought to protect company interests. That defensive posture is obsolete. Future-oriented organizations must embed public affairs into strategy—anticipating developments, shaping outcomes, and identifying opportunities to create value.
The recent McKinsey research highlights three powerful trends reshaping the corporate-affairs landscape:
- Geoeconomics as a Business Variable
Governments now wield tariffs, sanctions, industrial policy, and export controls as strategic tools. These interventions, aimed at bolstering national security or protecting domestic industries, can either hinder or enable corporate growth. Public-affairs leaders must help CEOs assess and respond to these shifts—by influencing policy, developing compliance programs, or spotting emerging opportunities in reshaped markets. - The Expanding Scope and Pace of Regulation
The velocity of policy change has become staggering. Compliance and legal costs have tripled in some sectors since 2009. Governments are increasingly announcing policies through unconventional channels, including social media, leaving companies scrambling to react. A proactive public affairs function enables foresight—tracking signals before they become established rules. - Rising Expectations of Corporate Patriotism
Globalization’s golden age is over. Companies are expected to demonstrate loyalty to their home economies by creating domestic jobs, investing in local industries, and aligning with national strategic goals. CEOs are being drawn into a new form of “commercial diplomacy,” balancing global operations with expectations from their home countries. In some cases, governments are even acquiring stakes in strategic firms, blurring the lines between public and private interest.
Leading Through Public Affairs
The best corporate-affairs leaders don’t merely respond—they interpret, translate, and lead. For CEOs, this means integrating public affairs into the organization’s strategic fabric with the following steps:
- Sharpen the Narrative: Craft a clear, authentic story about the company’s role in society. Explain how your business contributes to economic resilience, innovation, and sustainability. Clarity builds trust.
- Lead with Insight, Not Requests: Governments respond better to partners than petitioners. Frame engagement as information-sharing—help policymakers understand how markets and technologies work. Be a source of expertise, not just advocacy.
- Adapt the Language: Words carry cultural and political weight. In Europe, “advocacy” may resonate better than “lobbying.” In the U.S., “energy dominance” has replaced “energy security.” Tailor the message to the context.
- Control the Volume: When political winds shift, adjust how visible your positions are—without abandoning principle. Strategic restraint can preserve influence; selective amplification can demonstrate leadership.
- Use the CEO Voice Wisely: Who delivers the message matters. Policymakers listen more attentively when a CEO speaks on behalf of thousands of employees and stakeholders. The modern CEO must be part diplomat, part strategist—engaging constructively with officials at home and abroad.
From Lobbying to Legitimacy
The days when government affairs were a backstage function are over. The new corporate reality demands that public affairs sit at the strategy table alongside finance, operations, and innovation.
As one senior corporate-affairs executive put it, “If you’re a CEO who doesn’t like engaging with government, get to like it.” Today’s leaders must navigate not just markets, but mindsets; not just shareholders, but societies.
Public affairs, at its best, doesn’t just protect value—it creates it. It fosters trust, ensures alignment with the public interest, and empowers CEOs to lead responsibly in a world where business and society are increasingly intertwined.