With results from the presidential election officially in but the U.S. Senate in a state of uncertainty until Georgia’s runoffs in January, businesses are contemplating what a divided government could mean for them. Yet while it is only prudent to assess how executive and legislative decisions might reshape marketplace conditions over the next several years, I suggest there is a more pressing problem for businesses to address right now: a lack of trust in the marketplace.

Globalization has widened and emphasized corporate influence on society. The combined revenue of Big Tech companies alone is around $900 billion, which, when compared with global economies, would take the place of the 18th largest economy in the world. The monumental shocks of 2020 have further placed consumer trust in corporations at a crossroads, with shifting ideas around the role of business in society.

A year after the Business Roundtable (BRT) elevated the concept of stakeholder capitalism in its “Statement on the Purpose of a Corporation,” the percentage of Americans who believe companies are actually operating in this responsible manner is concerningly low. According to the 2020 Edelman Trust Barometer, only 38% of Americans think companies are actually putting purpose before profits.

As best stated in Politico's newsletter The Long Game, "Companies have two options in a divided Washington: to use it as an opportunity to lead or use it as a shield to preserve business as usual." 

Business Needs To Do More

The BRT’s statement was a great first step, but if we want to restore and enhance consumer trust, I believe businesses need to develop a set of tools they can leverage to demonstrate their commitment to accountability. A recent survey by GlobeScan found that consumer trust depends, above all, on companies proving themselves by their actions. 

One approach to helping take businesses from words to action is through industry self-regulation. This is a broad concept that includes any attempt by the industry to moderate its conduct to improve marketplace behavior for the ultimate benefit of consumers. Self-regulation goes far beyond self-reflection. Successful self-regulatory initiatives share several key features: clear guidelines, active monitoring programs, effective accountability and enforcement mechanisms, and procedures to resolve conflicts raised by consumers or competitors. 

I lead BBB National Programs, where our mission is to foster industry best practices in self-regulatory environments to enhance consumer trust. I have seen how self-regulation as a practice across industries can give companies a level of autonomy and control.

Skeptics of industry self-regulation worry that its self-funded, nonbinding nature limits its effectiveness. However, meaningful and robust independent self-regulation offers several advantages for consumers, businesses and regulators that are important to consider, especially during this time of bumpy government transition, the latest aftershock of the pandemic, and the laying bare of America’s systemic racism.

Independent Self-Regulation Can Lead The Way

Developing and implementing an independent self-regulatory system can protect and improve an industry’s reputation and goodwill with consumers by providing businesses with a means of demonstrating accountability and their commitment to corporate social responsibility. Rigorous and effective self-regulation reduces the number of bad apples, provides a better market playing field for all industry participants and encourages fairness, honesty and integrity between and among market participants.

Best positioned to govern an industry are the companies operating within it and pushing it forward. By involving industry in the development and implementation of a self-regulatory program, the guidelines and processes are more likely to accurately reflect the accumulated judgment and hands-on experience of industry members and more able to flexibly adapt to the realities of the market.

A Complement To Government

Industry self-regulation complements federal regulation by providing businesses and consumers with another option that is more cost-effective and more accessible. While guided by law, successful independent self-regulatory programs typically do not answer to the government. Independent guidelines and best practices for the industry can preempt the need for government to step in.

For example, in 2006 the Council for Responsible Nutrition (CRN) sought to clean up its own industry and began a partnership with the National Advertising Division (NAD), which is a branch of my nonprofit, to monitor dietary supplement advertisements and ensure they were truthful and not misleading. CRN launched the partnership with an industry campaign headlined, “There’s a new sheriff in town — you” that encouraged supplement companies to file challenges with NAD as part of their efforts to clean up their own industry. Under the program, company-to-company competitor challenges increased, and NAD has issued more than 300 decisions to date involving a range of misleading and unsubstantiated claims for dietary supplements.

Standards And Guidelines

As our world becomes increasingly interconnected, there is a need for interoperability standards that facilitate not just the flow of goods, but also the flow of data. Independent industry self-regulation allows for the development of universal guidelines that stretch beyond borders and establish internationally recognized blueprints for corporate best practices. And in this global environment of shifting consumer expectations and regulatory scrutiny, the inclusive, efficient, and agile model of industry self-regulation can help companies in the U.S. and elsewhere meet the evolving challenges they face.

Action taken through self-regulation can reduce the confidence gap without the expense, the high levels of publicity, or the sometimes coercive remedies of government enforcement actions or class action litigation. And if the process is sufficiently objective and transparent through accountability mechanisms, it will permit the public to judge the integrity of the review system, enhancing consumer trust in business.

Originally published on Forbes.