What Are the Risks to This Growing Form of Corporate Activism?
6/22/21 – – An article in the June 19 New York Times Dealbook by Corinne Purtill (“How Public Letters Became Companies’ Favorite Form of Activism”) captures the pressures and risks CEOs must weigh before taking public stands on contested political and societal issues.
Purtill points out that, “Over the last few years, chief executives have taken a stance on a variety of issues that previous generations of business leaders might have avoided altogether. Some have pledged money or reassessed their firm’s political giving. Mostly, though, they have written and signed countless public letters.”
In recent months you may have read CEO statements regarding a wide range of issues, including reflections on the anniversary of George Floyd’s death, proposed voter requirement legislation in states across the country, hate crimes against Asians and Jewish people, and threats to LGBTQ rights.
Purtill believes these missives “mark a shift in the relationship between companies and their employees and customers, and in the scope and role that chief executives are expected to play in the social and political landscape.”
So what are the risks to signing such letters? As we’ve discussed many times on this blog, with the U.S. divided pretty much 50/50 between liberals and conservatives, Democrats and Republicans, most issues have been politicized and are hotly contested.
Market research confirms that consumers want companies to be aligned with and actively supportive of their own beliefs and priorities. The problem is, studies also show that consumers are outraged by companies holding opposing views. In fact, customers are more likely not to buy products because of what a company stands for than they are to become a customer because of what a company believes. Some people would never have a My Pillow in their home because of the politics of the company’s founder Mike Lindell. Others will never buy another Coke because of its CEO’s opposition to voter legislation in Georgia.
Employees, who rarely are asked for their opinions, also hold differing views. If a CEO is pressured by an activist board member into taking a very public pro-life stance, how many pro-choice employees will be turned off? Different strokes for different folks.
I believe CEOs are being presented with a false choice between social activism and irrelevance. This shaming discounts the value to society of a CEO’s primary responsibilities, which include making safe, sustainable products, treating all employees equally, supporting local communities, and giving employees time off to vote and contribute to the causes nearest and dearest to their hearts. CEOs should make sure they’re delivering on all those promises before lecturing others in public statements.
Of course, there are companies that have jumped into this reputational briar patch with eyes wide open. For example, Patagonia and Chick-fil-A – on opposite ends of the political spectrum – are comfortable with and have acted upon their public views for years as part of their brands. They intimately know their customers and are willing to lose potential sales for the sake of authenticity.
Unfortunately, the newcomers to controversial public discourse may not be taking such a long view. Follow through is important, and authenticity is proven over time. If mid-term elections create a different political dynamic in Washington, will they flip their stances or retreat from view?
My guess is that the pace of CEO letter writing will slow as the realities of our divided world, the importance of getting one’s own house in order, and the necessity of walking the walk set in.