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The New Norm: Social Activism Drives Corporate Accountability – and New Challenges for Business Leaders

  • Stakeholders take stands on wide-ranging social issues, from immigration to climate change
  • In this environment, businesses can’t afford to ignore employees, customers
  • Leaders don’t have to agree, but they must listen

Public company CEOs have long been familiar with shareholder activism – when an individual or group of investors use his/her rights as a shareholder to bring about change within the corporation – or even take control, ala Carl Icahn. Increasingly, other company stakeholders – employees, customers and the public-at-large – are exerting influence over business. They’re using their voices, their social networks and their wallets. These stakeholders (whether you consider them activists or simply socially conscious) are often taking on social justice and political issues – those squirmy topics corporate America likes to avoid.

No company wants to be on the wrong side of an issue with its customer or employee base. But with the rising volume of divisive issues, it’s hard to get it right. You don’t have to look far to find examples of employees facing off with their employers or partners pulling the plug on a company that doesn’t fit with their social agenda:

  • Facing growing pressure from his employee base to address the company’s environmental impact, Amazon’s Jeff Bezos responded this month with a “climate pledge” – a comprehensive plan and commitment to meet the goals of the Paris climate agreement 10 years ahead of schedule. Earlier in May, thousands of employees showed up at Amazon’s annual shareholder meeting to deliver a proposal to address climate change and reduce the company’s carbon footprint. While the proposal was ultimately rejected, leadership is clearly listening to its stakeholders.
  • Palantir, a data-mining tech company, recently took heat for its business relationship with the U.S. Immigration and Customers Enforcement (ICE). The world’s largest tech conference for women, the Grace Hopper Celebration, dropped the company as a sponsor over the issue. Recode reported that it was the third time in recent months an outside group has severed ties with Palantir over its business contracts with ICE. Employees of the company have also been reported to push to end the company’s dealings with ICE. Whether or not you agree with these anti-ICE sentiments, it’s hard not to see why this is a difficult issue for Palantir to manage: a significant percentage of its annual revenues are based on government contracts.
  • Palantir’s not the only company to get tied up in the issue of immigration. In August, Google was lobbied by more than 1,300 employees who petitioned the company to end its work with government agencies “involved with the separation and detention of immigrants until those agencies stop engaging in human rights abuses.” Employees of several other companies, including Amazon, Microsoft and Salesforce followed suit with their own petition letters. Earlier this summer, employees of Wayfair walked out of its Boston headquarters because of the sale of furniture to migrant detention centers.

 

Business leaders are in tough positions. They have companies to run, investors to satisfy, revenue to earn and salaries to pay. For the last several decades, public companies in the U.S. have ascribed to a shareholder-first approach to business – a tenant of American capitalism that puts shareholder returns above all else. But under increasing pressure, business leaders are taking a broader view of shareholders and just this summer, the Business Roundtable (a consortium of 181 American business leaders) released a new “Statement on the Purpose of a Corporation” to work for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.” The group defines this as a more modern view of corporate responsibility. The shift isn’t subtle and aims to give businesses “permission” to take a more holistic approach to defining shareholder returns.

My advice to business leaders? Listen. If you ask, your stakeholders will gladly tell you what they expect from you (and increasingly, they aren’t waiting for you to ask). It’s not weak to ask, and you don’t need to act based on what you hear – you aren’t taking orders. But at least you understand the risk and reward of the decisions you make – and can prepare for anticipated reactions. It’s 100% better than coming under fire, blindsided.

Here are a few steps to take now:

  • Identify business practices that would most likely come under scrutiny, evaluate risk, and consider changes or other strategies for managing activism.
  • Survey your employees on the issues they care most about. If you already have a group of vocal employees – engage them. Make them a part of the process.
  • Watch for early warning signs. Social media and customer support teams are great vehicles to source customer and public sentiment on sticky topics.
  • Participate in industry groups. Collectively, businesses can identify common issues that are important to their constituents and work together for solutions.
Posted

October 21, 2019

Author

By Melissa Mahoney

Category

Crisis Communications

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