Posted On: Thursday, January 26, 2017
Circumstances have caused an increasing number of companies and CEOs to speak out in recent years on hot-button social issues that previously weren’t part of traditional corporate citizenship. For example, nearly 400 companies filed an amicus brief on marriage equity with the Supreme Court, and employers and organizations banded together using economic leverage to fight legislation discriminating on the basis of sexual-orientation in Indiana, North Carolina and Georgia. CEOs also weighed in against policies that exacerbated racial tension, like flying the Confederate flag and excessive use of force by local police.
This experience will serve corporate leaders well in navigating the challenges ahead. Issues of gender, race, sexual-orientation, pay equity, gun control and climate change are among the many hot-button social issues not going away – and likely to become more divisive — under the administration of U.S. President Donald J. Trump. Corporate citizenship may be entering its greatest test.
Will a Trump presidency have the effect of muting CEO voices for fear of reprisals and Twitter attacks in a government now controlled by one political party? Or will corporate citizenship, acting out of a bigger sense of purpose, gain increased public trust and support?
The new landscape offers unknowns, perils and opportunity even as the administration’s agenda isn’t finalized. As president, Trump wields enormous power and a low tolerance for criticism which makes dissent tactically sensitive. Companies have a full plate keeping up with economic policies impacting their business. However, the hot-button social and environmental issues will create defining moments for leadership and corporate citizenship.
Three of my observations from recent corporate citizenship challenges: 1) how a company defines its purpose fosters momentum; 2) using economic leverage isn’t corporate bullying; and 3) it’s critical to speak up collectively for what’s right.
How a company defines its purpose fosters momentum
When company leaders see the purpose of business as delivering value to society and the environment in tandem with delivering financial results, things change. They create stakeholders, shifting into a more authentic and aware relationship with employees, customers and all those impacted by the business. It makes “community” personal and shapes values and behaviors around what enables the community to flourish or be harmed. If everyone has a stake in its success as stakeholders then what everyone does matters more. If a law or action discriminates against anyone in the community, for example, it is a catalyst in seeking out like-minded leaders to join in addressing the problem.
Using economic leverage isn’t corporate bullying
Under pressure from many business leaders, Indiana, former Governor Michael Pence, now Vice President Pence, backed down on provisions in the Religious Freedom Restoration Act that invited sexual-orientation discrimination. If the provisions weren’t dropped, Salesforce.com CEO Marc Benioff was the first to threaten economic sanctions (like reducing investment in the state and offering employees a relocation option). Economic leverage, used in other states to address discriminatory legislation was called “corporate bullying” by critics. As discrimination is illegal, how is it bullying for companies not to want their employees put at risk?
It’s critical to speak up collectively for what’s right
Corporate Citizenship is an individual and collective act. It involves working continuously to reinforce ethical behavior in one’s own company and working collectively with other CEOs and like-minded organizations to address social and environmental concerns important to you and your stakeholders. There is strength in numbers, especially in uncertain and volatile times. Commenting on corporate social activism, Bank of America’s Chairman and CEO Brian Moynihan said, “Our jobs as CEOs now include driving what we think is right. It’s not exactly political activism, but it is action on issues beyond business.”
Climate change is just one example of the persistence needed for progress. Climate action to create a low-carbon economy and support the Paris Climate Agreement faces a challenge getting President Trump’s commitment as he has called global warming a hoax. The most recent Gallup Poll on the subject, found 64 percent of Americans surveyed expressed some to great concern over global warming.
It is unclear how, if at all, dissenting popular opinion will impact the Trump presidency and social and environmental issues. He lost the election’s popular vote by an unprecedented 2.9 million ballots. The day after the Inauguration over 600 peaceful marches – 400 in the U.S. cities and more than 200 around the world – put the president on notice regarding grassroots support for human rights issues. The president’s popularity (and how it impacts members of Congress) will be a bellwether of his ability to get his agenda through. Likewise, a company’s continued strong financial performance creates latitude to address controversial social issues.
Those companies whose business purpose is more than just profit are likely to avoid ethical problems longer if federal regulations and enforcement are relaxed. According to the 2017 Edelman Trust Barometer, 75 percent of respondents agree that “a company can take specific actions that both increase profits and improve the economic and social conditions in the community where it operates.” While 53 percent believe the current overall system has failed them, many continue to have faith in business as an institution. “Among those who are uncertain about whether the system is working for them,” the survey found, “it is business (58 percent) that they trust the most.”
Whether or not progress can be made on hot-button social issues in a Trump administration, acting out of a bigger sense of purpose and drawing strength from collective voices will likely gain increased public trust and support of corporate citizenship.
Photo via Whitehouse.gov.
Reprinted with permission: This column was originally published January 23, 2017, entitled “Corporate Citizenship in an Age of Uncertainty” in Business Ethics Magazine.