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Doing the right thing is harder than it looks.
GREAT EXPECTATIONS

Why the new CEO activism is bad for everyone

Alison Taylor
By Alison Taylor

Executive director, Ethical Systems at NYU's Stern School of Business

This year, businesses have avowed commitments on everything from the Paris Climate Change Agreement to DACA, from LGBTQ rights to gun control. In general, there seems to be a great business case for political engagement: short-term controversy around a political issue is a small price to pay for overall approval from the public and media.

And this new era of CEO activism—with companies showing unprecedented willingness to publicly engage on issues that would previously have been considered the exclusive domain of elected officials—has given “citizenship” and “sustainability” teams within big companies new traction. Previously these teams that address societal concerns were relatively powerless niches of the marketing or risk function. Today they are gaining traction, visibility, and the attention of the C-suite.

Nonetheless, the mood among these teams is one of trepidation, not euphoria. Here’s why.

Companies cannot fill a policy void

More than 60% of consumers want CEOs to take a lead on social change, rather than wait for governments to impose it, according to a survey published last week. More than 80% expect CEOs to inform policy debates and conversations.

But calls for corporations to act on what were once pure public policy issues is not a consequence of higher public trust in—or expectations for—today’s corporations. The percentage of consumers who trust in US-based companies, as measured by the Edelman Trust Barometer, has fallen from 61% to 50% since 2014. It is more likely that the recent call for companies to take a political stance reflects extreme political polarization and dysfunction, which has left the public with nowhere to project its anxieties or seek meaningful change.  Launching boycotts, which can be done with remarkable ease and speed, can seem like the only ready option.

Companies are thus being asked to show leadership on issues such as data ownership or large-scale refugee crises, for which the public policy agenda lies somewhere between incoherent and non-existent. This makes it impossible to manage expectations—and it invites scapegoating.

Scapegoating is inevitable

Whenever society suffers painful consequences from massive technological and social shifts, it invariably seeks a scapegoat to bear symbolic responsibility. Today, the business models and practices of Facebook, Google, Twitter, and others are being singled out by some as primary channels for ills that include political polarization, terrorism, and the rise of extremism.

Commentators freely blame tech companies for failing to anticipate and address extremely complex questions of privacy, freedom of expression, and transparency. Meanwhile, a recent incident at a Starbucks in Philadelphia has led to public outcry against the company alleging its role in perpetuating gentrification and further embedding systemic racism in the U.S.—a disturbing development, given that the organization has made long-term, thoughtful efforts to drive collaborative action on these issues. Finally, while the oil industry’s role in climate change denial is well-documented, companies face an unenviable set of choices as they attempt to maintain shareholder value through the transition to renewables.

Blame tends to be focused on the companies that extract energy, rather than on enterprises that consume it excessively. Whether companies start these conversations or are drawn into them against their will, they risk finding themselves in no-win situations. Subsequent explanations about their limited abilities to solve systemic social challenges can sound hollow and self-serving.

Doing the right thing is harder than it looks

For the past several years, “shared value” has become the dominant orthodoxy in the corporate responsibility field. Companies have moved from embracing feel-good philanthropy divorced from their core business to instead prioritize efforts that drive social value and help them make more money. Today, this approach is framed by critics as self-serving hypocrisy—the win-win narrative of shared value has morphed into calls to just “do the right thing.”

While this sounds comfortingly simple, the most ethical path forward is rarely obvious and holds vast potential to trigger unintended consequences. Reasonable people could examine the range of issues surrounding privacy, surveillance, freedom of expression, and “fake news” and arrive at opposing perspectives on the most socially responsible way forward.

Business is inviting scrutiny of its most vulnerable area

A recent paper from Oxfam reviewed lobbying payments made by companies regarding immigration reform, compared it to what they spent advocating the U.S. tax cut, and then contrasted it unfavorably with corporate rhetoric on both issues. While companies privately express frustration at what they see as a simplistic formula aligning money spent with influence gained, they have failed to educate the public about the nuances of their intricate, layered efforts to drive the policy agenda. The Michael Cohen debacle is likely just the first round of revelations about corporate “soft lobbying” and attempts at “access” to power. Businesses cannot trumpet their engagement with the political realm while continuing to avoid meaningful disclosure of the methods and tactics they use to drive influence behind the scenes.

The scale of unmet expectations generated by today’s activism is only starting to hit home inside companies. Corporate political responsibility does not sit neatly with corporate social responsibility, government affairs, or the legal team. Someone needs to take charge of bringing meaning to the C-suite’s rhetorical commitments while coping with the scrutiny such commitments generate.

Some companies are developing “values strategies” so they can explain and prioritize their actions, but this will require balancing complex and diverse stakeholder interests. Enterprises must swiftly come to appreciate the boundaries and limits of their political activities while openly admitting to being imperfect. No one has yet figured out an elegant way to do this.

Alison Taylor is Managing Director at BSR, a global nonprofit business network and consultancy dedicated to sustainability.

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