Should business leaders speak out more on public issues?

Business leaders are among the most powerful people on the planet. At the helm of huge corporations, with billions of dollars of assets to leverage, their decisions have a profound influence on all of us. At the same time, however, those very same business leaders only very rarely seem to speak out on many of the public issues that actually affect us.

Consider when the former Toronto Mayor Rob Ford was engulfed in a crack-smoking scandal that put the city in the headlines for all the wrong reasons. The response from the city's business elite was a deafening silence. Nonetheless, the scandal must have prompted considerable anxiety among business leaders about its effect on the business and investment climate of Canada's largest city.

Are CEOs right to hold back in such instances or should we expect them to take a more prominent position in public debates? There are no black and white answers to this; it largely depends on context. So here are four things to consider when deciding whether the silence of business leaders in good thing or not. And if you want to dig deeper, check out The Guardian's live chat on "Should business leaders speak out more on public issues such as climate change?" on Wednesday 5 August 2015, 1-2:30pm BST.

1. Some social issues face a leadership vacuum that business leaders can help fill
Earlier this year, a group of 43 CEOs of major multinationals signed a open letter urging governments to strike an ambitious climate deal at COP21 in Paris, Likewise, the CEO of the biggest oil sands producer, Suncor, recently called for more stringent climate regulation, including a high price on carbon.

These announcements, unthinkable even a decade ago, give at least some indication of the kind of muscle that business leaders might be able to flex in filling the great big hole in leadership around climate change. Quite simply, such signalling from the business community helps empower political leaders to do their jobs better.

Of course, if these CEOs had spoken out saying that no action on climate change was needed (despite all the evidence to the contrary), as indeed has happened in the past (most notably from successive Exxon-Mobil leaders), we would be bemoaning the addition of their voices into the debate. So it's a double-edged sword, with substantial risks as well as opportunities.

2. Hypocrisy won't work
There is a tendency to criticize business leaders for making pronouncements like these because their actions do not always match their impressive sounding words. Richard Branson for example, was branded a hypocrite by Naomi Klein for failing to follow through on his promise to divert $3bn of Virgin's revenues to developing biofuels and other clean energy projects.

"Greenwashing", as this is known, can be a major problem when companies and their leaders go public with grandiose plans that they either cannot deliver on, or that they actively undermine behind the scenes with lobbying and back room deals. Business leaders already face a major trust deficit when it comes to their credibility as spokespeople. Survey after survey has confirmed that CEOs and business executives in general are not trusted as a credible source by the public. So any attempt to hoodwink the public is unlikely to work, not least because most of the public don't believe them in the first place.

3. Aspirational talk isn't all bad
For all the problems of greenwashing, business leaders making aspirational statements about social issues shouldn't automatically be criticized. For one thing, in the context of challenging, complex problems, it is often imperative that business leaders do go outside their comfort zones and articulate "stretch" goals that they can not necessarily know if or how they can achieve. Consider Interface Carpet's mission to reduce their waste to zero by 2020. When they started their 'mission zero' journey in 1994, former CEO Ray Anderson did not have a plan for how this would be realized only that he needed to set a vision that was inspiring enough to galvanize the entire company. Since then, Interface has cut waste to landfill by more than 90% and GHG emissions per unit of production are down almost 75%. The company is rightly lauded as a sustainability leader that others should follow. The lesson is that there is scope for business leaders to be aspirational but sooner or later they need to back up their words with sustained action.

4. There is surprisingly little risk attached to CEOs speaking out personally on issues not directly connected to their company. 
Business leaders rarely take the plunge and speak about public issues not directly tied to their business. Despite being smart, influential people used to tackling complex problems, they are usually either too busy or too concerned about prompting a backlash to say publicly what they think about such issues. The silence really is deafening. But according to unpublished research conducted at the Schulich School of Business last year, when CEOs do take the plunge, there is rarely any kind of negative media response. Looking back over a number of years across a range of issues such as Obamacare, same sex marriage, the fiscal cliff, the Rob Ford scandal and the proposed Quebec secular charter, the mainstream press reaction to the rare instances of individual CEOs speaking out has been largely neutral. This suggests that corporate leaders may well be overestimated the risks associated with speaking out on public issues, especially those where their own self-interest is less obvious.

The bottom line is that business leaders could probably be part of the conversation on a whole swathe of public issues. But if they are to participate, it has to be in the right way, and that means three main things: a) transparency about what their company stands to gain or lose with respect to the issue (i.e. is it a matter of self-interest or not?); b) clarity about what they or their company is doing or planning to do to address the issue (i.e. are they open to a charge of hypocrisy?); and c) a willingness to encourage others, especially those without such power and influence, to also participate - and to engage fairly in the unfolding debate rather than seeking to dominate it. It's a tall order. But if nothing else, it might help earn back a bit of that trust in business leaders that is so sorely lacking .

Photo copyright Onewaystock.com. Reproduced under creative commons licence

Shooting straight at Target?

Target, the American discount retail giant that has for years been trying to claw market share from its mammoth rival Wal-Mart, was generally regarded as a more socially responsible alterntive to its big box competitor. That started to change with Wal-Mart's sustainability u-turn a few years ago, prompting Fast Company magazine to recently proclaim Walmart the winner in the "sustainability face-off" between the two companies.

One area of social responsibility where Target has continued to outpunch its rival though has been in diversity and human rights. For example, Target scored a maximum 100 points in the most recent Corporate Equality Index published by Human Rights Campaign, the largest national lesbian, gay, bisexual and transgender (LGBT) civil rights organization in the US. Among other things, Target extends its employee's health care coverage to same-sex partners. Wal-Mart, by comparison, until recently provided coverage to less than half of its own employees never mind their partners. It scored just 40 on the Index.

However, in the last two months, Target's carefully nurtured diversity reputation has begun to unravel. It is now in the midst of a boycott from LGBT customers, appears to have seriously angered many of its once loyal employees, and has even had the social media campaign for the launch of its fall clothing line derailed.

The cause? A relatively innoculous looking $150,000 campaign donation in the upcoming 2010 Minnesota Governor's Race. Target made the donation to MN Forward, a political action commitee which describes itself as "established to ensure that private-sector job creation and economic growth are at the top of the agenda during the 2010 campaign" . The group works to solicit campaign donations from  "Minnesota job creators to elect candidates from both parties who support policies that enhance job growth".

So far, so uncontroversial. Target is among a number of Minnesota-based companies contributing to MN Forward, with a view to backing candidates making job creation and support for business a priority. The group is putting its corporate money behind the Republican candidate Tom Emmer in the Governor's race. And they make no bones about why: "As a legislator, Tom Emmer voted against job-killing taxes and for reduced government spending. Emmer voted with the Minnesota Chamber of Commerce 91% of the time". You can't get much more pro-business than that. So it's hardly very surprising that Target is willing to cough up a few readies to get their man in poll position. So where's the rub?

The problem is Emmer isn't just about supporting business. He's also about supporting marriage. Traditional marriage. As in, not gay marriage. All of the other candidates are in support of legalizing same-sex marriage in the state, but Emmer has been a staunch opponent of LGBT marriage rights. As he says on his campaign website: "I believe marriage is the union between one man and one woman. As a legislator, I have consistently supported the constitutional marriage amendment that protects traditional marriage.”

There's more, as the Minnesota Independent newspaper documents well:

"In 2007, Emmer authored a constitutional amendment to prohibit same-sex marriage and civil unions. In many instances, Emmer has tried to change language in bills to that same-sex couples cannot benefit. In a bill to create standards around surrogate motherhood, Emmer attempted to replace the word “parents” with the words “mother and father.” In a wrongful death bill this session, Emmer questioned the use of the term “domestic partner” just as he has in bills aimed at providing benefits for same-sex partners. Emmer has also been criticized for his association with Christian hard rock ministry, You Can Run But You Cannot Hide Intl., Inc., which has made incendiary statements about the morality of imprisoning and executing homosexuals. Emmer’s campaign had purchased table space at the group’s fundraiser and visited with the group on the radio and in person."

Ah. So, not exactly a poster boy for Target's diversity policies then. The company, a regular supporter of the local gay pride festival, is more used to being recognized for its leadership on LGBT issues. So given this kind of backstory it is perhaps no surprise that the company's campaign donation has ignited a bit of a storm. Gay rights organizations have been up in arms, various facebook campaigns have been started, and protests have been held outside of the firm's stores. Boycott plans and employee unrest have followed.

Initially, Target was unrepentant. The CEO's response to staff was an email largely dismissing the problem. In the mail, he wrote: "We rarely endorse all advocated positions of the organizations or candidates we support, and we do not have a political or social agenda. As you know, Target has a history of supporting organizations and candidates, on both sides of the aisle, who seek to advance policies aligned with our business objectives, such as job creation and economic growth...Let me be very clear, Target's support of the GLBT community is unwavering, and inclusiveness remains a core value of our company."

However, fearing an escalation of the storm, earlier this month Target's CEO issued an apology letter to employees, remarking that "while I firmly believe that a business climate conducive to growth is critical to our future, I realize our decision affected many of you in a way I did not anticipate, and for that I am genuinely sorry." This seemed to stem the tide of protest, but the story has yet to go away for the troubled retailer. Last week, the Human Rights Campaign (yes, the group that gave Target the 100/100 score for their equality policies) announced that the company has refused to "make it right" to the LGBT community by retracting the donation or making a matching $150,000 donation to a gay rights organizaton. HRC said it would be making a $150,000 donation itself to elect a pro-equality governor.

We doubt ths will be the end of the story. But what can we learn from events so far? One clear conclusion is that the recent Citizens United ruling in the US that gives private corporations the right to fund political broadcasts during elections is not going to be a field of roses for companies. Whilst it may guarantee them free political speech, the question is will they necessarily want to use it given the dangers of upsetting their many and varied stakeholders? Big brand companies especially will probably want to be proceed with politics very carefully and not without due dilligence - as Target have found to their cost.

Secondly, companies will need to get smarter about how to engage in identity politics. It is no use saying "we don't have a political agenda" when you've invested in supporting minority or under-represented groups such as LGBTs, racial minoroties,or the handicapped. The decisions may be driven by business concerns but that doesn't mean that they don't have political ramifcations. And identity-based organizations know this and are ready to exploit companies' naivety. McDonald's have already been burnt on a simialr issue, as we reported a couple of months ago. And if you want to read more, we've recently written a couple of downloadable academic papers focusing on corporations and identity politics and how to bring identity afiliations into stakeholder identification.

The point is that companies are not yet very skilled at joined-up thinking across their span of operations when it comes to issues like gay rights - or any number of other issues that reflect people's complex and multi-faceted identities. Target is learning to thnk about LGBT issues not just in relation to human resources, but also in marketing, investor relations and government relations. Next it could be Muslims, Mexican immigrants or Mothers Against Drink Driving pointing out their inconsistencies. Or perhaps the American Family Association will start boycotting them now that they've heard about all that pro-gay stuff Target were doing. Then we'll really see if the company has a political agenda.

Corporate Pride

After talking about the G20 weekend in Toronto last week, we are happy to say that the last weekend was slightly different. And uplifting. Not only was THE Queen in town (the English, that is) but many more raunchy, outrageous and beautiful queens (and kings etc. for that matter).

It was the weekend of the Pride in Toronto and as always, it was a blast. And even the sky was laughing down – unlike the rainy G20 weekend – scorching weather and a lot of fun.

One thing that was striking this time was the dominant presence of big brands and corporations. Many of the wagons in the parade but also a large number of stands along the pedestrian areas represented private businesses. This did not only include the usual suspects, such as brands like Trojan (a condom manufacturer) or the Body Shop, but in fact the main sponsor of the event was one of the major four Canadian banks, TD Bank. And if one looks at the list of sponsors of the Pride you get the picture.

Now this can be looked at in two different ways. One could easily go up in arms and lament the fact that one of the few core events of counterculture, especially in North America, has now finally succumbed to corporate supremacy. Another example of 'Rebel Sell', as Jo Heath has attempted at stigmatizing the consumer patterns coming out of the hippie/alternative milieu of the late 1960s. 'Revolution' and 'Liberation' turning into just another consumption style.

I tend to disagree with this view. By and large, it is my impression that beyond islands of multiculturalism and liberal culture in North America, such as New York, San Francisco, Seattle and, yes, Toronto, North America is still largely a rather conservative place, governed by mostly religiously informed bigotry and, in this case, homophobia. So living up to your identity, if you are of the GLBT community, is often a risky thing. And that is why I find the corporate involvement so interesting.

By associating their brand with these communities corporations provide some crucial legitimacy to the causes of these minorities. And for me it gave a very palpable experience of how companies become a civic player. The Pride is no longer a loony lefty crazy communist side show, if major brands are publicly supporting it. Most impressive, I have to admit, I found the engagement of TD Bank. The banking industry is probably the most conservative and homophobic industry on the planet. I never forget when I was still in consulting in German in 1999, we had an assignment at a major German bank. Our team leader was gay, and open about it. And by being as he was, he found out that the department of some 30 employees we were working with consisted of 4 gay/lesbian colleagues, who prior to that did not even know of each other. Some of them in long term relationships – but too afraid of coming out.

Now, don't get me wrong. I acknowledge that these companies associate their brand and 'invest' in the Pride not without self interest. The GLBT community increasingly is important as consumers and investors. But the motivation is not really the point here. It is just the fact, that private corporations provide legitimacy to certain minorities in society. It is here where we see the 'political role' of private corporations. They are becoming, by dint of their financial power and dependency on public (and be it only: consumer's) consent key actors in shifting the priorities on how society should be run.

In that sense, I had my very private moment of enjoying the Pride.