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

Rethinking the division of labour between business and government

We liked this interview with Richard Haass in the McKinsey Quarterly where he talks about the implications of the new division of labour between and government. As he says, "the lines between what is government and what is the private sector of business will get blurred.... CEOs, when they get up in the morning and look out through their window or across their desk, they are dealing with a range of constituencies that looks an awful lot like what a cabinet member might look at." The basic ideas align pretty much with our own work on corporate citizenship and global governance, but seeing them getting such prominence from McKinsey shows just how much the whole agenda is starting to be taken seriously by the business community.

We were particularly interested in his thoughts on how companies should adapt to this 'new normal', as McKinsey likes to put it. Haass promotes a new way of thinking about business-government relations - an expanded perspective that not only thinks in terms of lobbying and political action committees, but about what the changing division of labour means for the company as a whole. As he says, we need to, "think about government and government-related issues not as something that you have a small side office [for], some vice president for government relations who maybe calls a congressional staffer when he’s got an issue. But it’s something now much more intrinsic, and every person in the company—certainly the upper echelon of leadership—needs to take this into account, needs to think very hard about what is the proper, desirable role of government for that company. ... the entire issue of government, and the division of labor between the company and government, needs to be something that is thought through from the outset."

Haass is short on specifics in the interview, but it certainly sends a clear message that we need to go further in working through what the expanded set of political responsibilities might look like. And it definitely crashes a rather large plank over the heads of most of our colleagues doing research on corporate political action who seem to simply be blind to the bigger picture of what's happening around business and politics. Dirk's article reviewing recent books by Robert Reich and Naomi Klein explains a little more where we think some of the problems are in this respect. If even the McKinsey Quarterly is getting it, surely our fellow management researchers won't be too far behind. We live in hope.

Should business boycott Israel?

With all the excitement in Washington over Barack Obama's inauguration, it may be tempting to put to one side for a little while the continuing problems in Gaza that so occupied the public and media attention throughout the last month. But one person clearly not watching Obama's swearing-in ceremony was the UN Secretary-General Ban Ki-moon who spent the day visiting the Gaza strip and Southern Israel. As the world's media widely reported, Ban, standing in front of the smoking rubble of a UN building described the scenes as "heartbreaking", and condemned the destruction as "outrageous, shocking and alarming".

It was an important and symbolic visit by the UN leader who was careful not to take sides in his condemnation of the "excessive force" used by both Israel and Hamas. And it clearly serves to highlight the fragility of the current ceasefire and the need for more determined resolve in finding a lasting solution to the problem. But the burning question, of course, is how can genuine progress to be made in such a complex and volatile political situation?

One suggestion recently put forward by the Canadian activist and author Naomi Klein is that businesses and consumers should take a role in addressing the conflict by actively boycotting Israel. Citing the Palestinian campaign group Boycott, Divestment and Sanctions (BDS). Klein argues that "economic sanctions are the most effective tools in the nonviolent arsenal." And she is not just talking about economic sanctions at the governmental level, but at the level of individual consumers and businesses too.

In fact, her two main examples of anti-Israel boycotting are both business-level actions: first, her own decision to switch publishers in Israel from a commercial publishing house to a small, anti-occupation acivist publisher; and second, a British telecom company, Freedomcall, which had recently sent an e-mail to the Israeli tech firm MobileMax saying "as a result of the Israeli government action in the last few days we will no longer be in a position to consider doing business with yourself or any other Israeli company."

Boycotts against Israel have been mooted, or activated, by academics, journalists and others in recent years - typically to storms of controversy. In the US, companies participating in anti-Israel boycotts can even be fined. However, recent developments in Gaza have clearly prompted a fresh look at some of these tactics by some, although specific instances of boycotts by western companies still appear to be very rare. Our very unscientific search only came up with one other report from the last two weeks - of a London-based Pashmina company which had joined a voluntary boycott on Israel due to "the horrors committed by the Israeli army". However, Ethical Performance also recently reported on Unilever selling its stake in a factory in an illegal Israeli settlement on the West Bank – but also noted that despite the protestations of campaign groups, had done so as part of a broader divestment process from non-core business rather than any "ethical considerations".

Similar protestations of what Klein calls "cold business calculation" are also evident at Freedomcall, where the managing director is quoted by her as saying "We can't afford to lose any of our clients, so it was purely commercially defensive." Such amoral language and the refusal by business to acknowledge that they are also involved in politics is not unusual. But what is unusual is Klein's appararent readiness to accept that business should be taking an active role in state politics, depsite (or even because of) their focus on commercial self-interest. The author of No Logo and The Shock Doctrine is better known for criticising the role of the private sector in the public domain.

It seems unlikely to us that too many companies will feel comfortable joining an anti-Israel boycott, whether for commercial or political reasons. Why? Well, the ethics are simply too contentious for most business leaders to be comfortable making that kind of a call. Apartheid-era South Africa, or the current situation in Burma have a degree of moral consensus that presages corporate decision-making in a way that the problems in Gaza do not. Yes, maybe business leaders should be encouraged to stand up for what they believe in, but this is less likely to happen when they think their customers and other stakeholders might not agree with them. If even Ban Ki-moon is so careful in choosing and balancing his words of censure, corporations will no doubt tread even more carefully. Only concerted efforts by consumer groups and NGOs will be likely to change their views on whether a political boycott makes good sense. For better or for worse, that is the cold hard logic of business that Klein will have to recognize.


Photo copyright Tom Spender

Iraq, five years later

We don’t know how you feel, but it’s somewhat hard to even properly listen when news from Iraq are coming up. So numbed and used to bombs, casualties and barbarian acts have we become that it really takes a ‘jubilee’ to make us remember, that: yes, of course, there is still a war going on in Iraq!

So here we were last week, five years since the ‘liberation’ of Iraq. Ah, and there was another ‘newsworthy’ item: the 4,000th US casualty was reported – no scores on Iraqi civilians though, they don’t ‘count’…

Not only have the news been basically all the same for the last five years, but so have been the interpretations. Pretty much "Bush’s incompetence, Oil and Halliburton" is what it mainly boils down to. In our view, there is one exception though: Naomi Klein’s recent book ‘The Shock Doctrine’.

OK – lets get this out of the way straight upfront: Klein is an activist, writes with a certain angle and probably some of her theses might be closer to legend building than to solid interpretation. This aside, the book is a fascinating read for everybody attempting at understanding the contemporary role of business and politics in society.

Starting in the 1970s Klein provides an excellently researched overview over the link between introduction of liberal, free market economic policies and the use of ‘shock’ in the form of violence, terror and intimidation by governments or powerful elites to achieve this end. Examples range from Chile, Bolivia, Poland, China, Russia, Indonesia, South Africa up to - post 9/11 - the US and other Western democracies.

The book provides a stunning analysis of the driving agents, forces and ideas behind the spread of global capitalism. It is a gripping read to anyone interested in business ethics for at least three reasons:

• Ever wondered why CSR, business ethics, corporate citizenship etc. has risen so sharply on corporate agendas recently? Klein provides a systematic account of how frameworks for economic activity have been changed towards less regulation and more discretion – and thus responsibility - of private actors (corporations that is).
  
• So, academic research and ‘ideas’ are just for filling the shelves of the ‘ivory towers’? Klein’s book provides a different story: Milton Friedman’s love affair with dictators of the likes of Pinochet or Deng Xiao Ping or with CEOs-cum-politicians such as Cheney and Rumsfeld had a significant influence on how billions of lives are shaped today. As a young economics professor, Jeffrey Sachs’ ideas – according to Klein – had disastrous effects on countries like Bolivia or Poland. So the book makes a strong case that studying and applying academic research in fact is tremendously powerful.
  
• Where are we heading? Klein shows that the systematic privatization of utilities, public transport, health care, correction facilities (i.e. prisons) and education in the last 20 years were just the beginning. The Iraq war is probably the first attempt by a government to fight a war where everything other than core strategic directions is privatized and run by for-profit corporations. Love it or hate it - corporations will face more and more claims for transparency, accountability and commitment to the public interest – all core topics for business ethics.
  

In short – looking for an inspiring read? Klein’s book won’t disappoint even if you don’t agree with everything.