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The rise of CEO activism

More CEOs are breaking from tradition and taking a stand on divisive social issues.

In a 2018 Harvard Business Review article ‘The New CEO Activists’, authors Aaron Chatterji and Michael Toffel reported that more CEOs are breaking from tradition and taking a stand on divisive social issues.

The report only focused on the United States, but some examples highlighted include:

  • Dan Schulman of PayPal taking a stand against a North Carolina law firm that required people to use the bathrooms that corresponded with the gender on their birth certificate.
  • Goldman Sachs CEO Lloyd Blankfein speaking out publicly about LGBTQ rights.
  •  Salesforce CEO Marc Benioff threatening to stop all employees travelling to Indiana in reaction to its anti-gay law.
  • More than 100 CEOs co-signing an amicus brief to have President Trump’s 2017 executive order to ban citizens from seven Muslim countries entering the US overturned.

Traditionally CEOs and other business leaders may not have responded or adopted non-confrontational tactics, such as lobbying behind the scenes or contributing to campaigns.

But times are changing and progressively more CEOs are taking active roles. This includes raising awareness via social media statements or writing opinion pieces, as well as exerting economic influence by relocating business activities or funding political and activist groups.

Chatterji and Toffel concluded this has occurred due to frustration with the growing political turmoil and paralysis in government. And because CEOs are realising that the more they speak up on social issues, the more they will be expected to in the future.

Even stakeholders are starting to expect corporate leaders to take a stand and speak out.

As Benioff told Time, “Today CEOs need to stand up not just for their shareholders, but their employees, their customers, their partners, the community, the environment, schools, everybody.”

We saw a similar situation in Australia in 2017 with many CEOs taking a stand to support the legalisation of same-sex marriage.

The most prominent was Alan Joyce, Chief Executive of Qantas, Australia’s biggest airline. Joyce was so vocal about the Yes vote that it even led to a disgruntled man smashing a meringue pie into his face during a public speech. Joyce (who is an openly gay man) was also criticised by members of parliament, who said he should not use his company’s brand to campaign on the issue.

Undeterred, Joyce continued to campaign for Yes, even donating A$1 million of his own money to the campaign. He was joined by over 20 high-profile CEOs of some of Australia’s largest companies, all offering their support for same-sex marriage.

Joyce echoed the sentiments of Salesforce’s Benioff when he said, “I think it is very important for our employees, customers and our shareholders, and that is why Qantas is a supporter of marriage equality and a supporter of gender equality and a supporter of Indigenous rights.”

Many CEOs don’t take an active role on social issues because they feel it will damage the company brand. Yet Professor Aaron Chatterji of Duke University’s Fuqua School of Business disagrees, for his study of CEO activism found that “being in the neutral middle, where most companies used to be a generation ago, is no longer tenable”, adding that “it is seen as lacking authenticity”.

Another study – ‘CEO Activism in 2017: High Noon in the C-Suite’, conducted in 2017 by Weber Shandwick and KRC Research – revealed that almost half (47%) of millennials surveyed believe that CEOs should take a public stand on social issues. This percentage dropped to 28% for those in generation X and baby boomers.

The report also found that over half (51%) of millennials are more likely to buy from companies if their CEO speaks out on issues. This is an 11% increase on the previous year’s data.

Finally, the research showed that 47% of people surveyed say CEOs who do not speak out risk criticism, whether from the media, customers, employees or the government, and 21% say silent CEOs risk declining sales.

Ultimately it is the decision of the individual CEO and the company if they take an active stand on social issues. The pros and cons need to be evaluated but the research suggests that there are more benefits than consequences.

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