Back in the 1950s with McCarthyism barely in the rearview, my parents always warned me never to sign anything for fear I would be a branded a Communist agitator. I was 6 at the time.
In the 1960s and 1970s as garbage piled up and crime ran rampant in a deteriorating New York City, we were told: “Don’t get involved.”
But the pendulum, as pendulums do, has swung in the opposite direction. Since the early 2000s, corporate social responsibility has become a moral imperative, as important a part of every company’s mission statement as profits, and the pathway to gaining the respect and loyalty of a younger socially conscious demographic.
Even in the cold, heartless canyons of Wall Street, where return on shareholder equity is a religion, socially responsible investing is becoming de rigueur. This is in no small part thanks to people like Warren Buffett and Bill Gates, whose personal fortunes are supporting social causes throughout the world as well as retailers like Starbucks, Whole Foods, Walmart and Loblaw—the only Canadian company to sign the Bangladesh Accord after the Rana Plaza factory collapse.
Then there are the persistent consumer advocacy groups demanding—or at least requesting—“social audits” in order to make a company’s activities more transparent.
Playing the Odds
I’m willing to put up hard cash that most companies, given the choice, would like nothing better than to remain asocial. The odds of coming out on the right side of the big, messy and convoluted issues such as the First Amendment, religious freedom and cultural values are slim. There will always be a backlash from some group, somewhere.
However, it is no longer possible to sit on the sidelines.
For the past decade, companies and top executives have become increasingly brazen in their defense and opposition to major social issues. They are putting skin in the game with financial and philosophical support of cultural issues such as race, religion, the environment, marriage equality, civil rights, gay rights and animal rights. They are also joining social justice efforts to save everything from humpback whales to the Piping Plover.
There is a growing list of companies for whom sales and profits are a means to an end or, as Whole Foods CEO John Mackey calls it, “Conscious Capitalism,” recognition that companies have a higher purpose.
Buy a pair of TOMS shoes and another pair is given to a child in need. In fact, the company works with over 100 partners globally to supply shoes, drinking water and eyewear to people in need. Warby Parker, which has set the traditional eyewear industry on its heels, distributes free glasses for every pair sold. Patagonia is the poster child for environmental stewardship, and fashion industry icons Ralph Lauren and Donatella Versace are deeply involved in cancer research and children’s organizations.
They have taken to heart the words of the 18th century Irish political philosopher Edmund Burke, who said: “The only thing necessary for the triumph of evil is for good men to do nothing.”
On the other hand, noted economist Milton Friedman espoused the theory 40 years ago that the social responsibility of business in a free enterprise system is to increase profits, and therefore, executives are simply agents of the company with their ultimate objective being making as much money for the company as possible.
I wouldn’t dare spar with an intellect like Friedman nor his disciples. But it seems that he had an answer for simpler times. Business, for better or worse, has clearly evolved to a point where it is irrevocably intertwined with social issues. Altruism and activism are part of a broader corporate strategy that is quite simply good for business.
Clearly, social responsibility, ethics and even morality can be subjective. However, the Center for Business Ethics at Bentley University in Ma. has reported that nearly half of the 1,000 largest corporations in the U.S. have in-house ethics programs and codes.
Many of the good men and women who run them have come from every corner of the retail industry. They have the courage of their convictions; unafraid to speak out against what they see as injustice and, in doing so, put their company’s reputation on the line.
But when it comes to involvement in social issues, the big questions are how and when? And at what point, in either mainstream media or social media, does an opinion become an intrusive rant that puts the brand itself in danger?
Look at some recent developments and how they fared.
Freedom of Choice
Apple CEO Tim Cook, who last year announced he is gay, is a vocal and powerful opponent of discrimination against gay, lesbian and transgendered people. He is only one of the many Silicon Valley power brokers flexing their muscles on social issues, some of whom have stated they will reduce their investment and employees in states that pass laws with which they disagree. On the downside, Apple continues to be scored by advocacy groups for shipping manufacturing jobs overseas to take advantage of cheaper labor.
Companies like Walmart, Levi Strauss, the Gap and NASCAR were among the corporate giants that vociferously criticized Indiana’s Religious Freedom Restoration Act and similar legislation in Arkansas, which they felt would legalize discrimination based on sexual orientation.
On the other side of the religious and marriage equality issue we have Chick-fil-A, the Georgia-based purveyor of chicken sandwiches and traditional Christian values. Although the company is looking for expansion in major cities, home of the legendary liberal urban Millennial, CEO Dan Cathy came out against same-sex marriage. He was being true to his long-held Christian beliefs, but it also came out that the company’s trust has made millions of dollars in donations to anti-gay organizations. This resulted in a half-hearted attempt at a boycott. But the chain dodged the bullet, proving that a strong brand image and fine chicken sandwich trumps Constitutional principles any day of the week.
Another retailer that sent ripples through Constitutional law and religious freedom was Hobby Lobby, a family-owned company whose Christian beliefs didn’t jibe with providing contraceptives under Obamacare. The argument ended up in the U.S. Supreme Court, which decided in the chain’s favor. This set a legal precedent and there was an outcry from some segments of the public. But people seem to like their hobbies as much as chicken sandwiches and little, if any, lasting damage will be done to sales.
On the other side of the coin, companies like Nike, Office Depot and others have come out firmly in favor of such issues as marriage equality, a stand that didn’t seem to have a positive impact on sales either.
Equality and Fraternity
Long before the racial strife in Ferguson, Mo., Baltimore and New York came to a head; Starbucks CEO Howard Schultz championed a national debate on race. His motives were sincere but his #RaceTogether campaign on coffee cups was ill conceived for several reasons. People willing to fork over $5 for a cup of coffee want cappuccino not conversation and they certainly don’t want to debate on a sensitive issue with their barista. They want what most customers want—to get in and out quickly. Hashtag activism is not on their agenda. Additionally, it put employees in the middle of a debate they may not be prepared to have and their opinions may open up a proverbial can of worms and create more confrontation than conversation with customers.
Overall, business has to learn how to navigate the waters of social activism in order to serve society while protecting its brand image. Consider these elements:
- Don’t try to be all things to all people. It only dilutes your message. Prioritize the issues you want to address based on your company’s culture and expertise. For instance if you’re in the food business focus on that and try to get your suppliers involved.
- Make sure executives understand that their personal pet causes are just that and not to involve or push the company into taking a stand.
- Involve employees on a strictly voluntary basis. Don’t mandate it as part of the job.
- Don’t bother spending millions of dollars on advertising and public relations or hire expensive advisors if you’re not willing to follow through with a CSR strategy that has real objectives and is not just window dressing.
- Create a “shared value” with consumers by connecting the company with a specific social purpose. For example, Nestle defining itself as a nutrition company rather than a food conglomerate.
- Focus on grassroots or community-based issues or sustainability issues rather than getting involved in sensitive national debates.Business, like life, is a battlefield. Watch out for landmines.