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Do the Right Thing? Corporate CEOs grapple with when and how to speak out on social issues

The complexities of running a business are infinite. Our clients face unexpected challenges every day balancing the demands of shareholders, employees, corporate clients, consumers, and the public. These demands are no longer limited to fiduciary, product, or service concerns. Corporations are increasingly tasked with the question of whether or not they should take a stand on pressing social issues. From racial injustice, to the refugee crisis, to climate change, to domestic terrorism, CEOs, Boards, and executive teams must grapple with whether or not to take a stand on the most important and, often, polarizing social issues. Thanks to social media, the surge in pandemic-induced work-from-home arrangements, the digitization of everything, and sharing economies, the line between professional and personal has become razor thin.

According to research from the Edelman Trust Barometer published in January 2021, 86 percent of respondents agreed with the statement "I expect public CEOs to speak out on one or more of these societal challenges: pandemic impact, job automation, societal issues, local community issues." And 65 percent of respondents agreed that "CEOs should hold themselves accountable to the public and not just to the board of directors or stockholders." The study generally reported a dramatically falling rate of trust in governments and the media, presumably a fallout from a crisis in communications in the last year around the pandemic response in the US and the social issues that have been exacerbated by or neglected because of that tension.

It would be impossible, much less inadvisable, for a CEO to speak out on every social issue. Aside from the fact that moonlighting as an activist would leave that leader no time to actually run a business, not every issue will have relevance to the business and its constituents. Additionally, every time a CEO takes a stance on a social issue, they run the risk of alienating a percentage of the population (be it their board, clients, or the public) that does not agree with that stance. As companies navigate an increasingly divided nation (and world) on a broad range of urgent social issues, when should a CEO speak out? Which issues?

In October 2020, in the wake of this past summer’s resurgence of the Black Lives Matter movement and in the midst of a global pandemic, Harvard Business Review published a three-question guide to a company’s approach on speaking out on social issues.

  1. “Does the issue align with your company’s strategy?” A company’s strategy is based on a broad range of inputs and objectives, not the least of which is the company’s stated mission and values. What any company will want to avoid is a misalignment of the social issue at hand and those values; any stance taken will be viewed as inauthentic and window dressing. A straightforward example of strong alignment with strategy is Patagonia’s longtime vocal support of environmental protection and preservation, including fighting against climate change and promoting a sustainable industry. It has built its advocacy into the fabric of its brand by featuring an 'Activism' tab on its website and paying a self-imposed "Earth Tax," where it donates 1% of its profits to environmental nonprofits around the world.
  2. “Can you meaningfully influence the issue?” Does your company have the resources to actually make a difference? And more importantly, is the company willing to take action and leverage those resources, or is it all talk and no action? This past summer, there were many corporate statements issued on Black Lives Matter without a plan for action or a commitment of resources to the issue. These companies were often called out as hypocritical or as “woke-washing.” In late May, 2020, Microsoft’s President Brad Smith highlighted in a tweet the work it was already doing in criminal justice reform, stating “Recent tragedies impacting the black community are powerful reminders that we need real change. As a company, we’re focused on using data, technology, and our voice to advance criminal justice reform.” He linked a blog entry sharing Microsoft’s work that included data dashboards for court systems, and visualization tools that highlight racial disparities in the justice system, amongst other solutions.
  3. “Will your constituencies agree with speaking out?” Rarely will the entire body of a company’s constituency have the same viewpoint on what are often divisive social issues. Companies will need to grapple with weighing the importance of certain segments against others, i.e., a major investor versus a small segment of the public. Ford Motor Company decided that speaking out in support of Black Lives Matter protests and ‘defund the police’ initiatives would not be well received by a major constituency: police departments across the US. When Ford Motor Company was called out for the Ford Foundation’s large contributions to ‘defund the police’ movements, the company made the statement, along with decrying racism more broadly, that “Ford is proud to be America’s long-time leader in producing police, emergency and first responder vehicles.”

This analytical approach, as outlined in the article, can lead to a less-than-clear outcome. More often than not, a company will be able to answer yes to only one or two of the three questions, but not be able to confidently say yes on all three. In that case, according to this particular framework, a company can choose to speak out as a follower, not a leader. That could look like highlighting statements from leaders on the issue on various platforms, giving the microphone to those with more knowledge and direct experience on the subject. Or it can simply be closely monitoring the situation and how peer companies are handling their response.

One trend that was clear in the 2021 Edelman Trust Barometer is decreasing public trust in government and media, and increasing trust in business. The latter increased by two points, with 61 percent of respondents reporting that they trust businesses. Compare that number to 57, 53, and 51 percent of respondents reporting that they trust NGOs, government, and the media, respectively.

What these numbers say to us is that corporate leaders are being looked to more and more often as a trusted voice and leader on some of the toughest challenges and issues. It is time for courage, bravery, and a commitment to what is right.

As stated in an Inc. piece in 2017 discussing Nike’s decision to stand with Colin Kaepernick in their prominent ad stating “Believe in something. Even if it means sacrificing everything.”, “Real leaders aren't neutral. They take risks, stand up, and speak out.”

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