A decade ago, companies such as PepsiCo and Unilever took the decision to initiate Performance with Purpose or the Sustainable Living Plan. The pace of business involvement depended on the appetite of its CEO for public leadership. The issues to be addressed were in the core of business, from sustainability to ethical sourcing to diversity and inclusion. The framework was corporate social responsibility, the deliverables were the Sustainable Development Goals set out by the United Nations. Non-governmental organizations were the foil, seeking to involve consumers in boycotts and the press in crusading for good. But significant events have changed the tenor of business involvement in societal issues from voluntary to mandatory.
The pandemic proved that business was significantly more competent than government, able to deliver goods while protecting employees, as the public sector waffled on vaccine advice and wobbled on lockdowns. The murder of George Floyd put into stark relief the failure of government programs, from public safety to equal opportunity, thrusting business forward as the opportunity engine. The invasion of Ukraine by Russia saw a concurrent series of actions by public and private sector; the provision of arms by Western governments while 1,300 companies chose to leave Russia. These are just a few that show a new reality: Society has intruded on Business because employees and consumers see that their companies and brands have the power to make change. We’ve seen an evolution of Business in Society to Society in Business because Trust is local, in ‘My Employer’, ‘My CEO’ and ‘My Brands’ and a declining trust in Government has led to the expectation that Business will step into the void. But companies are no longer leading the dance; they are more often pushed by activist employees and belief driven buyers.
It is true that companies are now under attack from both the left and the right. Texas and West Virginia have threatened to pull their pension funds from financial institutions that have a strong position on climate change. Meanwhile, President Biden has accused energy companies of profiteering on oil prices at the pump. Andrew Edgecliffe-Johnson’s article today in the Financial Times said, “Business leaders increasingly find themselves in unwinnable positions, caught between two sides on topics they never wanted to be debating, as culture war issues come to dominate U.S. political discourse.” He cites Disney as the obvious example of bending to employee pressure, leading it to be beaten up by Gov. Ron DeSantis of Florida after the company pushed against the state’s plan to restrict discussion of sexuality or gender identity in primary school. He goes on to say that employees are pressuring their companies to cease political donations to office holders who have restricted access to abortion or are against gun control.
But now is not the time to be timid, it is the moment for smart leadership. Here is a way to frame your thinking as a CCO advising the CEO:
- Start from Inside Out—Which issues matter most to your employees? Speak to them, gain insight, debate options. Find an on-ramp to action. A good example is employer-sponsored insurance taking care of those needing to travel to receive abortions and gender-affirming care because they live in states that have outlawed these services. Make it clear through internal communications that you will take care of your people, from health care to public safety.
- Continue to Participate in the Political Process—You cannot allow the company to become a single-issue voter. Engaging in the political process often means offering financial support – it’s unavoidable in the American legislative system. But you must make your views known to the candidate or elected official, whether privately or in public – and then be transparent with your employees on how the company influences policy conversations.
- Be a Public Advocate on Issues Related to Your Business and Your Purpose—Every CEO can address sustainability, wage levels, diversity and inclusion. There are also sector specific issues which make sense where you are guided by your mission and values. Companies have the right to push for better schools and safer streets as a means of attracting the best talent to your company. Work together with other companies to present a united front.
- Be Consistent—Actions need to be sustained to have impact and demonstrate commitment. A quick reaction to a crisis with no follow-through, or a one-time meeting with employees to hear their concerns without ongoing collaboration, puts the trust and performance of your brand at risk.
Edelman is committed to proving the case for societal engagement by companies and brands. We are speaking with Harvard Business School’s marketing department about proving the case for purpose led brands. We know already that the large global brands of Unilever that have purpose at the core are gaining market share; the Dove Campaign for Real Beauty is a great example. We will also continue to push CEOs to not back away from sustainability or diversity pledges as the global recession begins to bite. According to Alan Murray, CEO of Fortune magazine, the corporate commitment to ESG is real and long term. In his CEO Daily column of July 21, he reported that top ESG executives at America’s largest companies report a “fundamental shift in business strategy.” He goes on to quote Brian Moynihan, CEO of Bank of America, that the bank can deliver profits and purpose. “ESG isn’t woke capitalism, it is capitalism done right.”
Richard Edelman is CEO.