The role corporations play in society has never been static. Since the first joint stock Dutch and British East India Companies in the early 1600s—and probably earlier—the social, economic, political and cultural conditions of each era have determined what individuals expect from business.
Recently though, the pace of change has dramatically accelerated. Expectations for corporate leaders to take a stance on societal issues have risen since the Business Roundtable’s 2019 redefinition of the purpose of the corporation—and have intensified by the combined effects of a pandemic, an economic shutdown, ongoing social justice battles, employee and investor activism, inflation and general societal instability. New data from Edelman finds that these expectations now extend to the conflict in Ukraine and other geopolitical situations, implying that corporations—and their leaders—should serve as forces of moral good in society.
Several top-level research takeaways stand out. First, nearly 6 in 10 individuals now want business to add geopolitical issues to its agenda. Second, when it comes to crises like that in Ukraine, 95 percent of respondents say that they expect companies with business interests in that country to take action in response to the conflict. And finally, when it comes to taking a broader stand on political or social issues, respondents say that among the top considerations for businesses determining a course of action is an examination of what the corporation’s leaders believe is morally right.
To bring this into sharper focus: For an oil manufacturer, is it ethical to keep producing oil in Russia, knowing that your refinery may become an asset of the Russian state if you cease operations? For heavy manufacturers, do you stay and keep factories open or do you pull out, and risk your machinery being seized and repurposed for military use? For food manufacturers, how do you weigh the morality of ceasing operations, helping to further isolate Russia economically from the West, versus continuing production to help avoid a humanitarian hunger crisis?
This is where the stakeholder model can help. Enshrined within this approach is a framework for helping CEOs and Boards navigate complex societal challenges based on an understanding of what their key stakeholders want, expect, and believe. When it comes to Ukraine and other geopolitical events, it is worth keeping three key things in mind.
First, build the research apparatus to understand how stakeholders think about corporate action on moral or societal issues. CEOs are accustomed to processing incomplete directional data to evaluate trade-offs and make informed choices. Navigating the morality of geopolitics is not that different. Your stakeholder research should take a comprehensive view of how your key stakeholders perceive specific, relevant political and societal issues and what their expectations are.
Second, as you do so, pay particular attention to the employee perspective. We found that employees are significantly more loyal and willing to advocate on behalf of their employer when that employer is perceived as doing well in their response to the Ukraine conflict.
Finally, know that your position must continue to evolve. In a prolonged situation like Ukraine, company positions will undoubtedly need to shift. Short-term needs, such as helping refugees and limiting economic activity in the Russian market, may give way to longer-term commitments, such as rehabilitating Ukraine’s economy and helping protect countries against future aggression. Conducting comprehensive “pulse checks” across all stakeholders can help to track shifting perspectives and beliefs.
Navigating complex moral situations, while balancing the needs and expectations of multiple stakeholders, is arguably the defining challenge facing CEOs and boards today. Perhaps in the future a company “Chief Ethicist” or “Head of Moral Philosophy” will help. But for now, the stakeholder approach can be a valuable guide.
Martin Whittaker PhD is CEO of the nonprofit JUST Capital and Senior Advisor to Edelman.