Why the Activist CEO Will Endure Even With Pressure to Take A Stand on Socio-Political Issues

Guest Column: The corporate leadership paradigm may be uncomfortable for some current and future chief executive officers—but it seems it’s not a temporary expectation of the job

Corporate leaders toe an increasingly fraying line between staying mum on polarizing issues and stepping into the cacophony of public opinion and voicing their position. Socio-political topics abound: climate change, LGBTQ+ rights, voting rights, gun control, systemic racism, immigration.

The divisive policies and toxic rhetoric espoused by former U.S. President Donald Trump brought CEO activism to the forefront.

Passive leadership was left in the wake.

Whether emanating from their employees or board of directors, customers, investors, or public opinion, internal and external pressures are influencing a CEO’s communications strategy — and business decisions.

At a conference hosted by Fortune this month in Los Angeles, Delta Air Lines CEO, Ed Bastian, spoke about the case for CEO activism, “When you see something that you perceive is in violation against the values of the enterprise, you have a real question on your hands as to what to do with it.” Whether or not to weigh in, Bastian explained, “It’s been about what ‘Who are you? What are your values? What do you promote?’ You got to play offense on this stuff. Not just defense.”

CEOs have historically distanced themselves from speaking out on politicized issues. Their talking was done discreetly through political donations supporting legislation favored by each side of the aisle. But today, whether leaders are prepared to speak out in favor or not of a given issue, their responsibilities seem now to include “activism.”

Beyond America’s shores, international issues, like disruptions in the global supply chain and human rights abuses, are increasingly finding their way into a CEO’s public statements. The Russian invasion of Ukraine in February brought a flurry of condemnation and sanctions from the international community. In an ongoing study by the Yale School of Management, publicly traded American companies responded in a variety of ways albeit some more tepid than others.

According to a Morning Consult survey of over 2,000 U.S. adults polled in the days following Russia’s invasion of Ukraine, an estimated 3 in 4 respondents support American businesses cutting ties with Russia, and stopping sales of its products and services. Indeed, Netflix and Disney suspended their streaming services as companies like Alcoa, BlackRock, and professional services firms like Deloitte exited the country.

Last week, McDonald’s announced its closure of 850 restaurants in Russia citing the humanitarian crisis caused by the war. Starbucks, after suspending its services in Russia at the outset of the conflict, announced on Monday the closure of its 130 cafes in Russia.

Not all U.S. companies doing business in Russia have suspended or ceased their operations.

The dynamism of a company’s workforce, particularly millennials and Gen Z, is another influential force exerted on CEOs who are expected to assert themselves, and the company, in public discourse.

Younger employees feel emboldened to express themselves not only on social media but often in public demonstrations. Last year, Netflix employees staged a walkout to protest the new Dave Chappelle special for his perceived attacks on the transgender community. And after George Floyd’s death in the summer of 2020, workers by the thousands staged nationwide protests in support of Black Lives Matter.

In their public statements, CEOs across the spectrum from Patagonia to Nike, Delta Air Lines, and Target Corp., to Ben & Jerry’s leveraged the power of their respective brand to support BLM and social justice efforts. Moving from words to action.

Whether or not a CEO’s public stance on a given issue makes a realized difference in a company’s profitability remains inconclusive. Yet inaction, or a lethargic response, can potentially cripple a company’s image, and damage its business operations elsewhere. One need only look at the ongoing spat between The Walt Disney Co. and elected officials from the state of Florida.

Leaders, however, aren’t without their share of influence on capitol hill and in state legislatures.

In a 2018 Harvard Business Review article on CEO activism, researchers Michael Toffel and Aaron Chatterji explained how in 2016, Paypal (joined by Bank of America and many other organizations) opposed North Carolina’s bathroom legislation on the grounds that it discriminated against the LGBTQ community. When the bill passed, Paypal nixed its plan to locate a new global operations center in Charlotte – and the 400 jobs that would have been created.

The horizon today seems devoid of blue sky and rainbows as fears of a recession weigh on investors’ minds causing wild swings in the markets. Surging gun violence, yet again, takes aim at Asian-American and Black communities. The pandemic caused by COVID-19 continues with new, more contagious variants, infecting the vaccinated and unvaccinated. And the potential reversal of Roe v. Wade by the Supreme Court will likely coalesce into another inflection point for the activist CEO.

This leadership paradigm may be uncomfortable for some current and future chief executive officers, yet as the last decade has shown, it’s not a temporary expectation of the job. CEOs must be prepared to authentically address their company’s position on socio-political issues — laying bare where their values truly lie.

The activist CEO will endure.

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