CEO Activism?

The global political landscape has recently been immersed in the aftermath of racial violence in Charlottesville, Virginia. Along with the horror of the event itself, what drew even more attention was the very controversial reaction to it from the one who is expected to speak up for the people, the country and its values. President Trump’s remarks on “violence on both sides” and “the very fine people among alt-right groups” were highly criticized not only in the US, but also abroad. Many felt that Mr. Trump failed to take and communicate a public stance that ought to condemn racism and unite the people. Yet other strong voices — the voices of global CEOs — did just that.

Apart from being yet another reminder of deeply concerning political trends, the aftermath of the event also displayed the rise of a new form of activism: CEO activism. Earlier this year, prominent global CEOs spoke out against Trump’s immigration ban and the decision to pull out of the Paris climate agreement. At the European level, some French CEOs broke their silence and supported Macron during elections. Hence, it seems that global businesses are increasingly joining the political conversation. Why?

I would argue that this is a natural development, given the highly-interconnected world nowadays. With all the public media platforms that businesses are using to attract their clients, it probably feels even more difficult to remain silent in the wake of critical events, as the pressure to speak up is high. For example, Weber Shandwick and KRC surveyed 1,050 senior executives and 2,100 consumers in 21 global markets, and found that customers do indeed care about how companies behave in times of crisis. Specifically, one important factor that plays a role in shaping customer perceptions of companies is their proactive reputation for risk management, which may also show in clear and public responses to controversial issues. As such, CEO activism seems not only to reflect the moral part of standing up for one’s personal or brand values, but might also support business performance objectives. Research by Aaron Chatterij and Michael Toffel shows that when consumers favor a company’s standpoint, they are also more likely to buy a company’s products.

Naturally, not everyone will like the company’s stand and not every customer, with his or her political preferences, can be pleased. Yet, Coca-Cola CEO James Quincey believes that brands have to take a clear stand in this volatile environment. Mr. Quincey argues that this should be done even at the risk of alienating some customers, given the diversity their customers represent. For example, Coca-Cola was among those that stood up for inclusiveness amidst Trump’s travel ban, which might have certainly disappointed some of their Trump-supporting customers. I personally support this belief and suggest that CEO activism, when directed towards democratic values, is highly needed. When such a powerful voice as Trump gives encouragement to anti-globalist, populist and nationalist movements (e.g. David Duke seemed to be very pleased with Trump’s Charlottesville comments), we need other strong voices speaking up for, and serving as role models for, more liberal, progressive and inclusive values. As discussed in one of my previous posts, in times of high volatility global businesses — with their outreach to diverse pools of employees and customers — might be the ones to make a positive impact.