The Rise of CEO Voices on Social Issues

Recently we witnessed another convening of CEOs in a letter urging Senate leaders to address the gun violence crisis with expanded background checks and stronger “red flag” laws. Born out of ongoing tragedy and inaction by the government in addressing this challenge, this move exemplifies the rise of CEO voices on social issues. It followed a similar call to action from Walmart.

Increasingly, senior leaders are speaking out on a range of issues, from CEOs signing the ‘Human Rights Campaign’s Equality is our Mission’ statement opposed to anti-LGBT legislation, to Microsoft’s stand on immigration, CVS ending tobacco sales, and many other examples.

It’s not just CEOs speaking out. Unilever’s Chief Legal Officer Ritva Sotamaa joined the General Counsels of companies across Europe to commit to a ‘Diversity and Inclusion Statement of Support.’ In Sotamaa’s words, “Driving diversity and inclusion broadly in the legal industry was on our minds. We want to make an impact on the external counsel, law firm environment. As clients, we have a big role to play, and we can be part of the solution in driving diversity and inclusion in the external law firm environment.”

Some would suggest that corporate leaders should not weigh-in on social issues that are not directly tied to their company’s purpose. However, as companies shift to a position of serving broader stakeholders – including customers, communities, third parties and others – the call for corporate activism becomes stronger.

According to a recent Harvard study, nearly two-thirds of respondents say they want CEOs to take the lead on policy change instead of waiting for government. Likewise, a 2018 Stanford University study found that 76% of Millennials, 69% of Generation X and 60% of Baby Boomers are more likely to purchase products from a business with a CEO that is outspoken about the social issues that are most important to them.

That isn’t to say that corporations should take a stand on every issue. Indeed, each leadership team should consider whether the company can speak with authenticity and credibility; how its voice could impact stakeholders; and whether or not there is a need for collective action on the issue.

Richard Fain, Chairman and CEO of Royal Caribbean Cruises, spoke with NPR about why a company that provides “extraordinary vacations” would weigh-in on such a contentious issue as gun violence. First, many of his employees and customers were part of the community impacted by the Parkland shooting. And also, in his words, “This has become such a national interest, and this has reached such a level that we felt that as good corporate citizens, we should at least express our view.”

Walking the Walk

Earlier this week, 87 companies committed to cutting greenhouse gas emissions and move to a low-carbon future. With a total market capitalization of more than $2.3 trillion, the companies in the ‘We Mean Business’ coalition can make a difference. Some have agreed to slash their carbon emissions to net-zero by 2050, including French cosmetics maker L’Oreal, Swiss food company Nestle, and French building materials company Saint-Gobain.

That said, ambitious goals are not always met. The 2019 United Nations Global Compact—Accenture Strategy CEO Study on Sustainability reports that CEOs believe that since making commitments in 2016, “business execution is not measuring up” due to economic constraints and business pressures. As a result, CEOs are now making three calls to action to correct the course of the private sector’s contribution to the 2030 goals.

When IBM was recognized as a World’s Most Ethical Companies honoree last year, Chairman, President and CEO Ginni Rometty said, "We know our clients and the consumers they serve to expect more than groundbreaking innovation and expertise. They want to work with a partner they trust, and one that works to make the world better, safer and smarter. We are deeply committed to these values."

These values come to life in IBM’s ethical commitments, which cover issues ranging from leadership in diversity and inclusion, to publishing Principles for Trust and Transparency for new technologies, to launching the P-TECH initiative to advance “new collar” jobs by melding high school, community college, professional mentoring, and hands-on career learning. This drive for change is no small task. Since launching in 2011, the P-TECH program has involved 110 schools across eight US states, Australia, Morocco, and Taiwan; along with more than 500 industry partners, from American Airlines to Mastercard and Kaiser Permanente; and 77 community college systems.

At Ethisphere, we are fortunate to have a lens into the great work of companies through our World’s Most Ethical Companies process. We see that more than three quarters (76 percent) of honorees include societal impact in their business decisions. This shows up in a range of ways – from the evaluation criteria for suppliers to hiring processes that consider diversity and inclusion.

Many may view these actions as a repudiation of Milton Friedman’s claim that the purpose of a corporation is to maximize profits for shareholders. And, I agree. I believe that leadership and consideration of society lay the foundation for a company to sustain success over the long term. These companies also understand that as business cycles evolve and change, the constant competitive advantage is people. The best and the brightest employees are inspired to have an impact in the world; and to attract and retain them, the best companies are taking action.

In the coming months, I’ll be on a listening tour – talking with senior leaders about corporate purpose, and when and how companies should put a voice on broader social issues. If you would like to join the dialogue, get in touch. I welcome the conversation.