Sadly, the private sector is mostly talk and little action these days when it comes to digging in its heels to bring about necessary and meaningful change for society and our environment. It seems as though every day another round of corporate statements, pronouncements, and commitments trickle out with little meaningful analysis, transparency, or ensuing change reported. While this “double-speak” is not the case among all corporate citizens, it is pronounced enough to concern me deeply as a business leader who now also serves as CEO of a business activist organization. And as a newly minted grandparent, this lack of real progress renews my spirit to continue working for a more just and sustainable economy.
The good news is throughout the modern era, investors and businesses have often been at the center of the solution to society’s most pressing problems. Solutions to pervasive, systemic issues such as racial injustice and voter disenfranchisement have been immeasurably shaped by the power of capital and sway of institutional name recognition to divest from areas where government and collective conscience had been on the wrong side of history. For example, to protest Apartheid in South Africa in the 1980s, about which the U.S. government initially demurred, it was the leadership of institutional investors spurred by college campus protests and others that drew attention and raised pressure. Ultimately, that contributed to the ensuing change in political power, and helped create a new beginning for millions of Black South Africans who previously had no say in their government and direction of their economy. This institutional activism led to the creation of one of our highly respected and influential members, the Interfaith Center on Corporate Responsibility, which continues this critically important work.
Increasingly, stakeholder pressure plays a significant role in business with demands for greater diversity and inclusion in corporate leadership positions, reduction of environmental impacts, including elimination of single-use plastic, and preservation of fundamental democratic principles essential to a stakeholder economy.
Increasingly, stakeholder pressure plays a significant role in business with demands for greater diversity and inclusion in corporate leadership positions, reduction of environmental impacts, including elimination of single-use plastic, and preservation of fundamental democratic principles essential to a stakeholder economy. Partisan challenges to voting rights in Georgia (and elsewhere) flooded the headlines of political and business stories alike the moment large Georgia-based companies, such as Coca-Cola, Home Depot, Delta, and others, weighed in. And then those who are elected to serve us began to pay attention.
Stakeholders today expect businesses to be actively involved in society’s issues beyond those which are ‘company-specific.’ A recent study from Proxy Insight reported by the FT shows surging investor support for resolutions at annual meetings that focused on diversity, such as calling for companies to report on inclusion efforts in the workplace. Shareholder support is on track to more than double this year for diversity-related resolutions globally, and averaged 42.4 per cent in the first six months of 2021, compared with 23.9 per cent over the whole of 2020.
Stakeholders today expect businesses to be actively involved in society’s issues beyond those which are ‘company-specific.’
While more companies are ‘getting onboard,’ these efforts are falling short of bringing about the systemic change that is needed. Without improved transparency and disclosure, stakeholders will remain uninformed, unable to evaluate real progress, and must apply greater pressure. Recently, the House of Representatives passed corporate reporting requirements covering environmental, social and governance issues (ESG) like climate risks, political spending, executive compensation and tax rates. And the Securities and Exchange Commission (SEC) is considering increased disclosure mandates. Though these efforts are essential, they will likely face resistance from those corporate leaders who, despite public pronouncements to the contrary, prefer to ignore or minimize the injustices of the status quo. But in my experience, stakeholders are nothing if not persistent. They will keep coming for the change they expect.
Some corporate CEOs and their advisors may feel it is not their place to engage in partisan political affairs. I understand the pressures of balancing the priorities of a large organization. However, most of the most pressing issues we face are non-partisan. Sadly, unencumbered access to voting is not and should not be an inherently partisan issue, but it is framed as such by some politicians we elect to serve and protect us because it serves their interests, not ours.
Based on the backlash many companies experienced for not supporting voting rights and remaining on the sidelines of public discourse, I believe more CEOs will more heavily factor in the risks of silence and inaction. And the changing demographics of America are only likely to increase that pressure to stand up and speak out.
Companies need not face stakeholders on their own as the diverse membership of the American Sustainable Business Council shows. There is strength in numbers. And when it’s time to stake and state one’s position, my advice to fellow CEOs is to consider stakeholder engagement as a relationship, not a transaction. Our most important stakeholders are with us for the long term, for better and for worse. Lastly, beware of the statements of purpose and commitment that are not accompanied by actions, where details of progress must be reported with consistent transparency.
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