‘CEO activism’ has arisen from increasing stakeholder pressure on company leaders to take public positions on environmental, social, governance and political issues.
CEOs taking a stand on social issues is the new expectation of consumers, job-seekers and investors. But to minimise risk and maximise impact, CEOs must take a strategic approach.
Michael Jordan once famously said, “Republicans buy sneakers too.”
It was his reason for not endorsing a Democratic senate candidate, lest he alienate customers not aligned with his political views.
Contrast that with these statements from Australian business leaders in recent years:
- “There’s been a lot of discussions about whether companies should express a view on social issues. My view is they absolutely should.” – Qantas CEO Alan Joyce.
- “The responsibility of business leaders to provide leadership in [the] community…is something they should be aware of.” – Atlassian CEO Mike Cannon-Brookes.
- “If there is an issue that [business leaders] feel might be a social issue but an issue that is important to their business, then absolutely they should have the right to talk about that.” – President of the Business Council of Australia and former CEO of MYOB, Tim Reed.
How times have changed
Today, businesses no longer exist purely to create shareholder value, provide jobs and contribute to economic growth. They are also expected to make their moral positions clear and agitate for progress, with CEOs expected to be the face of that change.
This local movement is part of a much bigger global trend.
‘CEO activism’ as it is called has arisen from increasing stakeholder pressure on company leaders to take public positions on environmental, social, governance and political issues.
Behind it is a significant decrease in trust in institutions from consumers, employees and investors, who are looking elsewhere for leadership on issues that matter to them.
Take these numbers from the Edelman Trust Barometer Report 2022:
- Australians’ trust in democracy fell from 59 to 53% and their trust in media fell from 55% to 43% between 2022 and 2021. Nearly 3 in 4 (73%) worry about fake news being used as a weapon.
- The majority of consumers (58%), employees (60%) and investors (64%) worldwide now choose brands based on their beliefs and values.
- More than half – 60% – of people worldwide say that when considering a job, they ‘expect the CEO to speak publicly about controversial social and political issues that I care about’.
Advocacy in action
Climate change, LGBTQI rights and women’s rights are among the most popular pressing societal issues that Australian business leaders are taking a stand on. For example:
- Mike Cannon-Brookes, co-founder and CEO of the Australian software company, Atlassian, is demonstrating significant leadership on climate change, investing in the nation’s largest solar farm and building a presence on the board of the nation’s largest emitter, AGL.
- Qantas CEO Alan Joyce was a vocal supporter of marriage equality and personally donated $1 million to the Yes campaign. Last year, on a separate issue, he challenged the government to invest in sustainable aviation fuel production to achieve a carbon-neutral future.
- Sydney-based digital design platform, Canva, headed up by Melanie Perkins and Cliff Obrecht, committed to covering the travel and accommodation costs for US staff to access legal abortions after the reversal of Roe v Wade.
Leaders of some of the world’s largest companies are not only taking action but also persuading their peers to follow suit.
Marc Benioff, CEO of cloud-based enterprise software, Salesforce, asserts that business should be used as a platform for change in his book, Trailblazer, and former CEO of Unilever, Paul Polman, declares in Net Positive that leaders have a responsibility to make a positive impact on the world.
Choosing issues to take a stand on
With such groundswell, choosing to stay silent on a ‘hot-button societal issue’ can speak volumes. But get it wrong and you risk not only a hit to sales but also lasting reputational damage.
So, how does a business leader decide what topics to speak out about? Consider the following:
- Align with purpose and values: It all starts with purpose. Go back to basics. Consider why your company exists and how it makes people’s lives better. Does the issue align with these business fundamentals, and will speaking out on this issue help to advance your company’s purpose?
- Assess your role: What makes you well-positioned to speak about this issue? Do you have first-hand experience with the issue? Can you influence the issue?
- Evaluate substance: After the initial announcement, are you willing to remain vocal on the issue? Is your company activity aligned with your position? Without appropriate action, taking a stand has the potential to become a significant reputational issue for yourself and the company.
- Assess the risk: Will your stakeholders agree with your advocacy? Will inaction or silence harm the company’s reputation?
Maintaining your stance
Taking a stance is more than posting a tweet. CEO activism is about weaving the position through the fabric of your company and your personal approach to the world. But done well, approached authentically and strategically, it has the potential to grow market share, attract and retain employees, and now just as importantly, make positive change in the world.
Julia Loughlin, MBA is the founder and Managing Director of Echomakers, a corporate communications consultancy specialising in B2B and service-based organisations.