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LEVICK

August 11, 2016

Why Companies Can’t Stay Quiet On Social Issues

It used to be that companies focused strictly on their products. Maxwell House’s “Good to the last drop” slogan focused on its coffee, not on corporate behavior and beliefs. However, in the age of social media and activist shareholders, that is changing.

The nonpartisan Public Affairs Council recently released the findings of a study it conducted in July 2016 focused on how and why companies speak out on social issues.  Sixty percent of the companies that responded said they have experience increased pressure from stakeholders to get involved on social issues over the past three years.

According to the survey, the most influential stakeholder groups were customers, employees, and senior executives. The Council reported that compared to their non-U.S. peers, U.S. companies were more influenced by shareholders, political leaders, and advocacy groups to engage on social issues.

For some companies, social engagement makes sense. For example, when Target took a stand on bathroom access and gender issues, it followed the company’s history supporting equal rights and breaking down gender barriers.

For other companies, one of the factors in deciding to get involved is employee recruitment and retention. In response to Indiana’s “Religious Freedom Restoration Act,” which allowed businesses to discriminate against gay and transgender people, Salesforce CEO Marc Benioff sent tweets offering to relocate Indiana employees, as well as saying the company would reduce investments in Indiana.

Benioff, who The Wall Street Journal credited in May for kicking off a new era of corporate social activism, is well known for using his influence to motivate his high-profile customers and fellow CEOs to publicly show their support on social issues.

From a brand perspective, what companies need to keep in mind when deciding how and where to engage is that they need to stay true to their brand identity and the values their stakeholders support – whether those stakeholders are investors, board members, employees, or customers.

According to the Public Affairs Council survey, 74% of the companies that responded expect to see an increase in stakeholder pressure to engage on social issues over the next three years. It’s important the corporate leaders decide which issues are most important and develop a plan for how and where they want to engage to ensure that it is strategic and not simply reactionary.

As it becomes more and more expected that companies show their support of social issues, it is important that this is done to support – not at the expense of – the broader corporate mission and culture.

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