Corporate Social Activism. Mind your business. from Altruist League's blog

The voices of CEOs are becoming more and more loud, expressing their views on pressing problems our society is facing. We are getting used to seeing Tweets and interviews of big-name businesspeople and corporate statements about racial and gender inequality, gun control, gay rights, etc. The most recent example was the joint statement of hundreds of private companies and executives opposing a new election law in the U.S. state of Georgia that restricts voting rights. As acute as the problem is, should business be the leading force in shaping public opinion and political reform?

As statistics show, the vast majority of people would answer positively to this question. According to the 2021 Edelman Trust Barometer data, 86 per cent of respondents agree to that CEOs must lead on societal issues. This unanimity is explained by historically low levels of trust in the state. On top of that, the positive economic results, achieved despite the blow of the pandemic, suggest that business leaders might be able to propose better approaches to pending problems and manage well their achievement. The European study echoes: 77.5 per cent of the surveyed believe that managing directors should be present in the political arena. Asia is also slowly picking up the trend with close to half of respondents’ view on CEOs’ responsibility to speak up politically.

The pressure to be vocal comes also from stakeholders. Companies are increasingly expected to adapt corporate political activism by expressing their positions on issues that resonate strongly and potentially divide society into advocates and opponents. That is what exactly happened on the wave of Black Lives Matter and #MeToo movements. CEOs rushed reports on what had been changed in a corporate policy to prevent racial discrimination, sexual abuse, and sexual harassment.

We should not underestimate peer pressure that CEOs are facing. Those who refuse to join the expression of a common position, for whatever reason, may be publicly condemned. For example, Delta and Coca-Cola had to explain why they hadn’t signed a letter opposing strict voting limits in Georgia.

Of course, some CEOs take a public stance out of deep personal convictions. I liked reading the letter by the JPMorgan Chase chairman and CEO on the U.S. governmental decay and the needed increase of corporate taxes, among many other weighty concerns. Or, take Walmart CEO Doug McMillan, for example. Following deadly shootings in America, he revoked sales of ammunition in the retail giant shops and insisted on stricter gun control measures. It is encouraging to observe that the critical mass of people who disagree with the distortions in the social, political, and environmental spheres is steadily increasing.

However, we must ask ourselves whether corporate social activism is appropriate. Doesn’t this phenomenon undermine the fundamental principles of democracy?

To begin, the active participation of the business in political life contradicts the very principle of the separation of powers. The more influence the private capital has on setting and implementing the public agenda, the greater the risk of slipping into oligarchy and authoritarianism. If private companies gain political influence, the likelihood is high that this privileged position will later be used for its own purposes. This is the natural law of exploiting commercial opportunity. Can we expect the corporate world to bite the hand that feeds it? It is difficult to imagine that it will voluntarily submit to public interests, for example, by initiating the increase of corporate taxes or by self-imposing greater fines for violations of transparency and honesty of their value chains.

Everyone will be better off if the business sticks to its core principle, which is well summarized by the renowned economist Milton Friedman: “The social responsibility of business is to increase its profits.” He adds that “a company has no social responsibility to the public or society; its only responsibility is to its shareholders.” It doesn’t suggest that “responsibility” has only a monetary meaning. Friedman admits that the “owners of the business” might have other objectives apart from gaining profit. Yet, stakeholders’ aspirations of added social value should be channelled in a different manner, away from mingling with the power. If corporations focus on maximizing their profits, it can greatly contribute to the realisation of important state programs through the means of an increased tax base. Of course, this will only work if there is an absolute transparency in company finances and existing corporate tax holes are closed.

If it doesn’t sound like enough of a reason, don’t forget that corporations have a very powerful tool to be socially involved – corporate social responsibility (CSR). If the private business takes CSR seriously, rather than as a useful promotional technique, the society can advance on many systemic issues. Truly working corporate politics of equal rights, regardless of employees’ gender, race, religious, or sexual affiliation, will ease the problem of discrimination. This way there would be no dissonance between the business elite’s ardent assurances of support for racial equality movements and its corporations’ workforce containing only 1-2% black employees.

There are other honourable corporate social responsibility activities in which companies can engage to improve their public images and, more importantly, to do their part in resolving pressing problems. Joining the fight against the climate change, the business can and should develop sound environmental policies, notably reducing its carbon footprints. The list of those who have committed to do so keeps growing. GE and Johnson and Johnson are among those investing in cleaner power technologies. The Walt Disney Company and Lego are strong advocates for zero-waste and water preservation. By engaging in fair trade, companies address the inexcusable existence of slavery and extreme poverty. On top of that, we cannot overestimate corporate charitable giving that aims to improve education, health, and infrastructure.

Yet, the most powerful weapon that the business world can pick up is to support activist movements. They are there to raise the voice on behalf of all concerned people. They don’t have any hidden commercial agenda and use transparent democratic influence mechanisms. By these means, activist groups enjoy a strong public support and the greater attention on the part of politicians. Thereby transferring the responsibility of civic expression to social movements, everyone is doing what he/she does best: CEOs are increasing economic prosperity, while activist groups are fighting for the fair sharing of economic results and protecting civil rights and freedoms.