Warning: Long post follows
The roster of companies taking positions and undertaking initiatives that go well beyond the comfortable mediocrity of Corporate Social Responsibility (CSR) is impressive.
Influencing public policy is nothing new for businesses—it has been the work of lobbyists since they first began plying their craft during the Ulysses S. Grant administration. (Grant, in fact, invented the word when he saw the usual cadre of influence-peddlers waiting for him in their usual place: the lobby of the Willard Hotel, which he passed through every day after work on the way to the bar.) This is different. Rather than pay lobbyists to tip legislation and regulation in the company’s favor, organizations are committing time and energy into social causes that make the world a better place even if success has no effect on the company’s financial success.
In addition to “brand citizenship,” some people also refer to this as “public leadership.” What it’s not is your grandfather’s Corporate Social Responsibility. In fact, where CSR department launch programs to include in a CSR annual report, under the brand citizenship concept, the commitment to environmental and/or social causes becomes an integral part of the company’s mission.
There is good reason for brands to embrace brand citizenship
There are sound reasons for businesses to get serious about social and environmental causes. Some of the cynicism that has led to the lowest levels of public trust in organizations in decades can be traced to a worldwide belief that companies innovate only in pursuit of profit—less than half as many respondents to the 2015 Edelman Trust Barometer believe innovation is based on a desire to make the world a better place or to improve people’s lives.
As far back as 2007, there was evidence that making the world a better place was a smart business goal. For example, the Cone Cause Evolution Survey found that 83% of Americans believe companies have a responsibility to help support social issues. Since then, the evidence has been piling up.
According to Cone’s 2015 Global CSR Study, 62% of consumers would work for a company that demonstrated its commitment to social or environmental responsibility even if it meant earning less than they would from other companies. The study also found that addressing social and environmental issues has a substantial impact on the company’s reputation, with 90% of respondents saying they’re more likely to trust these companies.
While the conversation about business’ social involvement has been concentrated on sustainability, consumers increasingly want business leaders to address human rights issues. In a study from the Economist Intelligence Unit, 44% of respondents said CEOs should take the lead on human rights issues. Only 22% of companies participating in the study said they have a human rights policy available to the public.
Havas PR’s recent BeCause It Matters report pointed to a growing trend toward conscientious consumption, a preference for doing business with companies that do what is right simply because it’s right.
It’s not just customers and investors that want to associate with companies that spend time and resources on human rights and sustainability. Investors increasingly want to bet their money on conscientious companies. A 2014 Wall Street Journal report found that 56% of shareholder proposals in the first quarter of 2014 were focused on environmental and social issues. That was the first time a majority of shareholder proposals were focused on business’s role in improving the world. It meant that “shareholders are increasingly voting on things like greenhouse-gas emissions, political spending and labor rights.”
Employees, too, consider their employers to be a credible source of information about politics and public policy. “The idea,” according to an article in The Hill, “is that employers talk to their employees about where they stand on certain issues, and the employees then become advocates for those issues.” In a poll from the Business-Industry Political Action Committee, 53% of respondents said a company should actively promote public policies that are favorable to the industry and the company’s economic success. Sixty-three percent said the information shared by employers increased the odds that they would vote.
While the BIPAC study is focused more on the kinds of issues on which a company’s lobbyists would focus—those that serve business interests—it’s not unreasonable to expect employees would also look to company leadership to inform their views on other social issues the company has committed to addressing.
These studies are just a tiny sampling of research that reinforces the fact that the public has greater expectations of business and is willing to make employment, purchase, and investment decisions to support businesses that meet those expectations. Combine these studies with the dominance of socially-conscious Millennials in the consumer population and it’s easy to see why more and more business leaders are paying taking steps to get more active in using their companies’ power to address social and environmental issues.
(It’s worth noting that there is considerable health skepticism about some of these studies, given that consumer activism hasn’t led to a reduction in child labor in the fashion industry, for example. Consumers may say they won’t buy clothing from companies that don’t apply ethical standards to their supply chains, but when push comes to shove, they’re still making purchases that keep these industries in business. Either they don’t know the supply-chain issues associated with the brands they’re buying or they can’t resist the product or the price.)
Nevertheless, a greater desire to see companies that contribute to solutions instead of problems has given rise to the public benefit corporation. These are businesses that are required to create “a material positive impact on society and the environment” while also making money and delivering a return on investors’ dollars. Consider Core Capital Management—a certified benefit corporation—whose mission is to “create wealth for our clients by aligning their investments with their own positive, economic, environmental, and social values and accordingly making the world a better place.”
Finally, there is plain old enlightened self-interest. In an article calling on business to take action to correct the growing income inequality gap, Ketchum CEO Rob Flaherty writes, “If you are not motivated by the amorphous concept of social justice, or by a personal ‘do-the-right-thing’ credo, then be motivated by the cost of exclusion. Eroding the middle class for short-term gain is a fool’s game—a futile, ultimately profitless endeavor.”
How a company goes about demonstrating its commitment to social and environmental improvements, though, varies wildly among organizations.
Well-known brands are working for social change
While the notion of public leadership goes well beyond marketing, most of the examples of companies taking positions in support of social justice are on display in advertising and marketing.
Coca-Cola has been a longtime advocate of social change. More than two years ago, the company produced a marvelous video advocating for Indians and Pakisatanis to celebrate their commonalities instead of engaging in conflict over their differences. More recently, for Ramadan, Coke deployed a new version of its famous red-and-white soda can in Middle Eastern countries. The Coca-Cola logo is absent from the can, which instead reads, “Labels are for cans, not people.” The goal is to promote open-mindedness and tolerance, and the accompanying video hammers home the point, with six men talking in a dark room, developing perceptions of one another only from their comments. When the lights come on, they immediately see that they would have formed other first impressions if the conversation had taken place in the light.
The LGBT rights movement has spawned a cottage industry in supportive marketing. After the U.S. Supreme Court ruled in favor of same-sex marriage, the Independent Journalism Review posted examples of celebratory messages from 35 brands including Coca-Cola, Visa, American Airlines, Target, Procter & Gamble, GAP and Old Navy, AT&T, Macy’s, Kellogg’s, Maytag, Sears, Citi, Levi’s, and MasterCard.
So-called religious freedom laws are part-and-parcel of the LGBT rights movement, a reaction by conservatives that provide legal ground for refusing to provide services to people whose lifestyles conflict with their religious beliefs. Companies like Apple, Salesforce.com, Subaru, and IBM have made waves campaigning against these laws. According to MediaPost’s Marketing Daily, “These weren’t brands in crisis, issuing statements to fend off angry customers. Yet without their involvement and willingness to take a stand, there may have been no change at all.”
And in the wake of the Charleston, South Carolina massacre of nine black churchgoers by an avowed racist, Amazon.com, eBay, Sears, Etsy, and Walmart all pulled products bearing the image of the Confederate Flag from their inventories. According to Margaret Duffy, chair of the Strategic Communication Program at the University of Missouri’s School of Journalism (where my friend Don Ranly used to teach), “Walmart and Amazon are behemoths. When they make a move like this, it is going to affect the national conversation.”
Marketing’s great, but brand citizenship doesn’t end there
There are organizations taking action beyond their marketing efforts, though, in support of social causes, even as those positions also serve their own self-interests, enlightened though they may be. CVS, the massive pharmacy retailer, made the decision late last year to stop selling cigarettes, asserting that it “is simply the right thing to do for the good of our customers and our company. The sale of tobacco products is inconsistent with our purpose—helping people on their path to better health.” Note that its purpose goes well beyond making money. More recently, the company dropped its membership in the powerful lobbying group, the U.S. Chamber of Commerce, amidst reports the company was lobbying internationally against anti-smoking laws. That is, CVS made a business decision based on its values even though it might cost the company in other ways.
Similarly, Edelman severed its ties with the American Petroleum Institute over the organization’s efforts to raise doubt over the scientific evidence proving that human activity is to blame for climate change. The API paid Edelman more than $300 million for lobbying and PR; in some years, API billings accounted for 10% of Edelman’s global revenue. That’s a serious hit for Edelman to take in pursuit of a better reputation.
The perils of public leadership
Robert Phillips would have you believe that companies that commit themselves to addressing serious environmental and social problems will earn public trust and reap rewards. In his book, “Trust Me, PR is Dead,” Phillips—former CEO of Edelman’s AMEA operation—argues that there are only two types of organizations: those that shift their focus from public relations to public leadership and “asshole brands” that continue to engage in bad behavior and clean it up with words. (You’ll find my review of Phillips’ book here.)
While brands most certainly will involve themselves more systemically in social and environmental issues, there is no reason to believe the path will be smooth and easy. In fact, they will face a variety of obstacles on the road to public leadership.
Not all customers will share the company’s position
Taking a stand on issues of social justice in particular can alienate a segment of customers and cost the company money. Examples of just such consequences aren’t hard to find. Wells Fargo unveiled a new TV spot featuring a lesbian couple learning sign language in preparation for adoption of a deaf child. The BBDO-produced commercial led Franklin Graham to pull his ministries’ accounts from the bank. (Interestingly, he deposited those funds into a bank that is highly visible in its support of the Gay Pride activities in its headquarters city.) Graham—son of evangelist Billy Graham and head of the Billy Graham Evangelistic Association—also urged Christians to boycott Wells Fargo and other businesses that “promote a gay lifestyle.”
Not all companies may be as sanguine about losing customers and income as Wells Fargo, which has stood by its advertising as representative of the marketplace in which it does business. In 2005, Microsoft withdrew its support for a gay rights bill in Washington state after a local church applied pressure. It is not uncommon for large conservative activist groups like the American Family Association to launch boycotts and letter-writing campaigns to oppose corporate action in support of causes that contradict their doctrine.
Organizations like the American Family Association aren’t required to apply pressure. A TV ad for the breakfast cereal Cheerios featured a mixed-race family, prompting a torrent of despicable hate-filled messages to flood the brand’s Facebook page and elsewhere. Parent company General Mills was forced to shut down comments on the Cheerios ad on YouTube that included references to Nazis, ‘troglodytes’ and ‘racial genocide.’
How quickly companies will actively pursue more public leadership will be tempered by their taste for customer revolt and revenue loss.
Not all companies view social issues the same way
When Phillips talks about public leadership in his book, the examples he shares are consistent with his own liberal perspective. Some companies embracing public leadership, however, pursue a conservative agenda. Hobby Lobby, a U.S. chain of hobby shops, is a family-owned business that objected to a provision of the Affordable Care Act (aka Obamacare) that required companies to pay for contraceptives as part of worker health-care coverage. The objection led to a Supreme Court battle and a 5-4 ruling that allowed some family-owned businesses to opt out of the requirement.
Chik-fil-A is another family-owned business where conservative and religious values dictate company policy. CEO Dan Cathy used his position to oppose gay marriage, the same issue celebrated, as noted earlier, by 35 brands. While his position prompted a boycott among supporters of same-sex marriage, sales actually rose as conservatives began patronizing Chik-fil-A restaurants as a demonstration of support.
These are hardly the only two organizations embracing the principles of public leadership in support of social causes that would rankle Phillips and others who are looking to business to do their bit for social justice. Papa John’s Pizza and In-N-Out Burger are among the many organizations using their clout to advocate for conservative values.
Some people think business has no place in social causes
WalMart, the massive big-box retailer, made headlines when it injected itself in the debate over religious liberty laws by opposing such legislation in Arkansas, its home state. CEO Doug McMillon publicly asked Governor Asa Hutchinson to veto the law, saying it “threatens to undermine the spirit of inclusion present throughout the state of Arkansas and does not reflect the values we proudly uphold.”
After McMillon issued his statement, the company was deluged with opinions offered by everyone from elected officials to customers asserting that the company—and all retailers—should stay out of political issues that don’t directly affect their operations. Companies that will take stands on social-justice issues need to have a high tolerance for objections that could come from policy-makers that have historically been friendly to the organization.
(Incidentally, Governor Hutchinson first indicated he would veto the legislation, but he ultimately signed a version of the law that amended provisions that would have let businesses discriminate against LGBT customers.)
Some people will see support for social issues as mere exploitation
No matter how heartfelt and sincere a company’s involvement in environmental and social causes may be, some stakeholders just won’t be able to see it as anything more than opportunism. The tendency to view company sentiment as just another marketing ploy is evident in reactions to brands’ social media messaging during public commemorations of the September 11 terrorist attacks or Martin Luther King, Jr. When Adweek shared examples of tweets honoring King, readers left comments like this one: “When will brands learn? This is not your conversation.”
Well-meaning brands will blow it and invite bad publicity
Starbucks’ Race Together campaign is a sparkling example of a company making bad decisions in pursuit of a noble goal. Starbucks CEO Howard Schultz has always viewed the coffee shops as counterparts to European stores where people don’t just buy their triple-shot mochas and run; they stay to have conversations, debates, and arguments. With that view in mind, he launched the campaign to engage customers in conversations about race at the behest of baristas who wrote messages on customers’ cups. In addition to contemptuous jokes, the campaign also sparked a statement from Nelson Lichtenstein, director of the Center for the Study of Work, Labor, and Democracy at the University of California, Santa Barbara. Lichtenstein said, “I see a certain institutionalized arrogance, where CEOs have been given the right to mouth off on whatever they feel like.”
When efforts to drive social change go sideways, leaders can expect similar responses, dismissing the activities as PR, even if there is no direct benefit to the company from its efforts to promote the cause.
In fact, shaming of CEOs via social media has become a popular tactic among unhappy consumers. A Lithium Technologies study found that 42% of respondents have shamed a company via social media. According to Lithium CEO Rob Tarkoff, consumers are using social channels to “sometimes shame brands into solving their problems.” No doubt consumers will have no problem employing the same tactic against CEOs whose social actions (or lack of action) run contrary to their own beliefs.
Tim Hortons, the iconic Canadian coffee-and-donut business, was the recent target of just such shaming after ads from energy company Enbridge appeared on Tims TV, the company’s closed-circuit in-store TV channel. Opposition stemmed from Enbridge’s plan to build an oil pipeline deemed an environmental risk. Shaming tweets surged onto Twitter, like one that proclaimed “@TimHortons I do not want #tarsands with my morning cuppa joe. I’m quitting you till you dump #enbridge Ads.” Even some Canadian politicians latched onto the issue, leading the company to stop airing the ads.
Companies could be overwhelmed by the breadth of causes customers expect them to embrace
A study by Edelman Wellness 360 found that 65% of consumers believe companies need to do more to support their personal well-being. Physical and emotional health are important issues, but they don’t qualify as social or environmental causes. At some point, leaders could throw up their hands in frustration, wondering exactly where they should concentrate their resources given the multiple demands from stakeholders.
Few companies measure their reputation to begin with
Companies that embark on the path to public leadership need to understand the impact their actions will have on their reputations and, ultimately, their profitability. While many companies are likely to follow Wells Fargo’s example and accept some losses (consistent with Phillip’s view that a new form of capitalism should concentrate of optimizing rather than maximizing profit), they still need to have their eyes wide open. Yet according to the Reputation Resilience report from Schillings, a law firm, only 4% of FTSE 100 companies define their reputation risk appetite and only 8% measure their reputation risk at all.
Last but hardly least: Some companies just want to make money
Phillips believes companies will naturally embrace public leadership as part of a trend that redefines capitalism, enabling companies to invest in activities that make the world a better place but contribute nothing to their bottom line.
It’s a pleasant vision, but there is no shortage of leaders and investors who subscribe to economist Milton Friedman’s view of capitalism: “There is one and only one social responsibility of business: to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” It’s unlikely that belief will change any time soon, and its adherents will continue to push the belief that societal problems will be resolved as a consequence of businesses making money. Convincing these companies to invest in societal change that doesn’t contribute to its success will not just be hard. It will be impossible.
Companies that proudly and boldly proclaim their positions on controversial issues, then suffer a backlash, could retreat from those positions in the face of unexpected losses, both reputational and financial, setting back the whole movement toward public leadership.
A brand citizenship roadmap
The rationale for businesses to adopt a public leadership posture is sound and strong. Rushing headlong into it is madness. Like most things businesses do well, integrating public leadership (or brand citizenship) into a company’s DNA should be based on sound research and planning. The Marketing Daily piece referenced earlier notes that this new brand of corporate citizenship “requires bold moves.” Being bold, though, and being rash are two different things.
A number of experts echo this view. According to Nicholas Pearce, a clinical assistant professor at the Kellogg School of Management specializing in values-driven leadership, “I believe [corporations] should not engage hot-button social issues just for the sake of being controversial or edgy. But rather executives should be willing to take a principled stance on issues that matter to the organization.”
One approach brands can explore is to create advertising campaigns that take a stand while building trust and loyalty among customers. Eva Daniel, associate director of communications at BSR, points to the Cone study cited earlier, noting of customers that “They’re not saying they want a CSR report. They’re saying, ‘We want to hear about this in terms of marketing.’ It’s a deeper connection than old-school marketing.”
As outlined in a FastCompany article, a BSR report outlines three priority areas for advertisers to focus on:
Transparency—Provide access to information and resources that enable consumers to make informed decisions about a company and its operations.
Audience empowerment—“Companies also need to be ready to respond to customer feedback on platforms like Facebook and Twitter,” according to the FastCompany article. “But brands can also empower audiences by letting them talk back.”
Purpose—Produce advertising that is based on a foundation of strong values and authenticity. FastCompany calls out Chipotle as an example for its stand on anti-factory farming as part of its advertising efforts.
Of course, there is much a company can do to be true to its values and demonstrate its brand citizenship. Taking a hard look at the supply chain could be a good place to start, since supply chain issues led to effective protests against companies like Nestle (over the palm oil in its Kit Kat candy bars) and Mattel (for rainforest product in Barbie doll packaging). Intel is removing conflict minerals from its supply chain, for example. It didn’t blow its horn over the decision; the announcement has been characterized as “quiet.”
Intel has also invested in workplace diversity to the tune of $300 million; its Intel Capital business has set aside $125 million for women- and minority-led startups. These are examples of putting their money where their mouth is. Investing in diversity carries a lot more weight—the weight of action—than just talking about it.
(Brands embarking on the brand citizenship journey need to have a clear understanding that talking is not enough; the routine Corporate Social Responsibility approach won’t cut it. Currently, despite widespread pronouncements by companies about the importance of undertaking environmental initiatives, only 16% of companies monitor the carbon emissions of their suppliers. Their insistence that they care about the environment would carry a lot more weight if it informed a review of their supply chain. As things stand, though, the actions of many of these companies don’t match their words.)
CEOs have a prominent part to play in public leadership. According to a Weber Shandwick study, The CEO Reputation Premium: Gaining Advantage in the Engagement Era...
CEOs have entered a golden age of opportunity in which to tell their company story and join the conversation. This new era is marked by the recognition that CEO engagement is particularly critical to corporate reputation and is facilitated by high demand for content to help grow the business. Today’s CEOs are expected to be seen and heard and to be on the scene internally, externally and virtually. The same goes for top executives in the organization.
According to the study, 81% of global executives believe external CEO engagement has become a mandate for building a company’s reputation. If a company’s public leadership is going to be an integral part of that reputation, then it becomes the responsibility of the CEO to use her pulpit to reinforce the company’s commitment to its values and the causes it has undertaken. (This should be relatively easy, given that 80% of CEOs from the world’s leading organizations are engaged online via social media.)
The vital role of employees
Finally, if ever there was a role for employee ambassadors, it will be as the most visible, credible, and authentic manifestation of brand citizenship. Engaging employees in public leadership not only makes sense; it will produce bigger payoffs than any other single factor.
First, consider that employees are among the most credible spokespeople available to an organization, according to the Edelman Trust Barometer.
Public leadership/brand citizenship should come down to alignment with organizational values (as Intel has demonstrated with its actions in support of its diversity value). A lot of people are justifiably cynical about values statements, pointing to example after example of companies whose published values are polar opposites of their behavior. There is a basis for the stereotype of the company that slaps laughable values statements on walls while behaving in completely contrary ways. The fact that some organizations have perverted their values statements doesn’t diminish their value, though. Clearly stating a company’s values—the principles under which the organization operates—can help direct business activities at a macro level and individual employee behavior on a micro level. What’s more, emotional capital is built to a large degree based on employees who work for a company that shares their own personal values.
Employees who believe their company shares their values about vital social or environmental issues build a stronger attachment to the company. When they are able to participate in actions meant to help solve these issues, they develop pride and purpose. Engagement rates soar. When employee engagement teams are empowered to create the opportunities to use company resources to make the world a better place—like the one from WestJet that comes up with the annual Christmas Miracle—people notice and reputations trend upward.
While not every company will cozy up to the idea of investing money and resources in causes that don’t affect the bottom line, others will—and they’re right to do so. The journey could well be perilous. Research, planning, and a strategic approach will make it smoother.
Effective public relations will be front and center in companies that adopt brand citizenship as a way of life, helping audiences understand the positions your organization has staked out and the actions the organization is taking that speak so much louder than words.