Are top-profile issues good for the bottom line?

Executive Summary

Corporations have traditionally avoided political and social controversies, on the theory that wading in would interfere with their primary mission of maximizing profit. No longer. Many executives are concluding that taking a stand on some issues, far from conflicting with the bottom line, has become essential to protecting the brand and balance sheet. These companies have found that their customers have expectations in this area – and are quick to express dissatisfaction on social media when those expectations are not met. This trend is accentuated by the rising market importance of Millennials, who are especially inclined to buy from and work for businesses that align with their values.

Here are some key takeaways:

  • The political polarization of the broader society may be replicating itself in the business world.

  • The growing power and reach of social media is a force multiplier that has left companies feeling, in the words of one expert, “just one bad tweet away from getting in trouble.”

  • Millennials are now the single largest demographic group in U.S. society, and, according to surveys, are more likely than other generations to make buying decisions based in part on a company’s values.

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Resources for Further Study

Bibliography

Books

Friedman, Thomas L., “Thank You for Being Late: An Optimist’s Guide To Thriving In The Age Of Accelerations,” Farrar, Straus and Giroux, 2016. The New York Times foreign affairs columnist proposes socially responsible ways for both CEOs and individuals to navigate the tectonic changes resulting from the convergence of climate change, globalization and advances in technology.

Walker-Said, Charlotte and John D. Kelly, eds., “Corporate Social Responsibility?: Human Rights in the New Global Economy,” University of Chicago Press, 2015. Walker-Said, an Africa specialist at John Jay College of Criminal Justice, and Kelly, an anthropology professor at the University of Chicago, explain how CSR functions within different disciplines, such as business, law, the social sciences, and human rights.

Articles

Birch, Simon, “How activism forced Nike to change its ethical game,” The Guardian, July 6, 2012, http://tinyurl.com/jnrq5nk. A reporter traces how 20 years of activism on behalf of workers’ rights forced the world’s largest sportswear manufacturer to change its corporate culture.

Coleman, Edda Collins, “Why global corporations should embrace corporate social responsibility,” The Hill, May 4, 2015, http://tinyurl.com/q593p37. A Washington-area business consultant defends the corporate social responsibility business model.

Davis, Gerald F., “How corporate CEOs found their political voice,” The Conversation, Aug. 30, 2017, http://tinyurl.com/yam8tgms. A University of Michigan business professor analyzes the forces propelling CEOs to take political stands against President Trump.

Davis, Gerald F., and Christopher J., White, “The New Face of Corporate Activism,” Stanford Social Innovation Review, Fall 2015, http://tinyurl.com/yauldwaj. Two University of Michigan business professors suggest that if corporations stand behind their employees when they protest, rather than shutting them up, they will attract a more dedicated work force.

Fuhrmans, Vanessa, Joann S. Lublin and Emily Glazer, “Trump and the CEOs: Behind the Collapse of an Uneasy Alliance,” The Wall Street Journal, Aug. 20, 2017, http://tinyurl.com/ybgpo6e7. Three reporters trace the events that led to the disbanding of Trump’s two business advisory councils.

Greenhouse, Steven, “Anti-Sweatshop Movement is Achieving Gains Overseas,” The New York Times, Jan. 26, 2000, http://tinyurl.com/yby324oq. A labor reporter details the successes of activists who have forced corporations to improve labor conditions in their factories overseas.

Jarret, Valerie, “Business Leaders Support President Obama’s Plan to Reduce Carbon Pollution,” obamawhitehouse.archives.gov, June 27, 2013, http://tinyurl.com/yd4mnmd6. One of Obama’s top political advisers curated a compendium of statements by business leaders who supported the former president’s clean energy initiatives.

Nisen, Max, “How Nike Solved Its Sweatshop Problem,” Business Insider, May 9, 2013, http://tinyurl.com/cydqacl. A reporter provides a blow-by-blow account of how Nike got into its sweatshop problem and how the company woke up, corrected its mistakes and survived.

Sorkin, Andrew Ross, “Can Good Corporate Citizenship Be Measured?” The New York Times, June 26, 2017, http://tinyurl.com/y7526hq8. The “Dealbook” columnist casts a skeptical eye on a new Bank of America study that says stocks of companies that observe environmental, social and governance criteria are better performers than their peers who do not observe those standards.

Strom, Stephanie, “To Be Good Citizens, Report Says, Companies Should Just Focus on Bottom Line,” The New York Times, June 14, 2011, http://tinyurl.com/82klc6p. A reporter discusses a report that refutes previous performance studies on the impact of corporate social responsibility.

Waggoner, John, “Seeing green, asset managers ramp up purchases of ESG shops,” Investment News, Nov. 3, 2016, http://tinyurl.com/y9cx5ymm. An investment industry publication reports that socially responsible investing is spreading into traditional mutual funds.

Reports and Studies

Davis, Gerald F., Marina von Neumann Whitman and Mayer N. Zald, “Political Agency and the Responsibility Paradox: Multinationals and Corporate Social Responsibility,” International Policy Center, Gerald R. Ford School of Public Policy, University of Michigan, Oct. 7, 2010, http://tinyurl.com/y7oanbj9. Three business professors trace the history of the corporate social responsibility movement in the United States and describe how both globalization and the advent of multinational corporations have complicated issues of responsibility and jurisdiction.

Eccles, Robert G., Ioannis Ioannou and George Serafeim, “The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance,” Harvard Business School, May 9, 2012, http://tinyurl.com/ycl4hksy. This study, conducted over 18 years, shows the stocks of companies with environmentally and socially responsible policies outperformed the stocks of peer companies without such policies by nearly 5 percent.

McWilliams, Abagail and Donald Siegel, “Corporate social responsibility and financial performance: Correlation or misspecification?” Strategic Management Journal, May 2000, http://tinyurl.com/yaus93l2. McWilliams, a business professor at the University of Illinois in Chicago, and Siegel, who teaches business at the State University of New York in Albany, find that corporate social responsibility has a neutral impact on financial performance.

Porter, Michael E. and Mark R. Kramer, “Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility,” Harvard Business Review, Dec. 2006, http://tinyurl.com/y7jda7zl. Two Harvard business professors argue for strategic applications of corporate social responsibility, first in the workplace through safe work conditions and fair wages, then expanding into initiatives that address social needs, all while adding to the company’s bottom line.

The Next Step

Branding and Reputation

Crowl, Jonathan, “Are Ethical Branding Campaigns Causing Consumer Fatigue?” Content Standard, July 28, 2017, https://tinyurl.com/y7vqzsru. Consumers might be growing more wary of corporations pushing ethical branding because of increasingly half-baked, misguided attempts, says a journalist.

Giammona, Craig, “Kraft Heinz Expands Sustainability Push After Unilever Bid,” Bloomberg, March 21, 2017, https://tinyurl.com/y8u4uaky. After a failed bid to buy Unilever, Kraft Heinz Co. invested $200 million in a corporate social responsibility program to fight malnutrition and reduce its carbon footprint. The Unilever bid failed in part because of concerns about whether Kraft Heinz would preserve Unilever’s emphasis on “brands with purpose.”

Hobbs, Thomas, “The Body Shop on how its new owners are trying to revive its ‘activist spirit,’” Marketing Week, Sept. 20, 2017, https://tinyurl.com/y7pxcclq. The Body Shop, a traditionally “purpose-driven retailer,” has begun a new CSR campaign against animal testing utilizing the mobile wallet function in smartphones.

Culture

Taylor, Alison, “How to build the 5 levels of ethical company culture,” Green Biz, April 20, 2017, https://tinyurl.com/ydflqgmm. Companies looking to develop an ethical culture should focus on strengthening relationships among and within groups in their organizations, says a paper by Business for Social Responsibility, a global sustainability and business nonprofit.

Xu, Kevin, “Got a Do-Gooder Gene? 3 Tips for Launching a Successful CSR Initiative,” Entrepreneur, Sept. 13, 2017, https://tinyurl.com/y7pr394s. Companies that engage in corporate social responsibility (CSR) see many benefits, including an improved employee culture, and create a more fulfilled and connected workforce, says the CEO of an intellectual-property management company.

Yohn, Denise Lee, “New Generation Of Tech CEOs At Uber, Microsoft And Google Lead With Culture,” Forbes, Nov. 15, 2017, https://tinyurl.com/yag5ponx. Major tech companies are emphasizing the importance of a positive corporate culture and empathetic values in their work environments.

Environment

Covello, Lauren, “Nike, Patagonia Win Awards at Davos for Efforts to Combat Waste,” Fortune, Jan. 17, 2017, https://tinyurl.com/ycuh9eun. The World Economic Forum in Switzerland honored two apparel companies this year for their waste-reduction efforts in manufacturing and product use.

Eckhouse, Brian, “Biggest U.S. Companies Setting More Renewable-Energy Targets,” Bloomberg, April 25, 2017, https://tinyurl.com/m7mbx2v. A rising percentage of both large and small corporations in the United States have set clean-energy targets for themselves.

Toor, Amar, “Apple, Google, Microsoft, and Amazon will continue to fight climate change despite Trump’s order,” The Verge, March 31, 2017, https://tinyurl.com/ya3tyts3. Major tech companies have vowed to continue supporting climate-change regulations and policies, even as President Trump moves to undo Obama-era climate policies.

Millennials

Alton, Larry, “How Millennials Are Reshaping What’s Important In Corporate Culture,” Forbes, June 20, 2017, https://tinyurl.com/ybordmoe. Millennial professionals value corporate culture, social responsibility and diversity and inclusion, when deciding where to work and what products to buy.

Biro, Meghan M., “Be the Change: Promoting Corporate Social Responsibility,” The Huffington Post, Feb. 27, 2017, https://tinyurl.com/y85heuuv. As Millennials become the largest group in the workforce, companies need to adopt more CSR initiatives, says the CEO and founder of a social workplace forum.

Peretz, Marissa, “Want To Engage Millennials? Try Corporate Social Responsibility,” Forbes, Sept. 27, 2017, https://tinyurl.com/yb328x96. Companies that want to attract Millennials should invest in volunteering programs and initiatives that benefit the local community, says a founder of Silicon Beach Talent, a recruiting and consulting firm in Los Angeles.

Organizations

Boston College Center for Corporate Citizenship
Carroll School of Management, 140 Commonwealth Ave., Chestnut Hill, MA 02467
1-617-552-4545
https://ccc.bc.edu
This organization provides research, executive education and networking forums to further CSR skills for its members. Membership is restricted to nonprofits and some government organizations and credit unions with corporate citizenship or sustainability departments.

Businesses for Social Responsibility
5 Union Square West, 6th Floor, New York, NY 10003
1-212-370-7707
https://www.bsr.org
This international organization offers companies a range of programs on corporate social responsibility issues related to ethics, the workplace, the marketplace, the community, the environment and the global economy.

Committee for Economic Development
1530 Wilson Blvd., Suite 400, Arlington, VA 22209
1-202-296-5860
www.ced.org
With members representing a cross-section of U.S. corporations, this organization conducts policy research on the country’s fiscal health, education, global competitiveness and democratic institutions. It encourages U.S. business leaders to speak out on timely policy issues.

Corporate Responsibility Association
136 West St., Suite 104, Northampton, MA 01060
1-413-320-4807
http://corporateresponsibility.3blmedia.com
An organization offering training, webinars, and conferences for corporate officials charged with implementing sustainability policies and dealing with the media if something goes awry. The organization publishes Corporate Responsibility magazine, which compiles an annual list of the 100 most socially responsible U.S. companies.

Institute for Supply Management
309 West Elliot Rd., Suite 113, Tempe, AZ 85284-1556
1-480-752-6276
https://www.instituteforsupplymanagement.org
This school trains supply chain professionals in sustainable and socially responsible procedures. In additional to accredited courses, it maintains a website that provides research, articles, training, audits and assessments, business case materials and indices on how companies and their suppliers can integrate sustainable and socially responsible strategies and practices into their business and supply chains.

Responsible Business Alliance
1737 King St., Suite 330, Alexandria, VA 22314
1-571-858-5720
http://www.responsiblebusiness.org
A group that works to create industry-wide social, environmental and ethical standards for the electronics industry supply chain. It partners with several auditing firms that monitor compliance with environmental and labor standards in factories and mines in 110 countries.

Social Venture Network
P.O. Box 29221, San Francisco, CA 94129-0221
1-415-561-6501
www.svn.org
This membership organization provides support to businesses that use “the triple bottom line,” an accounting framework that measures a company’s impact on profits, the people in its community and its surrounding environment.

United Nations Global Compact
685 3rd Ave., 12th Floor, New York, NY 10017
1-646-884-7502
www.unglobalcompact.org
The world’s largest corporate social responsibility initiative. To date, 9,727 companies in 162 countries have signed on since it was initiated in 2000. The compact commits participating companies to a 10-point code of conduct regarding their labor, environmental, human rights and clean governance practices.

DOI: 10.1177/237455680335.n1