When should business take a stand

Companies face increasing pressure to speak out on a range of issues, from racial unrest to Russia’s invasion of Ukraine, says the article “When should business take a stand?” by Sarah Murray, published recently in the Financial Times Moral Money Forum. 

While companies may have stayed quiet on controversial issues in the past, expectations have changed. The evolution of views over the past four or five years has been “remarkable,” the article quotes Elizabeth Doty as saying.  Companies are “shell-shocked by the frequency of need and the ballooning requests to engage,” says Doty, who is director of the Erb Institute’s Corporate Political Responsibility Taskforce. 

It’s a new era of corporate political responsibility, the article notes. 

The Corporate Political Responsibility Taskforce agrees. In the U.S., an environment of polarization and distrust over the past couple of years has made clear that inattention to corporate political responsibility can increase reputational risk, destabilize the civic and business environment, threaten credibility and undermine the positive systemic changes society needs, according to the taskforce. It was created to help companies manage these risks and concerns regarding their corporate political activity.

In recent years, companies have needed to decide whether to engage on issues such as same-sex marriage bans and the killing of George Floyd, the Financial Times article notes. While speaking out is risky, so is staying quiet.

And this pressure may come from different directions. The article cites a survey of Financial Times Moral Money readers that asked where the pressure to speak out was coming from. More than 70 percent said employees, 46 percent said consumers and 33 percent said investors.

To decide when to engage, companies are considering the issue’s materiality and relevance to the company’s business—an assessment that can include factors such as location and customer base, the article explains.

Another problem is that companies may contradict themselves. The article notes: “So many social issues cause controversy today that the challenge for companies is to be sure to take one stance publicly while avoiding discreetly lobbying for the opposite.”

Some of this contradiction may be unintentional, and people in different functional areas of the company may be unaware of it. It may happen because of company organization, “with managers in government affairs and sustainability not necessarily reporting to the same senior executives or to the board,” the article says. 

“It is shocking that companies are so poorly integrated that they don’t talk to one another,” the article quotes Tom Lyon as saying. “Some companies do seem to understand this—but there are a lot that don’t.” Lyon is the Erb Institute’s faculty director and a leader of the Corporate Political Responsibility Taskforce. 

According to the taskforce, many executives lack an integrated view of their companies’ political engagement, as well as clear principles to ensure transparency, accountability and responsibility.

Figuring out how to navigate this shifting landscape will be uncomfortable, the article says, adding: ”One thing is certain, though: not engaging in political, social and moral issues is no longer an option.”