Corporate Activism, Yesterday and Today
This article is the second in a series of articles on corporate social responsibility in the Trump era.
Last week, we learned what corporate social responsibility is: a corporation's initiatives to assess and take responsibility for their effects on environmental and social wellbeing. We also learned that corporate social responsibility can be further subdivided into two categories: (1) the direct manufacture of its products and the social provisions of its services and (2) corporate activism, the ability to act as a voice calling for larger societal change.
I covered the first category in my article last week. Today, we’re going to dive into corporate activism, past and present. How has the idea and execution behind corporate activism evolved over time?
University of Michigan Ross School of Business professor Jerry Davis notes that when he first “started studying the interactions between social movements and corporations 25 years ago, it was rare to see business take a public stand on social issues” (New Republic). Today, as even the most casual media consumer knows, large businesses are frequently in the headlines for taking stands on social issues ranging from gun control to the rights of transgender people to use the bathroom they prefer.
In years past, corporations tried to be neutral on contentious social issues. While they didn’t hesitate exerting influence on tariffs, trade, and tax laws, they steered clear of speaking out on more controversial issues so as to avoid alienating current and potential consumers. Changing social norms, however, have led to more customers both in favor of social progress and with high expectations for the companies they spend their hard-earned money on.
The origin of this shift can be identified as occurring as early as 1960, Davis argues. A crucial civil rights event was the 1960 sit-in at a segregated Woolworth’s (a five and dime store) lunch counter in Greensboro, North Carolina. The intense publicity the sit-in received cast Woolworth’s in a negative light, and four months after the protest began, the manager of the Greensboro store integrated it, leading to a domino effect of further integration. This underscores a key fact: corporations can have an effect on society through their activism, but their activism is usually prompted by outside social movements and changing societal values and expectations. This line of thought is borne out by survey results: a survey of 1,021 American adults conducted with KRC Research found that twice as many Millennials said they would feel increased loyalty (rather than decreased loyalty) toward their own company’s CEO, if he or she took a stand on a contested issue.
These social effects of corporate activism can be very large. For example, when the Arkansas State Congress passed a “religious freedom” bill that allowed LGBT discrimination, Walmart CEO Doug McMillon released a statement asking the governor to veto the bill . As Walmart is the nation’s largest private employer as well as a crucial source of tax revenue for its home state, the governor listened, vetoing the original bill, although a modified one was eventually signed.
Even since the beginning of the Trump administration, the list of corporations that have taken on an activist role is very lengthy, and keeps growing. Public relations firm Weber Shandwick analyzed how CEOs and corporations have responded to five controversial Trump administration acts and statements: the Muslim travel ban (January), withdrawal from the Paris Accord on climate change (June), the disallowal of transgender service members from the U.S. military (July), the president’s comment that “many sides” were responsible for the death of a woman at a Charlottesville, Virginia protest (July), and the decision to end the Deferred Action for Childhood Arrivals (DACA) program (September). Weber Shandwick gathered 425 corporate response and found that corporate activism is not a monolithic trend: each company puts its own rhetoric, spin, and style on their statements. Notably, many companies have banded together in their activism efforts: over 1,600 businesses and investors signed the We Are Still In declaration to support climate change action, and over 500 business leaders signed an open letter to Trump asking him to keep DACA.
What is the efficacy of corporate social responsibility? It may have had results in the past, but if there’s one thing the Trump administration has proven, it’s that previous rules don’t always hold. Next week, I’ll analyze how both corporate social responsibility through supply chain and fair labor conditions as well as corporate activism is having an impact on larger society, and what it means for companies’ bottom lines.