Corporate Social Activism:
When the Tail Wags the Dog
Source: AP Photo/Marcio Jose Sanchez, File
Corporations exist primarily to provide goods and services to willing buyers. Yet a growing number of employees believe that this mission must include the role of social change facilitator. They view profit and global salvation as woven together. To accommodate this call for reinvention, some employers are offering their work forces paid leave for activism. Welcome to the age of the radicalized, “woke” employee.
A corporation, whether unionized or not, has a natural interest in addressing employee grievances. Open communication is necessary for workplace morale. But at some companies, top officials have become advocates on such controversial public issues as gun control, immigration and global warming. This trend is almost entirely driven by employees, particularly younger ones. And the politics lean sharply leftward. Amplified by social media, activist workers are trying to persuade employers to be accountable to the general population, also known as “stakeholders.” And they’re getting results.
Google, a company with a current market cap of roughly $400 billion, experienced this “rule from below” about a year and a half ago. Employees were in revolt over a Defense Department contract through which Google would develop Cloud-based artificial intelligence with potential military applications. About 4,000 employees signed a petition demanding that Google and all of its contractors refrain from such activity. Management relented, announcing that it would not renew the contract.
As a further manifestation of mission reboot, employees at certain companies now are receiving paid days off for attending rallies, seminars and other political events. Some employers don’t even have to be coaxed. At Luxe, a San Francisco-based valet parking smart phone app, founder and CEO Curtis Lee, angered over President Trump’s “Muslim ban” of January 2017, provided paid leave to any employee who took part in protests against that executive order. Ventura, Calif.-based outdoor gear and apparel retailer Patagonia, meanwhile, is paying bail and court costs for employees arrested at environmental demonstrations.
Recent market research suggests such business practices could become standard. This May, New York-based public relations firm Weber Shandwick released a study, “Employee Activism in the Age of Purpose: Employees (UP)Rising,” indicating that nearly four in 10 surveyed employees had openly supported or criticized their employers over a particular public issue. The figures for baby boomer, Gen Xer and millennial respondents, respectively, were 27 percent, 33 percent and 48 percent. A nationwide survey released in 2017 by St. Louis-based consulting firm Povaddo yielded a similar result. Among employees of major American companies, 57 percent believed employers should be more active in addressing social problems and 38 percent said they were less likely to make a long-term commitment to a company whose management isn’t politically-focused.
A new seal of approval awaits employers who make the desired adjustments: the “B Corporation.” This designation, issued by B Lab, a nonprofit entity based in Berwyn, Pa., requires that a company achieve a minimum score for “social and environmental performance” and integrate stakeholder concerns into governing documents. At present, there are roughly 1,700 Certified B companies worldwide. For help in acquiring such status, corporations can rely on Conscious Company, a self-described “magazine for business leaders, entrepreneurs, and the next generation of professionals looking for meaning and mission in their work,” that relies upon a “community of forward-thinking, influential changemakers to help us co-create the content.” In less spin-tested language, it would seem this publication intends to facilitate global boycotts of unenlightened enterprises.
Some companies, to their credit, aren’t buckling under such pressure. Early this summer, for example, employees at the Boston-based furniture company Wayfair staged a publicized walkout to protest the company’s contract with the government to provide $200,000 worth of beds for Baptist Child and Family Services to operate a migrant detention center for unaccompanied children in a Texas border community. Wayfair employees were steaming over their employer’s involvement with Trump’s “concentration camps.” But co-founders Steve Conine and Niraj Shah held firm, properly noting that a company should not renege on its commitments to customers. Perhaps the protestors, filled with love for humanity, would have preferred that these children sleep on a concrete floor.
Corporations cannot allow themselves to be held hostage to political-activist employees. When they cave in, willingly or not, they risk violating their fiduciary duties to investors. A corporation has a legal obligation to act in the best interests of persons formally connected to it. What business owes “society” or certain political causes is not nearly of the same priority.