Corporations and their boards are increasingly tackling social issues like climate change, sustainability and diversity. And many CEO's are publically addressing issues like transgender rights, pay equity and immigration.
With so much dysfunction and partisanship coming out of Washington, Americans are increasingly frustrated with the government's inability to get things done. As a result, Americans are looking elsewhere for leadership on important issues, and corporations and their leaders increasingly have an opportunity – and a responsibility – to fill that role.
Our annual study1 found that nearly 8 out of 10 Americans (78%) believe corporations should take actions to address important issues facing society; an even greater number (88%) believe that corporations have the power to influence social change.
And while this shift in expectations is seismic, it is hardly surprising.
For starters, our courts extend specific constitutional protections to corporations, including free speech through Citizens United. And as David Brown, Ted Schroeder and Val Delp point out in their recent Boards and Directors article “What Corporate Boards Need to Know Before Wading into Politics”, corporate political spending is an area where Board engagement and oversight is critical.
But corporate activism goes far beyond political donations.
The environment and expectations have changed. Companies are expected to tackle social issues, implement policies, and stand up for their employees on issues that matter to them. This move from Corporate Social Responsibility (CSR) to Corporate Impact (CI) takes many forms. And for those companies who can successfully navigate the space, there are real and tangible benefits.
Consumers are more aware of corporate stances on social and political issues than ever before. Our study indicates that awareness of corporate political engagement is at an all-time high, having nearly doubled from 15% to 29% since 2014. More and more, consumers say they would be more willing to recommend or buy a product or service from a brand that supports policies and issues important to them.
Not surprisingly, these feelings are even more pronounced among millennials, for whom doing business and doing good are increasingly intertwined and expected. CI offers a new way to engage this employee group that is on-track to become the largest percentage of our workforce and an increasingly powerful consumer group.
But it goes beyond buying power. While only 1 in 3 millennials currently invest in the stock market2, according to a 2016 U.S. Trust Report3, 8 in 10 millennials pursue higher returns with higher risks. And 93% of millennials agree that social or environmental impact is important to their investment decisions. In addition, according to a 2013 report4 by the Spectrem Group, 45% of wealthy millennials factor social responsibility into their investment decision-making.
Whether it is socially responsible investing, taking a position on a current issue, or making a business decision that advances the public good as well as the bottom line, expectations for CI are trending upward.
Admittedly, it's easier for newer companies to embed a CI mentality into every aspect of their business. Companies like TOM's and Warby Parker, for example, built their companies with social impact at their core. But our annual Business and Politics study shows that legacy companies like Coca-Cola and McDonald's have an equal opportunity here.
That said, not all issues – or executions – are created equally. It's important for companies and their leadership to invest the time to determine if and when to wade into political and social issues:
· Engage your stakeholders: Actively involving employees at all levels and across all functions is a critical first step when it comes to developing a cohesive and authentic CI position. Through one-on-one interviews, focus groups and surveys of employees, companies can bring employees into the development process and ensure that these valuable brand ambassadors are fully engaged.
· Understand your environment: CI conversations don't happen in a vacuum. Companies can use traditional and social media audits to understand how the public, thought leaders in business and politics, and their competitors are talking about and engaging with key issues. This kind of landscape audit helps to ensure companies identify the most relevant and impactful point of entry. In addition, the landscape can change quickly, so companies need to have an infrastructure in place to keep up. Developing a playbook for how and when to react, respond or seize an opportunity allows companies to stay engaged and topical while ensuring that their activity is safe, smart and consistent with their brand values.
· Know your customers: The first rule of business is also the first rule of CI. Conducting survey research among your customer base is a good way to ensure that you have credibility on an issue and that CI position resonates with and motivates your consumers.
· Plan ahead: Among the most important issues a Board will consider is the strategic direction of their company. Strategy requires the ability to look well beyond the next quarter and peer over the horizon to position the company for success amidst changing demographics and trends. Knowing how you will be perceived by your future customers and investors is increasingly as important as understanding any of the other key dynamics boards and management routinely seek to understand.
Americans have now given Corporate America permission –some would even say a mandate– to take an active role in the issues of the day. Boards play an important role in the investment, oversight, and measurement of these activities.
Sources:
1. Global Strategy Group (January 27, 2016) Business & Politics: Do They Mix? GSG's Third Annual Study. Retrieved August, 8 2016, from http://www.globalstrategygroup.com/thought-leadership/gsgs-third-annual-study-business-politics-do-they-mix/
2. Sanicola, L. (2016, July 10). Only 1 in 3 millennials invest in the stock market. Retrieved August 8, 2016, from The Street, https://www.thestreet.com/story/13631032/1/only-1-in-3-millennials-invest-in-the-stock-market.html
3 US Trust Report: Insights on Wealth and Worth Survey (2016). Retrieved August 8, 2016, from http://www.ustrust.com/ust/pages/insights-on-wealth-and-worth-2016.aspx
4. pectrem Group (2013, May 28). Millennial Investors Want Their Wealth to Help Others, Lack Confidence Managing Finances. Retrieved August 8, 2016, from http://spectrem.com/Content_Press/May-28-2013-Press-Release.aspx.
Tanya Meck and Julie Hootkin are Executive Vice Presidents and Co-Chairs of Global Strategy Group's (GSG) Corporate Impact Practice. GSG is one of the nation's leading public affairs firms, with political, corporate and advocacy clients across the U.S. www.globalstrategygroup.com