Could the board have seen this ESG crisis coming?
Some employees at online furniture retailer Wayfair called for a walkout Wednesday in protest of the company sales to migrant detention centers. The detentions have come under fire for alleged “inhumane” conditions.
No matter where corporate leaders side on the immigration-camp debate, it is clear the issue is impacting Wayfair’s reputation.
The just-created Twitter page with the handle @wayfairwalkout with the slogan “No aid to juvenile incarceration!” already has 20,000 followers, and the walkout is getting a lot of media attention. And more than 500 employees “have signed a letter addressed to senior management, criticizing the company over allegations it has been fulfilling orders for furniture destined for U.S. detention camps at the southern border” saying “We also want to be sure that Wayfair has no part in enabling, supporting or profiting from this practice,” according to an article from BusinessInsider.
The company responded in a letter shared with the Boston Globe, “We are proud to have such an engaged team that is focused on impacting our world in meaningful and important ways. We support the rights of all individuals to engage in their communities to drive change on the topics and issues they care about. As business leaders, we also believe in the importance of respecting diversity of thought within our organization and across our customer base. No matter how strongly any one of us feels about an issue, it is important to keep in mind that not all employees or customers agree.”
The fallout is just the latest example of how social issues are increasingly presenting significant risk problems for corporate leaders. Given the escalating focus on all things environmental, social and governance (ESG), especially for employees, the question is increasingly being asked in corporate governance circles: What should be the board’s role in seeing around the corners and preparing for social disruption and should the board have seen this coming?
Davia Temin, a corporate risk and reputation expert, answers, “Of course."
“It takes a 360-degree vision about what is going on in the world. This is the ‘S’ and ‘G’ parts of ESG. And they’re not toothless when your company is targeted by its own employees. The world is changing so rapidly and the voice individual citizens have claimed on social media is extending to the voice employees are claiming about their companies’ actions.”
Employees, she continues, “really are beginning to expect organizations to live up to their credos. And when companies don’t, or they do what employees perceive as the wrong thing, they will protest, walk out, use social media.”
Boards, she stresses, “must appreciate the real operational and reputational risks associated with growing employee activism. It’s not soft stuff anymore. It has teeth, and [employees] can take a bite out of the bottom line.”