Finsbury 21 Aug 2017 // 4:02PM GMT
In 1962 the American economist Milton Friedman famously wrote, “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.” Many large companies followed his lead. If they were ever asked to stake a political stand, there was only one answer: “Our sole priority is serving our customers.”
But today – when President Trump can
move a stock several percentage points with a single tweet, and when activist investors are more visible than
ever – companies know that “no comment” is not an option. Just look at the reactions
to Mr. Trump after the violence in Charlottesville, Virginia.
What’s more, leading executives
are finding that a public position on a political or social issue may not only
be necessary, it can be a positive for many reasons. But it only works if a company
plans carefully, formulates a smart communications strategy and follows
A team of my colleagues here at
Finsbury surveyed public comments by the CEOs of the Fortune 100 companies in
the United States over a nine-month period in 2016-17, and found that no fewer
than 70 had spoken out on the economy, the environment, healthcare, social
justice, taxes, trade, or other issues of national or global importance.
Moreover, the vast majority of them made it clear that they were speaking on
behalf of their companies, not as individuals.
That said, they were hardly
reckless when they braved political waters. Though none of the 100 CEOs
endorsed Donald Trump’s presidential candidacy (about a dozen publicly
supported Hillary Clinton), many said they would work with him after he won in
November and took office in January. If they took issue with Mr. Trump, they
did it diplomatically. Most of those who spoke on global trade, for instance,
were in favor of opening it up, but they were careful not to tangle with Mr.
Trump and his American-jobs-first stance.
Dennis Muilenburg of Boeing,
which imports about 30 percent of the parts for its planes, said early on that
his company was “very supportive” of Mr. Trump’s plans: “I think Mr. Trump’s
engagement with industry is going to help us grow manufacturing jobs in this
Gregory Hayes of United
Technologies: “Everybody knows that free trade is what drives growth in this
But it’s instructive to look at
cases – such as Mr. Trump’s response to Charlottesville, or the American
withdrawal from the Paris climate accord – in which executives said they felt
compelled to speak out in opposition. By going public on controversial issues,
they probably did their companies some favors, even if it may not have seemed
that way in the heat of the moment.
Kenneth Frazier, the chairman and
CEO of the pharmaceutical company Merck & Co., was one of 28 executives on
the president’s American Manufacturing Council. After Mr. Trump’s tepid first
response to the white supremacist violence in Charlottesville, Mr. Frazier said
he was leaving the council. “America’s leaders must honor our fundamental views
by clearly rejecting expressions of hatred, bigotry and group supremacy, which
run counter to the American ideal that all people are created equal,” he said
in a statement.
He and Merck said nothing more.
Within 16 hours, two other council members also left, and within two days, the
council and another on economic policy were disbanded. A fairly representative
statement came from Jamie Dimon of JP Morgan Chase: “I know times are tough for
many. The lack of economic growth and opportunity has led to deep and
understandable frustration among so many Americans. But fanning divisiveness is
not the answer.”
There was also this from Mary
Barra of General Motors: “Recent events require that we come together as a
country and reinforce values and ideals that united us — tolerance, inclusion
and diversity — and speak against those which divide us — racism, bigotry and
any politics based on ethnicity.”
Their statements were measured,
brief, easy to quote, and calming. Each company positioned itself as a voice of
reason at an upsetting time. And each probably helped itself by showing that it
was willing to stick to its values – something that surveys show is
increasingly important to consumers.
And there’s a lesson in there:
that a company that stands for something stands to gain – as long as it follows
some basic guidelines.
Pick your battles:
Are you speaking on an issue that is of importance to you? Are you sincere and
open about it? Are you putting your money where your mouth is?
Do your issues align with your
business? Tolerance and inclusiveness do for most major
companies, Merck included. A statement from Mr. Frazier, posted long before
Charlottesville, says employees’ “varied skills, experiences, backgrounds and
cultural perspectives help us better understand the needs of diverse customers,
healthcare providers and patients who ultimately use our products.” So the
decision to break with the White House was not a break with anything else Merck
stands for. Companies lose credibility if they take positions on issues that
have nothing to do with them; they gain credibility by standing their ground.
Know your audience. Who
will be affected if you take a controversial stand? Consumers? Employees?
Shareholders? Regulators? Make plans for how you will explain your rationale to
all of them. If it’s a struggle, maybe you’ve picked the wrong issue.
Be authentic. If a company picks an issue or a cause just because it looks good, it can look pretty bad. People will see right through it.
Ned Potter is a Senior Vice President in Finsbury's New York office