Whether you think it’s a good thing or a bad thing, CEO activism is real!
There are a growing number of CEOs taking positions on political and social issues. Their vision is that a company should have a greater goal of maximizing shareholder value and that they can use their position of power as a force to raise awareness and do well.
In his latest book, Trailblazer – The Power of Business as the Greatest Platform for Change (Benioff, M., 2019. Currency), he talks about how he founded Salesforce with a clear purpose and promised from the start that 1% of profits go to perform well. He is quoted in Time magazine (Steinmetz, K 2016): ‘…CEOs today must defend not only their shareholders but also their employees, customers, partners, communities, environment, schools, everyone. “In fact, this position is responsible not only for the organization and its direct shareholders but also for wider social communities.
Benioff is by no means the only one with such views. Jeff Immelt, the former CEO of General Electric, said: “I just think its fair not to stand up for the things you believe in. We’re also managers of our own companies, we’re representatives of the people who work with us and I think we’re cowards if we don’t take a stand once in a while about things that are really in line with what our mission is.
Patagonia is an organization that has long been at the forefront of the targeted profit movement. Since its inception, Patagonia has donated 1% of sales to environmental organizations and in 2016 100% of Black Friday sales (about $10 million) to environmental groups.
In addition to funding, there is also education. Patagonia advises large private and public companies on best practices to reduce manufacturing and packaging waste, reduce greenhouse gas emissions, and use innovative technologies such as converting recycled bottles into the polyester. In 2009, he and Walmart formed the Sustainable Apparel Coalition (www.apparelcoalition.org), an industry partnership that has transformed the textile, footwear, and apparel industries.
Members, including Nike, Gap, and Adidas, are committed to measuring and improving the impact of social and environmental sustainability. Coalition founder Yvon Chouinard has supported Patagonia as a catalyst for lasting change, and since 1985, Patagonia has donated more than $100 million to environmental causes. In addition, in 2013, it launched a venture capital fund that invests in start-ups focused on environmental issues.
Until recently, under the leadership of CEO Rose Marcario, Patagonia has continued to refine its focus on the environment, with a commitment to finding solutions to the environmental crisis and changing the face of capitalism. To share the intent and transparency of his dedication, he changed his mission statement in 2018 to “Save our home planet”. In his 2019 magazine article, Marcario said: “Everyone I work with, from CEOs of large public companies to private companies, recognizes that things need to change. And capitalism needs to evolve if we are to have a healthy planet and healthy people on the planet planet. Today’s customers want their money to go to companies that will use their money to make the world a better place. Companies realize that their customers and employees expect them to take a stand” (Semuels, 2019).
As for the leaders, in 2017 Patagonia sued the government of President Donald Trump after it reduced Utah’s Bears Ears National Monument, claiming the move was illegal. In the same year, they also successfully led a boycott of the Outdoor Retailer Trade Show in Salt Lake City after the Utah administration asked President Trump to downsize the monument. The following year, Patagonia teamed up with Levi’s to launch the Time to Vote initiative, which resulted in 400 companies granting licenses so that their employees could vote (Semuels, 2019). More recently, Rose Marcario announced that Patagonia will only accept new corporate customers for custom Patagonia products if the company has a meaningful sustainability plan as part of its mission (Berger, S. 2019).
These determined leaders are just a few of the many innovative CEOs who are taking on the role of ‘activists’. And, of course, when they come together, collective action can have a greater impact than companies acting alone. For example, in 2015, CEOs of 14 major food companies – including Mars, General Mills, Coca-Cola, Unilever, Danone, The Hershey Company, Ben & Jerry’s, Kellogg’s, PepsiCo, and Nestlé – signed an open letter asking government leaders to join address the realities of climate change.
In 2016, more than 160 CEOs, including Apple, Facebook, Salesforce, and Google, signed a Human Rights Campaign letter against a North Carolina bathroom law that discriminated against the LGBTQ community. The law has been repealed. Then, in 2017, 100 CEOs signed a petition to overturn an executive order barring citizens of Muslim countries from entering the United States.
Another example was in August 2019, when the Business Roundtable, which has regularly published corporate governance principles for US companies since 1978, announced the release of a new “Purpose of a Company” statement. It was signed by 181 CEOs, each of whom pledged to run their business not just for shareholders, but also for all stakeholders: customers, employees, suppliers, and communities (Chatterji and Toffel, 2018).
More leaders seem to be taking a stand and calling attention to a return to the foundations on which organizations were founded in the past: “social enterprise”, to support their employees, employee families, and the wider community, often hospitals, schools, and resources to communities and contribute to the overall health, well-being and prosperity of society as a whole.
Alan Jope, CEO of Unilever, considers the goal one of the most exciting opportunities he has seen in the industry in 35 years of marketing. He said at the Cannes Lions Festival of Creativity in 2019: “If you do it right, we will [intentionally] restore confidence in our industry, unleash more creativity in our work, and build the brands we love” (Unilever).
In this interview, he also showed that Unilever eliminates brands that represent nothing and stated that every Unilever brand is a targeted brand. This is a very strong statement given the number of brands within Unilever’s umbrella. However, there is commercial wisdom behind this view. In that interview, he also explained that Unilever’s brands focused on action for people and the planet grew 69% faster than the rest of its businesses in 2018, a significant number.
From a marketing perspective, Unilever is committed to investing a greater part of its marketing expenditures in explicitly objective communication (Vizard, S., 2020). Unilever believes that focused leadership is good for growth and profitability. Joppa’s vision is that purpose is a consumer-driven phenomenon and that consumers are the key to identifying the right purpose, which balances the need to do well with commercial profit.