CEO Activism – When should leaders weigh in?

There’s a growing phenomenon of chief executives speaking out on social, political and economic issues.

A phenomenon that allows companies new opportunities for influence in a rapidly evolving world.

Called, CEO Activism, a new breed of business person has emerged.

Why is it spreading?

Some CEOs have argued that it is the responsibility of businesses to speak out on matters that don’t necessarily affect the company's line of work.

Salesforce CEO Marc Benioff said, “There is a third [political] party emerging in this country...the party of CEOs.”

In 2013, Starbucks CEO, Howard Schultz, asked gun owners to refrain from bringing guns into its stores. Two years later, Apple CEO Tim Cook publicly criticised his home state Alabama over lack of LGBTQ rights.

In Australia, Qantas CEO, Alan Joyce, was a strong advocate for marriage equality and AGL Chief Executive Andy Vesey refused to keep the Liddell coal-fired power station open beyond its scheduled closure date.

Traditionally brands have remained neutral on social issues, but recent surveys have suggested the public wants chief executives to lead social change when governments take too long to act.

Economic Power of CEO Activism

When CEOs of powerful corporations speak out, they can wield their influence on legislation and government policies through economic pressure, specifically in terms of job creation, lobbying or funding to promote their favoured cause.

Effectiveness and Risk

Depending on the size and wealth of the brand, CEO activism can indeed play a key role in the current social and political landscape.

But it can sometimes lead to charges of hypocrisy or tarnish a CEO's reputation. In the age of Twitter, controversies can highlight the risk of silence when viewed as a sign of approval or acceptance. They should expect that the media, employees and other stakeholders may ask why they choose not to weigh in.

When and how should leaders weigh in?

●    CEOs must be smart when making these decisions, do their research and know their facts. They should choose their issues, rather than letting the issues choose them. Consultation is key, rather than a spontaneous tweet in a weak or angry moment.

●    They should err on the side of championing less divisive issues which can ultimately improve the brand image. E.g. speaking out on climate change can seem less offensive than abortion or gun control.

●    Even if CEOs feel very passionately about certain controversial issues they should consider the extent to which the public believes it is necessary for a CEO voice to be added to the debate.

●    Their message needs to be authentic, with a well-researched and justified basis for taking a stand, particularly if they are pressed by journalists and politicians.

●    Companies must have a firm understanding of the attitudes of key stakeholders, internal and external before they engage in CEO activism. Leaders should weigh in when the issue relates to the company’s mission but they must also consider employees and discuss ramifications with the board.

There’s no doubt that the trend of CEO activism is on the rise and, as noted by Chatterji and Toffel, “CEOs need a playbook in this new world”. As the movement gains traction, more business leaders will be called upon the help shape debate and must be prepared to comment on certain issues, whether they want to speak out or not. Chief executives must be selective with issues, aware of their timeliness, consider the implications and measure the results.