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The Limits of Corporate Activism

Corporations can help apply positive pressure for social change, but their profit motives should make us wary of letting them displace moral leaders.

Back in August, a bill that would have limited transgender people's access to bathrooms in public buildings died on the floor of the Texas state legislature. While there were way too many opponents of the bill to cite, more than one news story pegged a single, surprising group as its executioner: corporate chief executive officers.

In the weeks leading up to the vote, chief executive officers from 10 major companies—including Uber, Lyft, JP Morgan Chase, and Paypal—signed a letter urging Texas Governor Greg Abbott to withdraw support for the bill. They were soon joined by more—51 chief executives from Fortune 500 companies in all—and that was enough.

But the opposition voiced by the executives wasn't all about morality or trans rights, it was also about their bottom lines. As they wrote in their letter: "No industry will remain untouched by the unnecessary harm that discriminatory laws will do to our competitiveness, to our ability to attract talent," before adding, "and to our employees and their families."

How did corporations find themselves at this strange junction of profit motives and social advocacy?

Examining poll numbers or monitoring boycotts can provide businesses with a better understanding of their consumers, but polls shift, and boycotts flail. This is why, generally speaking, corporations like to stay out of cultural arguments entirely. But every now and then, the right executive hears the right pitch by the right person at the right time, and the company takes an official position. (And then other executives, seeing the precedent set, follow suit.) Scott Sonenshein, a professor of management and organizations at Rice University, has a name for these people: "social change agents."

"Usually, it's someone with an explicit corporate social responsibility role," Sonenshein says. It may even be multiple, like-minded people forming a coalition. "You can have employee-action groups to channel social activism and put pressure on management." Wherever they come from, these social change agents drive executives to take what could be considered controversial stances.

Businesses taking stands on social issues isn't anything new, but it seems to have become normalized, particularly during the presidency of Donald Trump. After Trump announced the United States was leaving the Paris climate accord, Tesla's Elon Musk exited Trump's advisory council; he was soon followed by other executives. It's almost become an expectation that, if a controversial new measure is enacted, business leaders will offer their view on the matter.

"If you look at [President Trump's] religious council, I think one person has resigned because they were outraged at his remarks. Meanwhile, many executives have already resigned," Sonenshein says. "Maybe [corporations] stepped in to fill a void that other institutions haven't been playing."

Perhaps this figures into the new trend, according to Sonenshein, of corporate executives weighing moral arguments alongside fiscal ones. "My old [advice for social change agents] would have been, just make the business case," Sonenshein says. "What's important [now] is to use language that speaks to the core values and mission of the organization. That's probably a good thing, because this way we're having a more transparent dialogue about why we're doing things."

But should corporations really adopt the role of society's moral police? On the one hand, the influence of corporations—that is to say, the sway of their money—is a more significant driver of policy than, say, a bunch of volunteers working for an advocacy non-profit. And if our elected officials are lagging behind, smart corporations can actually get ahead of a slow legislative process. "Big business was extending domestic partner benefits to include same-sex couples well before the government was," Sonenshein says.

Yet it's difficult to ignore the problems with trusting corporations to lead social change. "It's natural to question the intentions and motivations of big business, and ask if they really have the best interests in mind," he says. It's also worth questioning the effectiveness of this approach.

Take the fight over Deferred Action for Childhood Arrivals. While more than 400 chief executive officers urged Trump to keep the Obama-era program, their arguments were couched in a business-first philosophy.

"Dreamers contribute to our companies," Apple's Tim Cook tweeted. "These young people represent the future of our country and our economy," Facebook's Mark Zuckerberg wrote. "As a CEO, I see each day the direct contributions that talented employees from around the world bring to our company, our customers and to the broader economy," Microsoft's Satya Nadella said on LinkedIn.

It's not surprising that executives would focus on how the elimination of DACA would affect their profits, but such public outcries fall flat as galvanizing messages. This is why activists, not corporations, will continue to be the true drivers of social change.