by Mark David Richards, Senior Vice President
Companies and their CEOs have long worked to influence public policy on issues that affect their core business and bottom-line, but corporate and business leaders have typically remained neutral on controversial social issues. In recent years, more CEOs are speaking up on social issues unrelated to their company’s business. A new study by Weber Shandwick, “The Dawn of CEO Activism,” conducted in partnership with KRC Research, shows that CEO activists can reap reputational rewards, but there are also risks to consider.
“A new breed of chief executive is emerging — the CEO activist. A handful of CEOs are standing up and standing out on some of the most polarizing issues of the day, from climate change and gun control, to race relations and same-sex marriage,” Weber Shandwick’s Chief Reputation Strategist, Leslie Gaines-Ross, wrote at the end of last year in 2016 Reputation Trends to be Mindful About. “Despite the risks, such CEOs are rejecting the time-honored refrain: ‘we take no public position on issues not directly affecting our business operations.’ Don’t think for a minute that CEO activism is a flash in the pan or a mere fad. More CEOs will be banking their reputations on today’s thorniest and most pressing social, political and environmental issues.”
Recently, more than 100 leading CEOs and business leaders called on Governor Pat McCrory and the North Carolina General Assembly to repeal provisions of the Public Facilities Privacy & Security Act, considered by the LGBTQ community to be discriminatory. The law prompted outrage within the LGBTQ community and among social liberals, but drew support from social conservatives.
CEO activism has drawn the attention of commentators across the media and political spectrum (for example, see US News, “Corporate Activism and the Rise of the Outspoken CEO;” CNBC: “The rise of the CEO social activist;” Forbes: “When CEOs Become Activists;” TIME: “Is Political Activism Actually Good for Business?;” National Review, “Dear CEOs: Stop Pandering to Progressive Activists;” Conservative Review: “Social Issues Expose Progressive Bias of CEOs”). Many observers are watching to see how CEO activism plays out.
Few researchers have studied the impacts of CEO activism on public attitudes and behavior. In April, Aaron Chatterji of Duke University and Michael Toffel of Harvard Business School published the results of a field experiment they conducted in The New York Times, “The Power of C.E.O. Activism” (Full working paper: “Do CEO Activists Make a Difference?”). “Corporate neutrality may be outdated,” they wrote. Nonetheless, their findings suggest that “CEO activists may have considerably more influence on some audiences than others and that CEO activism is a double-edged sword that can promote or erode purchasing intent, depending on the audience.”
Our survey of 1,027 U.S. adults, conducted online this May, found awareness of CEO activism is still low. Despite media coverage, only 34% say they have heard about CEOs taking public positions on hotly debated current issues.
Our research suggests that CEO activism makes no difference to about a third of adults. But when it does make a difference, activism is perceived more favorably than unfavorably. However, when the issue at hand is not tied to a company’s principal business, Americans have a less favorable opinion of the CEO. In its new report, “The Dawn of CEO Activism,” Weber Shandwick points out the importance of being crystal clear about the CEOs’ motives, because on their own, many Americans may discredit CEOs’ altruism. Many in our study attributed CEO activism to a CEO’s personal motivations, and some even think it is a cover up to hide or correct problems they’re having.
Our study also shows that when Americans who care one way or the other personally agree with a CEO on an issue he or she speaks out about, they are more likely to buy from the company (40% more likely). However, when Americans disagree with a CEO on an issue, the impact is the opposite: they are less likely to buy from the company (45% less likely).
This implies that CEOs, in their role as leader of an enterprise, should speak out with eyes wide open by having a firm understanding of the attitudes of their key internal and external stakeholders. Communications research can help CEOs and communications professionals craft arguments in order to enhance admiration and trust among both those who agree and those who disagree.
Weber Shandwick offers 12 guiding principles for CEO Activists in its new report, “The Dawn of CEO Activism.”