Traditionally, businesses have tried to maintain a degree of separation from politics and social issues – take a side and you might risk alienating important internal and external stakeholders. However, a new era of ‘stakeholder activism’ has shaken this up. No doubt ‘ESG’ has become the buzz word (or acronym) of the corporate world over the past few years.
Environmental concerns are most prevalent in ESG discourse, but increasing numbers of businesses are being pressured to take a stance on a number of social issues as well. Recent high profile examples include Disney facing public backlash over its silence on Florida’s controversial law, colloquially named the ‘Don’t Say Gay’ Law. Similarly, brands H&M and Nike have withdrawn criticism of alleged forced labour in China after government threats to shut them out of the Chinese market.
A recent long read in The Financial Times, raises an interesting question: What happens when these ethical stances conflict? Without delving into philosophies of Aristotle or Emmanuel Kant, it’s clear to see that there is an entire academic and social debate on what can be considered ethical – Business ethics and corporate responsibility usually grounded in Anglo-Eurocentric thought.
The FT article brings up an interesting case between ice cream brand, Ben and Jerry’s and its parent company Unilever. Ben and Jerry’s is known for its political activism and the social justice advocacy of its founders and this governs the way its products have been manufactured, marketed, and distributed (US Senator Bernie Sanders, proudly calls them his first supporters). When Unilever bought the firm in 2000, central to the acquisition agreement was a deal to put in place an independent board to protect the brand’s social mission and integrity.
Unilever also largely sees itself as an ethical business, committing its brands to many social and environmental targets, with the former chief executive, Paul Polman, arguing that brands with a clear moral purpose will do better financially. However, both parties now face legal troubles in relation to their business in Israel, with each taking opposing views.
It’s not up to me to comment on the merits of each argument, but It’s the first in likely many instances of businesses disagreeing on ethical and political viewpoints. Of course, they could cut ties with that branch of the business but as Unilever itself states, what if another moral issue arises? If the state of Texas adopted a measure that conflicted with the firm’s views on LGBTQ+ rights or the environment, will they have to end decades of operations in Texas?
Speaking to a client earlier this week, we talked about how Unilever faced a moral challenge it couldn’t win – morals of course constantly change and one action could be seen as correct today, but absurd in a few years’ time. They illustrated this well with the defence industry, investing in arms manufacturing just 18 months ago would be going against ESG, but in the light of the Ukrainian Crisis, and framed in the context of supporting Ukrainian freedom fighters, it would appear immoral not to?
Businesses may need to sacrifice their ESG goals to concentrate on the financials, but this will always be unlikely to go down well. But controlling the messaging behind these decisions will be a large challenge for their communications advisers.
This is all part of the risk firms should assess when they take a side in social activism. Companies can only lead social justice campaigns if they remain solvent. In turbulent economic times, it suggests a return to a focus on financial business targets over ESG may be on the horizon.