CEO activism: Does executive protest have a place in the business world?

Friday 25th August

Following a number of top level resignations from Donald Trump’s manufacturing council after his delayed condemnation of white supremacist violence in Charlottesville, Alice Kennedy takes a look at CEO activism and the benefits and potential pitfalls of taking a stance.

Corporations have always sought out ways of leveraging political influence on issues related to their businesses through traditional methods such as lobbying. The rise of CEO activism has seen this take a notably different form – high powered executives taking a public stance on controversial issues seemingly unrelated to their core business agendas.

The majority of CEO activism has taken place in the US. Donald Trump’s domestic policy and most recently his failure to immediately condemn the actions of violent white supremacists in Charlottesville alienated large portions of the American population and prompted CEOs at top American firms to speak out against him. This culminated in the high profile resignations of Kenneth Frazier, CEO of pharmaceutical giant Merck, Scott Paul, president of the Alliance for American Manufacturing and Brian Krzanich, CEO of Intel, amongst others, from Trump’s business advisory council.

Is CEO activism a new phenomenon?

CEO activism as a term is just beginning to surface on the media agenda, but it is not a new concept. Over the past few years it seems to have steadily increased in prevalence, potentially due to the inevitable and natural evolution of corporate social responsibility in a social media age, but also as a result of increased conviction politics in the US and elsewhere.

Many of the most recent instances of CEO activism have been prompted by Trump’s actions on issues such as immigration, trade deals and climate change. However many see Starbucks’ ill-fated Race Together campaign, led by founder and Chairman Howard Schultz, as an early example of this.

What are the dangers?

When speaking out against the Charlottesville protests, Kenneth Frazier, experienced first-hand the impact of so publically challenging Trump. In retaliation, Trump tweeted that “Now that Ken Frazier of Merck Pharma has resigned from President’s Manufacturing Council, he will have more time to LOWER RIPOFF DRUG PRICES!”

Trump has demonstrated his ability to considerably damage share prices and market value of businesses, simply through the use of Twitter. Lockheed Martin was one of the first businesses to suffer Trump’s unpredictable Twitter behaviour, with $1.2 million wiped off their market value after Trump tweeted about the overrunning cost of the F-35 plans, indicating he would drop the deal.

On the flip side, not acting or speaking out can prove to be just as damaging reputationally. Earlier in the year Uber’s CEO, Travis Kalanick stepped down from Trump’s economic advisory council after Trump’s immigration executive order. But this was only after the company faced an online viral boycott of the service, with a social media campaign headed up by the hashtag #DeleteUber. This is a lesson in paying close attention to the impact of political agendas or specific policies and knowing when to act.

Should you be empowering your leadership to take stronger public positions?

Aside from the obvious dangers of social media retaliation, as a wider concern, CEOs must be careful when providing a voice on political matters not to take on the role of elected political representatives, for the clear reason that they are not. When political issues directly affect business agendas, workforces or customer base, there is value in being vocal, as long as the view is authentic and reflective of the business interests as a whole. The media is always looking for high profile business leaders to contribute to national debate. Though, CEOs must ensure that the stance they take is not purely a personal one or they are likely to get caught out.

What does the future hold for CEO activism? With Trump in the Whitehouse for at least another three years and executives increasingly using social channels as a method of communication, we are likely to see many more examples of high profile interventions in the future.

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