Brands Taking Stands | Businesses Square Off Against Government Policy

Jun 27, 2018 12:05 PM ET
Newsletter

THE BIG STORY

Business Speaks Out—Again—on Immigration Policy

One of the hottest of hot button political-social issues got pushed, hard, last week. The separation of children from immigrants seeking asylum in the U.S. blew up into a major conflict zone in the larger culture wars that shows no signs of quieting down anytime soon. As before, following the issue of the “Muslim ban” immigration executive order issued in early 2017, business squared off against government policy in a high volume debate over values.
 
The tech industry took the lead. CEOs of Google, Facebook, Apple, Microsoft, Uber, Airbnb, Tesla, Cisco, and Reddit, among others, issued statements decrying the separation of families. With their workforces including mission-minded millennials and many immigrants, tech companies are particularly sensitive to issues of values (or the perceived lack of them) in public policy.
 
The administration’s “no tolerance” policy puts “something fundamental at stake: whether our nation’s policies will reflect values or run in direct contradiction to them,” Airbnb co-founder Joe Gebbia, in a statement typical of many.
 
Several business leaders evoked “values,” “standards,” and “ethics” in their statements. “A moral imperative,” said Lloyd Blankfein, chief executive of Goldman Sachs, calling for a halt to the policy.
 
Tech companies also face internal pushback from their own employees about accepting government contracts with terms that trouble employees. For example, Microsoft management received a request signed by more than 300 employees demanding that the company end its contract with the Immigration and Customs Enforcement agency. “We believe that Microsoft must take an ethical stand, and put children and families above profits,” said the open letter, addressed to the chief executive, Satya Nadella. The company replied by pointing out that the $19.4 million dollar deal was not related to the “zero tolerance” policy but focused on basic data management.

Amazon employees protested that company’s sale of facial recognition technology to law enforcement agencies. And earlier this year, Google employees halted an AI project with the Pentagon to improve the accuracy of drones. The company has published a statement of “AI principles,” the first of which is “be socially beneficial.” Just now, more than 650 Salesforce employees have signed a petition asking their employer to end a contract with U.S. Customs and Border Protection (CBP).  

Several airlines joined in protesting the separation policy. American, Frontier, United, and Alaska Airlines said they would not cooperate with the administration’s “zero tolerance” policy by not transporting children taken from their parents. United CEO Oscar Munoz said: "Our company’s shared purpose is to connect people and unite the world. This policy and its impact on thousands of children is in deep conflict with that mission and we want no part of it."

Where will this increasing practice of brands taking stands go? As of this writing, the firestorm over immigration policies continues to rage, and will probably burn hot through this fall’s mid-term elections, so it is guaranteed to drive controversy and comment. What is certain is that pressure from customers, consumers, and the general public will require that companies to stake out positions on such social issues of great public importance. Speaking of the broader trend of companies looking beyond profits to their responsibilities towards other stakeholders, Airbnb’s Gebbia told FT: “I think maybe that’s becoming an expectation of companies in the 21st century.” 

I’d argue that it’s more than a trend—it’s a movement, and a large and growing one at that. A company’s statement of principles is becoming an important element of its reputation—and its market cap, as the investment sector is becoming aware of the practice. Look for as much focus on values as on valuation by public companies as the general public demands socially responsible behaviors from the companies they patronize and invest in.

NEWS YOU CAN USE

Business Picks Up Where Government Leaves Off

Two iconic companies, one a legacy business and the other a tech industry newcomer, have taken up projects that used to be the purview of government. Ford has announced that it would fund the restoration of the once splendid but long abandoned Detroit train station. Once restored, the historic building would be the centerpiece of a new urban campus that will focus on the developing businesses that use self-driving cars, like ride-hailing services and delivery companies. And Space X, the rocket company of Tesla’s founder and CEO Elon Musk, has won a $130 million contract for an Air Force launch mission. Public transportation hubs and space vehicles used to be funded and managed by governments—city, state and national. With tight budgets and lacking leadership, the previous governmental “owners” of such large, public projects have been overtaken by private innovative industry.

Amazon, JPMorgan Chase and Berkshire Hathaway Choose CEO for Innovative Health Policy Initiative

A joint venture to reform health care practices has announced its first CEO, Dr. Atul Gawande, a noted medical personality. Gawande is a Harvard professor, active surgeon, and a staff writer for The New Yorker. The initiative by JPMorgan Chase, Amazon, and Berkshire Hathaway is aimed at lowering medical costs for the companies’ 1.2 million employees. While limited to their workforce, the partnership’s stated intention is to build out an example of a better system as an example for the larger US health care system, since government seems unable to produce one. “This work will take time but must be done,” Dr. Gawande said. “The system is broken, and better is possible.”

Women Score Record Gains in Board Seats in 2018

Corporate board seats are being filled by women at an increasing rate this year. In the first five months of 2018, new women board directors made up 31 percent—248 positions— of the total appointments made at 3,000 of the largest publicly traded companies, according to ISS Analytics. That puts this year on track to be a record for new female board members. Drivers include shareholder pressure. Large investors such as State Street Global Advisors and BlackRock are pushing companies to diversify their boards. Many investors point to correlations that several studies by McKinsey & Co. and other consulting firms and business schools have drawn between greater diversity and enhanced financial returns as reasons for demanding greater female representation on boards, reports WSJ.

C-SUITE COMMENTS

“Companies tend to steer clear of political issues that are not material to their business, but there comes a point in time when businesses need to take a stand with their communication and action.”  — James Walker, VP, Ruder Finn

PEOPLE ON THE MOVE

Mark Shamley has been named Vice President, Global Social Impact, Tupperware Brands. He was previously president and CEO of the Association of Corporate Contributions Professionals. Shamley also served as Director, Global Corporate Citizenship, for Tupperware 2000-2006.

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Continue the important conversations on corporate responsibility long after 3BL Forum with the Brands Taking Stands newsletter. Written by veteran journalist, John Howell, this newsletter is published every Wednesday morning.