Comment: Mary Martin of LSE IDEAS says companies have to internalise the changes they are demanding if they are going to take a stand on social issues like Black Lives Matter

Disaster makes the headlines. Politicians pledge to review policy, NGOs step in to offer assistance, the public takes to phone lines offering cash, or goes on social media to debate the issue. What should companies do to respond to dramatic events? How does political change impact corporate social strategy, and what are the risks for companies of being caught by sudden shifts in the public mood?

If the private sector is to become more socially engaged and put purpose alongside profit as its motivating force, companies must learn to deal effectively with unexpected turns of events and changing priorities. Pandemics, peace processes, street protests and political upheavals are occasions for mobilising outside intervention. What role should business play?

The Black Lives Matter movement has prompted a wave of social activism by companies which have traditionally resisted what they saw as entanglement with politics. In June Coca-Cola CEO James Quincey called on companies to speak up as allies for BLM, saying: ‘We stand with those seeking justice and equality. Businesses like ours can play an important role. As a company that believes diversity and inclusion are among our greatest strengths, we must put our resources and energy toward helping end the cycle of systemic racism.”

Declaring support for popular movements is not enough, if companies have not internalised the changes being demanded

Global financial services group Mastercard in June launched its programme In solidarity: Standing against racism and advancing equal opportunity for all. The programme has both internal and external dimensions: including increasing black employment, training, counselling and leadership roles, open discussions about tolerance and diversity, a review of payments to identify biases, inequities and weaknesses and expanding annual spending with black suppliers by more than 70% by 2025.

One lesson is that simply declaring support for popular movements is not enough, if companies have not internalised the changes being demanded. Being outspoken may simply reveal a gap between rhetoric and action. Companies need to check their own performance on treatment of minority populations before voicing their support for BLM. According to Personnel Today magazine, the UK’s biggest organisations are still “way off” meeting their board diversity targets, with some all-white boards remaining among FTSE 100 companies. Three years ago the Parker Review recommended that by the end of 2021, no member of the FTSE 100 should lack a black, Asian or minority ethnic (BAME) person as a director. The Parker 2020 update report shows that 59% of 256 firms surveyed had not met their target.

So-called “woke” branding by consumer products companies in an attempt to align themselves with progressive movements can also backfire if the timing is wrong. Nike’s use of Colin Kaepernick in a 2018 advertising campaign after he had been dropped by the National Football League for giving the knee in protest against police brutality brought boycotts at the time; were it done today, in light of the BLM movement, it might lead to increased sales for Nike. At the same time, Nike opened itself up to criticism for not doing enough for employees from minority backgrounds.

Ice-cream maker Ben & Jerry’s criticised government policy towards migrants crossing the English Channel, saying “the real crisis is our lack of humanity for people fleeing war, climate change and torture”. At the same time its parent company Unilever, a leader in drive to create companies with purpose, was in dispute with the British tax authorities over a €141m tax bill.

In a humanitarian initiative that has resonance today in the wake of the Beirut explosion, French utility company Veolia helped restore water supplies to Lebanon after the country was devastated by conflict in 2006. Yet next door in Palestine the company faced a worldwide consumer boycott over its decision to participate in building a light railway connecting illegal Jewish settlements on the West Bank.

It was estimated that Veolia lost €25bn in cancelled contracts, and eventually withdrew from the railway project. The episode demonstrated the power of activists to mobilise opposition to business over its activities, the need for companies to align their commercial and charitable focus, and to consult with the grassroots to understand the impact of their actions. Describing its approach to help combat the current coronavirus pandemic, Veolia emphasises its partnerships with local stakeholders which try to minimise excessive procedures while paying attention to the ethics of the company’s engagement in social issues.

Companies need to develop a coherent strategy for engagement, particularly in areas which are politically sensitive

Companies have often deployed their logistics, information, finances and volunteer forces in response to a sudden catastrophe such as a hurricane or earthquake. The difference today is that philanthropy alone is not sufficient to meet public expectations that the private sector should play a more active social role. Companies need to develop a coherent strategy for engagement, particularly in areas which are politically sensitive and often far removed from their traditional comfort zones. In the current climate, maintaining a distance between commercial and social activities and organising them in separate silos, is likely to cause unintended and adverse consequences for a company’s reputation, its trust ratings and even its share price.

In Colombia, the business for peace (B4P) movement received a boost when companies participated in the 2016 peace agreement, which sought to end 50 years of civil war in the country, and were subsequently invited to help implement the peace process. This required a range of actions, from building roads to connecting rural areas hit by the conflict , reintegrating former combatants and even helping with provision of mental health services. Yet this participation was undermined when business suddenly found itself on the wrong side of politics after the government changed to one which was highly critical of the peace process. Business and government also found it difficult to work together, and corporate support for peace operations waned.

Companies who have responded to the Covid-19 crisis by providing emergency resources and help to vulnerable communities have echoed the lessons of companies from participating in the Colombian peace process: stick to what you know, leverage existing relationships and work closely particularly with local government and community organisations.

Local actions speak louder than words and are less likely to be caught up in the fast-changing tides of national and global politics.

Mary Martin is director of the UN Business and Human Security Initiative at LSE IDEAS, the London School of Economics’ foreign policy thinktank, and senior policy fellow at LSE. Her research focuses on the role of the private sector in conflict and peacebuilding and private security in the international system. She was co-ordinator of the Human Security Study Group 2006-1010, reporting to the High Representative of the European Union.

 

Black Lives Matter  ESG  diversity and inclusion  coca-cola  Nike  Unilever  Ben & Jerry's  Veolia  Business for Peace movement  Covid-19  Coronavirus  pandemic