In defence of corporate social activism
25 June 2019 at 8:38 am
Companies may adopt positions on social issues which some people may not like, but there’s no reason why in a free society we should be telling companies to stay silent, writes Krystian Seibert.
In recent times, we’ve seen an interesting development in Australia, with major companies more prominently adopting positions on social issues. During the same-sex marriage postal survey campaign, hundreds of companies signed on to support the Equality Campaign. More recently, we’ve seen companies publicly support the Uluru Statement from the Heart and its call for the establishment of a First Nations voice in the constitution.
For a while now, many Australian companies have included a focus on corporate social responsibility (CSR) as part of their operations. CSR involves a company being accountable to a wider range of stakeholders than just its shareholders, and prompts a company to consider the broader societal impact of its actions. Whilst CSR has been around since at least the 1990s, the kind of “social activism” that we’re now seeing from some companies is a relatively new development in Australia.
This social activism has drawn some critics. In a new book, senior research fellow at the Centre for Independent Studies Jeremy Sammut takes aim at the “progressive agenda” of many companies and argues that their social activism is even harmful to our democracy. You can get an idea of some of Jeremy’s arguments in articles such as this and this. Whilst I don’t agree with much of Jeremy’s argument, it’s always worthwhile to have a debate about new developments in our society.
As much as some people would like to portray them as such, companies are not just faceless entities – they tend to have values and an identity. They are collectives of capital, but they are also collective of people, be they board directors, management or employees. Often these people are guided by a set of values which drive the company – and a well-run company will not impose these values from the top but seek to develop values collaboratively. If a company has values, in a liberal democracy such as Australia, I see no reason why they shouldn’t be allowed to express these values in the public sphere.
There are checks and balances in place – a company can’t just do what it wants. Four checks and balances are most relevant. Firstly, a company is accountable to its shareholders. If shareholders aren’t happy with the social activism of a company, as approved by its directors, under Australian law they can vote to change the directors of the company. Secondly, a company is accountable to its customers. If customers have a problem with the social activism of a company, they may choose not to purchase its products. Thirdly, a company is accountable to its employees. Accountability can manifest itself in terms of a collective voice of employees about the direction a company is taken. Employees, like consumers, who are not keen on the social activism of a company may also decide to work elsewhere. Fourthly, there is also the accountability that comes from media and other stakeholder scrutiny more broadly – the news stories and opinion pieces in newspapers or the online petitions from people who may be unhappy with a company’s actions.
Now I accept that these forms of accountability, like most forms of accountability are not perfect. Sometimes there is no alternative supplier for a customer to switch to. And it’s not always easy for an employee to just choose to work elsewhere. Shareholders may not always be vigilant about the actions of a company. But the idea that companies can adopt positions on social issues that are completely at odds with the majority of their shareholders, customers and employees is rather fanciful. In fact, it seems that Australian companies only adopt positions on social issues when it is relatively “safe” to do so, when they have considered the issues in detail and thought about the benefits and risks of taking a stand. For now at least, they also tend to only adopt a position on social issues of major significance, rather than taking a stand on every issue in the public debate. To me, the social activism of Australian companies doesn’t seem like a knee-jerk reaction but comes across as rather carefully thought through.
From reading Jeremy’s arguments, part of his problem with the social activism of companies seems to be that they have tended to take what could be termed a “progressive” stance on issues such as marriage equality or constitutional recognition of First Nations, which he seems to believe is “out of touch” with ‘“people in the outer suburbs and regions who hold more traditional views”. However, one big myth which the same-sex marriage postal survey dispelled is this idea that the outer suburbs and the regions are necessarily “more traditional” in their views on social issues.
The results show that outer suburban electorates around Melbourne such as Aston, Deakin and Dunkley had large majorities voting Yes, as did regional electorates such as McMillan, Wannon and Indi. A number of outer suburban electorates and regional electorates around Australia had majorities voting No, but what the results show is that you can’t stereotype the outer suburbs and regions of Australia (and I say that as a person who until recently spent most of his life living in the middle and outer suburbs of Melbourne).
I don’t doubt that companies may adopt positions on social issues which some people may not like. But in a liberal democracy like Australia, different groups and organisations will adopt particular positions and it’s inevitable that not everybody will agree on everything. Democracy is a contest of ideas, and that involves disagreement.
The main focus of companies is never likely to be social activism – rather it’s something they will undertake to complement their core business delivering whatever goods and services they exist to provide. But if companies have values, and feel strongly about them, I can’t understand why in a free society we should be telling them to stay silent.