April 04, 2017
The New York Times had a front page article Friday, “Brands Wrestle With Whiplash of Viral Anger,” that explores the requirement for increased nimbleness on the part of brands as activists pressure them concerning the placement of their advertising. While the article is concerned with advertising, it has an important quotation that speaks to something deeper:
“Americans are now demanding that their brands articulate their values and weigh in on political issues, and I think the degree to which they are expecting that is really quite new,” said Kara Alaimo, who teaches public relations at Hofstra University.
The consumer demand stands in sharp contrast to the claim by Milton Friedman in the same newspaper almost fifty years earlier: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (NYT, Sept. 13, 1970).
While today’s article is quite good, giving the context of a handful of current controversies, it misses a more crucial question: Why do Americans demand more of their brands? Why do Americans now expect CEOs to speak out about presidential executive orders, state laws, and a myriad of concerns that, at first blush, seem removed from their corporate responsibilities?
One macro explanation is that the social contract has changed. While numerous philosophers have described the “social contract,” Jean-Jacques Rousseau’s Du contrat social (1762) may be the canonical description of the concept. Rousseau’s concept included business but his notion of the social contract was largely a consideration of individuals and the government. An individual yields sovereignty to a government that in turn provides prosperity, security, and health. Rousseau’s concept did not envision the circumstance we have today. Corporations have evolved such that they wield enormous resources and, thereby, influence. Multi-national corporations now have annual sales that dwarf the economies of many nations. The graphic below shows that, if the largest corporations’ annual sales were considered alongside the GDP of nations, more than 40 corporations rank in the top 100. In 2016, Wal-Mart ranks #21, with an economy larger than that of Sweden.
The enormous size and scale of multinational corporations fittingly drives the desire on the part of consumers that these corporations express the values of those consumers. Hence, a controversial state law may spark statements from large employers in that state. Further, leading institutions, like the United Nations, via the Global Compact which engages more than 9,000 global companies in support of the U.N.’s Sustainable Development Goals, and the Catholic Church, in documents like Laudato Si’, attempt to persuade the corporate community that business must attend as well to the care of creation and concern for the most poor on the planet.
A changing landscape with greater concentration of power in large, multi-national corporations brings greater responsibility for attending to matters that were once not a day-to-day concern in the operations of a corporation.
February 02, 2017
Today’s Milwaukee Journal Sentinel has an extended article about Fr. Mike Crosby and his efforts in corporate social responsibility. The article can be found here: For Milwaukee friar, win vs. ExxonMobil is biggest since ‘Joe Camel’.
Below is the press release from the ICCR:
SHAREHOLDERS WELCOME APPOINTMENT OF CLIMATE EXPERT TO EXXONMOBIL BOARD
Appointment of Susan Avery, atmospheric scientist, to board of directors responds to investor concerns regarding need for board with climate change competence.
NEW YORK, NY – Thursday January 26, 2017 – Members of the Interfaith Center and long-term shareholders of ExxonMobil were encouraged by Exxon’s decision yesterday to appoint a climate scientist to its board of directors.
In a company press statement yesterday, ExxonMobil announced that Dr. Susan K. Avery was elected to its board of directors, effective February 1, 2017. Avery, an atmospheric scientist, is the former president and director of the Woods Hole Oceanographic Institution. Her appointment is responsive to a long-standing request from shareholders to appoint a climate expert to its board.
For three years, led by the Midwest Capuchins, ICCR shareholders and other groups have filed a resolution calling on ExxonMobil to elect an Independent Director with Climate Change Expertise. Until now, the company has opposed this effort. Investors were informed of the election of Avery by company representatives in a phone call yesterday and requested a dialogue to discuss withdrawal of the resolution.
The lead proponent of the resolution, Fr. Michael Crosby of the Province of St. Joseph of the Capuchin Order and Executive Director of Seventh Generation Interfaith Coalition for Responsible Investment, has helped to lead an ongoing shareholder campaign at ExxonMobil on climate-related issues for nearly two decades. Crosby made clear that he viewed the board appointment as a noteworthy breakthrough given the company’s early resistance to action on climate change.
Said Crosby, “We’ve seen Exxon’s gradual evolution from active denial of climate change to reluctant acknowledgement of its risks and now, its elevation in priority as an essential component of board management. Apart from the enormous environmental and social risks facing Exxon management, we, along with many other investors, believe a failure to adequately respond to climate risk disadvantages Exxon financially. This critical step demonstrates that the board recognizes the need for expertise in board discussions to address climate change.”
In its opposition statement to the same resolution on last year’s proxy the company argued against a climate specialist on the board “Because each director must possess a breadth of expertise and experience, setting aside a seat for an environmental specialist or other single-issue candidate who lacks other important attributes would, in our view, not be in the best interests of the Company or its shareholders because it would dilute the breadth needed by all directors to make informed decisions for the Company.”
Said Tim Smith of Walden Asset Management, who has helped lead engagements with ExxonMobil, “This action by the Board is encouraging for shareowners and we want to commend Exxon for this prudent and forward-looking decision. We are hopeful that Dr. Avery’s appointment will assist the company as it works to systematically embed climate risk into decision-making and address its implications throughout its operations and supply chain. Increasingly investors are calling for “climate competency” and a disciplined system of review and accountability in company boards. New directors like Dr. Avery significantly strengthen such climate oversight.”
About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 46th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300 member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $200 billion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability on questions such as climate change, corporate water stewardship, sustainable food production, human trafficking and slavery in global supply chains and increased access to financial and health care services for communities in need. www.iccr.org