In an effort to mold society and shape public opinion as they see fit, business leaders are increasingly bold in their political stances. From Dick’s and Shopify’s gun control changes in 2018, to Colin Kaepernick’s Nike campaign, to HBO Max and other streaming services removing politically-defined “sensitive” content due to the rampant cancel culture, these business leaders are either hoping to cause a lasting change, or avoid uncomfortable political ramifications. But there’s a significant downside to all this corporate politicking. Businesses entering the fray risk their brand’s success, their company’s profits and reputation, and their shareholders’ investments.
Political activism can damage a brand overnight. Over the last 18 months, we have seen companies either trampled or supported because of their political leanings. LuluLemon, the “athleisure” manufacturer valued at $45 billion, hosted a “resist capitalism” event. Why would a company promote an anti-capitalist Marxist workshop when they are only successful because of free-market competition? A single social media post promoting a class on anti-capitalism in the height of 2020’s unrest received so much backlash that LuluLemon removed the post.
Political activism can also destroy a company’s profits. Business marketers who are the most reluctant to get involved in politics say that their bottom line is what is keeping them neutral. In a study by Forbes, 67% of business leaders think it’s best to stay out of politics, saying that it would negatively affect the company’s ability to attract and retain customers. Alienating a large portion of their customer base could severely impede their profits.
The Risk of Corporate Politicking
The more politically active a company, the greater the reputational risk. For example, Silicon Valley (Apple, Facebook and Google, among others) spoke out against the temporary 2017 immigration ban. They sent letters to all employees, raised millions in funds and offered other resources. However, Google and Facebook received millions of anti-immigration ad dollars in 2016. Many of these “moral” stances taken by big corporations ring hollow because they don’t align with their actual business practices.
Political activism in the corporate world can also reduce return on investment for shareholders. 52% of business leaders stated they do not take a political stance because they believe it wastes resources on non-core business activities. No one went into business to be a moral compass or to solve societal problems. Businesses provide a product or service to their customers and increase profits for shareholders.
Imagine what the last 18 months would have been like without overly opinionated and outspoken CEOs. Wouldn’t it be nice if Nike just made cool shoes, Starbucks just served your favorite iced coffee and Amazon just brought your packages? Large corporations put their shareholders on the back-burner with their desperate attempts to maintain or regain cultural relevance.
Activists today expect companies to take a political stand, whether through a campaign or a change in business policy. However, they are only happy if that campaign, policy, or candidate aligns with their beliefs. These activists are not concerned with how that political stance will impact the company’s bottom line or shareholder investments. It’s time for a new wave of activists to stand up and push these business leaders back to neutral.