With the right strategy, corporations can play a positive role in addressing polarisation and social division around issues of public interest.
There are long-standing questions about business engagement with social and political issues. On the one hand, there is the broad expectation that business ought to engage with matters of public interest. On the other, there can be concern when companies engage in contested issues in the absence of broad social consensus.
Current approaches do not work. Companies are regularly entangled in controversy over public stances taken on contested issues.
Driven by a combination of factors, including good intentions, commercial imperatives and reputational concerns, business leaders to date have pondered whether to take a stand or remain silent. Both options are increasingly untenable and fraught with risk. As societies become more diverse and their members more polarised, the need grows for a leadership and governance approach that reduces discord, restores trust and bridges divides.
Corporate controversies
There is a bountiful supply of case studies from the past decade of companies engaging or becoming entangled in contested issues not directly related to their core operations. These can be categorised into four broad groups:
- Personal identity issues including race, ethnicity, sex and gender.
- Individual liberty issues including marriage, freedom of speech, religious beliefs, abortion, guns.
- Environmental challenges including climate change, sustainability and energy transition.
- Geopolitical issues including wars, great-power relations, cultural differences and how to understand the past.
Each issue involves tense debate, interconnection with views on like issues, strong emotions and disagreement. The relevance of these issues to core business operations varies and assessing how to respond is difficult because of qualitative and subjective factors involved. All this makes the likelihood of corporate missteps high.
Controversies typically follow a four-stage trajectory: build, catalyst, response and fallout.
During the build phase, a company may experience internal and external concerns about an issue, influenced by broad social and cultural trends. This is particularly pronounced within large, public-facing companies with high brand visibility and a diverse consumer base.
The catalyst phase involves a primary trigger event that puts the company in the spotlight, such as an employee’s public statement, pressure from stakeholders or external events like political decisions or social movements.
The response phase sees the company taking a public stance on a contested issue not directly related to core operations — the secondary trigger event — deepening the controversy.
Finally, the fallout phase encompasses the lingering effects of the stance, where the company might defend its stance, repent or hide while media attention persists. If the stance is taken when the company is performing poorly on a core activity, the result is almost always lethal for leadership, as the two are often linked, even if there is little correlation.
There are many reasons why companies decide to take public stances on contested issues. Not all are at play on every occasion, and some are not publicly stated. This leads to questions about the decision-making process and the potentially conflicting role some reasons played in the company expressing a view.
When and how to engage
Two factors are evident in previous controversies.
- Highly contested issues attracting a broad range of views and an absence of social consensus (social contest).
- Issues not directly proximate to daily core business, that is, normal operations were not integrated around progressing the issue (relevance).
To reduce controversy, companies might consider when and how to engage by assessing the level of external social contest against its direct relevance to the company’s core business.
This can be undergirded by three principles:
- Combining commitment to excellence in core business with restraint from taking sides on contested issues not directly related.
- Respect shown for all persons and their right to hold their own views on contested issues. Balanced by responsibility of employers and employees to express their views in ways that do not detract from core operations and which acknowledge others’ rights to express their own views and the possibility such views may be held in good faith.
- Robust and respectful debate among citizens as the primary and most effective means of achieving progress, increasing respect and approaching consensus on contested issues.
While pejorative and popularised slogans such as “woke capitalism” suggest that concern has an ideological motivation, most concerns focus on unintended effects on employees, institutions and public debate. Namely, the polarisation of views within the workplace and difficulty managing employee disagreement/activism; the politicisation of the company, expectation that it speaks similarly on other issues, and distraction from core business; and concerns over the power companies have to distort public debate and weaken democratic institutions.
This approach can be proactively considered in a variety of sectors to help navigate fast-evolving and hyperpolitical environments, with better (not perfect) outcomes for employees, institutions and public debate.
Similar approaches have already been deployed in financial, educational and cultural settings including the Charles Schwab Corporation, Harvard University and Getty Museum. Adapted across sectors, this might help bring about a more constructive and fruitful approach for dealing with contentious issues in pluralist societies.
Patrick Langrell GAICD is director of the Governance and Public Affairs Centre (GPAC) at the Australian Catholic University and convenor of the Executive Forum.
This article first appeared under the headline 'Navigating contested social issues’ in the August 2024 issue of Company Director magazine.
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