The recent Bud Light boycott in response to the company’s partnership with a transgender activist is a poignant reminder that corporate support for radical agendas risks alienating customers.
Customers aren’t the only ones troubled by corporate activism. Shareholders are also expressing concerns. And a recent Ipsos Survey commissioned by Alliance Defending Freedom as part of the Viewpoint Diversity Score initiative found that companies who take political stands on contentious social issues might be alienating their workforce as well.
So why do corporations continue to get involved in political advocacy?
According to ADF Senior Counsel and Senior Vice President of Corporate Affairs Jeremy Tedesco, it’s because companies are caving to pressure from outside activists.
In a print interview with The Epoch Times, Tedesco explains how the Human Rights Campaign’s Corporate Equality Index (CEI) and corporate rating agencies including Standard & Poor’s and Morningstar convince companies to betray their own interests.
“They have a 360-degree pressure campaign to push these companies further and further left, including on the positions they take on contentious political issues,” Tedesco said.
The CEI index includes criteria like corporate advertising and messaging, he said. To get a high score, “You have to essentially cede control over your marketing to external groups that have no interest in whether your company is successful, whether you’re alienating your customers or your employees.”
Research shows that companies have much to lose and little to gain when they put activism ahead of serving their customers and shareholders. As noted in The Epoch Times article:
A study by Vanessa Burbano, a professor at Columbia Business School, titled, ‘The Demotivating Effects of Communicating a Social-Political Stance,’ found that there was little upside for companies that take on political causes from the perspective of their employees. The report cited ‘strong evidence that communicating a social-political stance with which employees disagree has a demotivating effect,’ while ‘communicating a social-political stance with which employees agree has no (statistically significant) motivating effect.’
Tedesco’s interview also highlights how the U.S. Securities and Exchange Commission has contributed to companies’ leftward shift by influencing companies’ board meeting agendas.
“The SEC really controls what shareholder resolutions appear on the proxy statements,” Tedesco said. “What they’ve been doing over the last 10–15 years is opening the floodgates for left-leaning shareholder activism, but throttling conservative shareholders from acting as some kind of counterweight. And we pointed that out in our filing with the SEC, related to the JPMorgan Chase proposal, and said, ‘You’re risking a First Amendment lawsuit over viewpoint discrimination if you continue to allow all these left-leaning shareholder resolutions but deny conservative ones that deal with the same issues.’”
The good news is that companies can still correct course. And shareholders, state officers, and several other constituencies have shown that they are willing to hold corporations accountable when they betray shareholder, employee, and consumer’s interests. In the past month, the SEC has ruled in favor of shareholder transparency by quashing requests from JPMorgan Chase and PayPal to ignore shareholder resolutions on equal treatment of customers regardless of religious or political viewpoints. Now, the resolutions will be included in both companies’ proxy materials for their upcoming shareholder meetings.
Tedesco’s advice to companies considering whether they should get politically involved is simple: “just stay out of it. Serve the interests and needs of everybody who wants to be a consumer of your products, or an employee in your organization, or a shareholder of your business.”
Read The Epoch Times’ full piece here.