1. Human Rights is Your Business
In an interview last week on CNBC, billionaire investor Ray Dalio was asked how he reconciles China’s human rights record, including the recent disappearances of high-profile citizens such as Alibaba founder Jack Ma and former Grand Slam tennis champion Peng Shuai, with investing in the country.
Dalio replied, “I can’t be an expert in those types of things. I’m basically just trying to follow the rules, understand what’s going on, and invest properly in light of those rules. What they have is an autocratic system. As a top-down country … they behave like they’re a strict parent. That is their approach. We have our approach. If I evaluated all approaches around the world, in all countries, I’d be in a bind to try to find out, ‘Where do I invest?’”
It is worth noting that Dalio is not a disinterested observer. Last month his firm, Bridgewater Associates, the largest hedge fund in the world, raised $1.3 billion for a new private fund in China.
At almost exactly the same time Dalio was dancing with Wolf Warriors, the Women’s Tennis Association (WTA) suspended all its tournaments in China out of concern for Peng Shuai, whose stilted video conversation with International Olympic Committee (IOC) President Thomas Bach did not satisfy WTA Executive Director Steve Simon that the player is able to move and speak freely.
Simon said: “In good conscience, I don’t see how I can ask our athletes to compete there when Peng Shuai is not allowed to communicate freely and has seemingly been pressured to contradict her allegation of sexual assault. Given the current state of affairs, I am also greatly concerned about the risks that all of our players and staff could face if we were to hold events in China in 2022.
“Unfortunately, the leadership in China has not addressed this very serious issue in any credible way. While we now know where Peng is, I have serious doubts that she is free, safe, and not subject to censorship, coercion, and intimidation. None of this is acceptable nor can it become acceptable. If powerful people can suppress the voices of women and sweep allegations of sexual assault under the rug, then the basis on which the WTA was founded – equality for women – would suffer an immense setback. I will not and cannot let that happen to the WTA and its players.
“But this is something we can’t walk away from. If we walk away from this, we’re basically telling the world, that not addressing sexual assault with the respect and seriousness it requires is OK. It’s something that we simply cannot allow to happen, and it’s not where we stand for as an organization.”
Tennis legend Billie Jean King praised the WTA decision “for taking a strong stand on defending human rights in China and around the world”, further saying, “The WTA has chosen to be on the right side of history in defending the rights of our players.”
2. Businesses’ Societal Role
Company executives often believe business stands apart from politics, but that ignores the billions of dollars companies spend on lobbying. In 2020, companies spent a (self-reported) US$3.53 billion lobbying the U.S. Congress and federal agencies. The real and global total spent on legislative lobbying is undoubtedly exponentially higher.
Lobbying is pro-active, however, and executives today must be prepared to respond to questions about how their businesses address social issues. “That’s not our business, we just make widgets,” is no longer an acceptable response (which can be tweeted globally in seconds and make the executive and his/her company look at the least insensitive).
Mark Penn, a former political strategist (and now a lobbyist), says, “In politics, incumbents get ahead of challenges by defining them. In commerce, not so much.”
Yet the past five years have seen a dramatic increase in public calls for CEOs to take public stands on social and environmental issues not directly related to their company’s core businesses, and today, social media platforms allow human rights advocates (and we’re all human rights advocates, aren’t we?) to take stories global within hours.
Since 2000, the public relations firm Edelman has published the Edelman Trust Barometer, which this year found that globally, “my employer” (76%) is more trusted than businesses generally (61 percent), NGOs (57%), government (53%) and the media (51%).
Eighty-six percent of respondents said they expect CEOs to speak out on societal challenges such as the impact of the pandemic, job automation and other issues at both local and national/global levels. And 68% believed “CEOs should step in when government does not fix societal problems.
At the same time, the Edelman Trust Barometer found that CEOs lack credibility as a source of information about a company (48%), especially when compared to more credible voices, such as a company technical expert (59%) or academic expert (59%).
There is a disconnect between what is expected of CEOs and what they are delivering: CEO credibility is at all-time lows in several countries, including Japan (18 percent) and France (22 percent).
3. Do the Right Thing
In 2019, Kathy Bloomgarden, CEO of PR firm Ruder Finn wrote about “activist CEOs” on the website of the World Economic Forum.
Her “top three reasons when and why a CEO should speak up”
1. When it’s authentic., i.e. when the issue resonates with the business objective, a CEO’s personal story, or a commitment to making a change in relation to that issue.
2. To connect with the rising millennial workforce.
3. Because it’s the right thing to do for the future of the company.
Number 1 is obvious.
Number 2 is cynical and exactly the opposite of #1, in my view. If you are speaking up to “connect” with millennials, that’s inauthentic.
But I want to talk about #3.
In support of #3, Bloomgarden offers several examples:
McKinsey left its contract with US Immigration and Customs Enforcement (ICE) agency because of pressure from employees, and thousands of Google employees walked out in response to how the company has handled workplace harassment, following press reports that the company had paid millions of dollars in exit packages to executives accused of harassment.
It’s clear to me Bloomgarden is offering the corporate prescription for dealing with social issues. That is, she is – and this is obviously what she gets paid for – telling CEOs: “This is how you should behave if you want to be perceived as doing the right thing.”
Which to my way of thinking is very different from doing the right thing because It’s The Right Thing.
Companies that wait for employees and customers to protest their involvement with odious regimes (or odious U.S. government agencies, in Bloomgarden’s McKinsey example) or to protest toxic company cultures (her Google example) and/or behaviors are not “doing the right thing”. Most of them are doing the bare minimum they think they need to do to keep unhappy employees/customers/investors from damaging the company’s reputation and brand and equity value.
The companies I want to do business with are companies that do the right thing because it’s the right thing. There are many examples of companies that consistently do the right thing (unfortunately there are far more companies that do the bare minimum, or nothing at all), but the one that consistently impresses me, and that has impressed me for decades, is Patagonia.
Here’s Patagonia’s public statement on social injustice, issued in May of last year, as dozens of American cities were seeing demonstrations that were specifically a protest against the murder by a policeman of Minneapolis resident George Floyd and police brutality – especially against African-Americans – but more broadly are the culmination of decades of institutionalized racism, with little apparent effort by government to effect reforms.
And Patagonia did not only issue a statement; it also made a $100,000 donation to the NAACP Legal Defense Fund in support of a civil rights organization with a mission that has remained relevant for over a century: “To ensure the political, educational, social, and economic equality of rights of all persons and to eliminate racial hatred and racial discrimination.”
Patagonia’s founder/owner Yvon Chouinard is famously iconoclastic. He doesn’t need Kathy Bloomgarden to tell him how to do the right thing. In 2011 on Black Friday (the unofficial start of the retail Christmas holiday season) his company ran a full-page ad in The New York Times to tell people “Don’t Buy This Jacket”, and to explain why.
What was the “why”?
Patagonia noted that it’s in business to make and sell products, and that “everyone’s paycheck relies on that”. But it noted, “It’s part of our mission to inspire and implement solutions to the environmental crisis. It would be hypocritical for us to work for environmental change without encouraging customers to think before they buy. To reduce environmental damage, we all have to reduce consumption as well as make products in more environmentally sensitive, less harmful ways. It’s not hypocrisy for us to address the need to reduce consumption. On the other hand, it’s folly to assume that a healthy economy can be based on buying and selling more and more things people don’t need – and it’s time for people who believe that’s folly to say so.”
That was 10 years ago and consumerism has continued to spread unchecked.
For me the key phrase in that explanation of the company’s action was “it’s part of our mission to inspire and implement solutions”. Not because “it’s the right thing to do for the future of the company”. And definitely not “to connect with the rising millennial workforce”.
Time and time again I have encountered executives who are unprepared to communicate about issues that are of concern to their organizations’ stakeholders (both internal and external). Most of those executives simply have not given those issues any thought. Others consider themselves “too busy”, and do not believe there is any overlap between business and society except in the commercial transaction. Still others are socially far removed from stakeholders and the issues that matter to them.
Be on the right side of history.