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POLITICAL VS. SOCIETAL; HELPING THE CEO LEAD IN A TIME OF CHANGE

RICHARD EDELMAN / MARCH 25, 2021

The senseless murder of George Floyd one year ago raised our collective awareness of the long-standing, deep-rooted issues that our society must confront. Business leaders have now recognized an incontrovertible fact: the businesses they run have a crucial role to play in rectifying society’s most pressing ills. That is why business has prioritized issues such as systemic racism and diversity and inclusion.

The data released last week in the Edelman Trust Barometer Spring update confirmed Business as the most trusted institution, well ahead of Government in half of the fourteen markets surveyed. This was a reprise of the January trust data, which showed that Business was the only institution both competent and ethical. Across seven important societal issues, from education to health to systemic racism, Business was also more trusted to fix the problem than Government.

The most controversial slide in our Spring update was one that sought to distinguish between political and social issues, with our data suggesting more public support for CEOs standing up on social matters. In the U.S., for example, there was a fifteen-point divide on involvement on social versus political issues, with Americans saying that CEOs are too involved (-14 points) with political problems. Rich Lesser, CEO of BCG, was concerned that this finding might encourage CEOs to view voting legislation as a strictly political issue when it could equally be seen a societal issue centered on finding bipartisan approaches to encouraging voter equity and access. In his view, CEOs can be non-partisan advocates for their employees and their communities in this important area. To be clear, I agree with Lesser that business should speak up here, so that employees and their families can fully participate in our democracy.

In deciding which issues to emphasize, CEOs must take special heed of the three deep divides in the attitudes of the U.S. populace: by party, region and ethnicity. There was a significant party divide on CEOs taking stands on social issues (Democrats +14 points, Republicans -26 points) compared to political issues (Democrats -2 points, Republicans -34 points). There was a deep regional divide on social issues (West +6 points, Northeast +5 points, South -2 points, Midwest -3 points) but unanimity on political issues (West -9 points, Northeast -11 points, South -21 points, Midwest -7 points). On social issues, there was enthusiastic support for CEO action from racially diverse communities (Blacks +15 points, Hispanics +13 points, Asians +21 points), but not whites (-5 points). There was less acceptance of political stands by CEOs even by racially diverse communities (Blacks +4 points, Hispanics -1 point, Asians +5 points) with deep concerns that CEOs are too involved by the white population (-21 points).

2021 Spring Update Slide 30

At the same time, there is counter-reaction from those accusing CEOs of “woke capitalism.” Consumers Research, a conservative group, ran an ad last week blasting Nike, American Airlines and Coca-Cola for playing to the crowd on voting rights. The Free Enterprise Project, a shareholder activist group, urged conservative investors to vote against the CEOs of BlackRock, Salesforce and Bank of America.

I had breakfast on Saturday with Harvard Business School Professor, Michael Porter, who has authored a soon-to-be-released paper entitled The Changing Role of Business in Society. We talked about his shared value thesis, that in fact social impact work by business enhances corporate profitability. Porter believes that it is the purpose of business to create economic value in a way that also creates shared value for society. “Implementing social solutions while generating profit is self-sustaining,” Porter said. “Shared value opens up new strategic opportunities to address overlooked social needs, which is actually the largest unserved market opportunity.”

Porter went on to discuss two social issues that companies determined were in their best interest to fix instead of waiting for government. Sherwin Williams, an Ohio-based maker of paints and coatings, was having a hard time finding enough painters as older workers retired. It established a training program, the Sherwin-Williams Pro Painters Institute in partnership with Goodwill, with five days of trade-specific classroom training then six days of hands-on development. Oak Street Health has invented a new model to offer better healthcare to Medicare patients, enabling them to live healthier lives by early intervention on genetic disorders or changing bad lifestyles via diet and exercise.

During the conversation, we went on to discuss where CEOs ought to be out front. It begins with a set of questions: Where can we make impact given our expertise and reach? How can we demonstrate tangible results; are you ready to be accountable for your own house? Is the issue aligned with your company’s values? Are your employees passionate about the issue? Is this an issue that is important in your headquarters market or key markets elsewhere? Do you have someone who can champion this cause within the company? Is this consistent with your prior position on the issue; do you have a stake in the ground? Do you have the stamina to resist the inevitable counter-pressure from those who oppose the action?

I have consistently said that companies are better off focusing on societal issues but in this increasingly hyper-partisan moment, it is difficult to separate the two. Every issue has political overtones today, even sustainability and higher wages. Business has been well advised to stay out of issues like gun control and abortion rights. The line for companies has clearly moved because of employee pressure for the company and its CEO to be activist. But businesses must decide in advance what issues they will stand for and not waver. Business has to concentrate on its home market and stand up on issues such as transportation, education and public safety. CEOs also need to be out front on issues of national importance such as retraining helping set a context for the appropriate level of investment and to work with government on a national strategy.

Richard Edelman is CEO.