How Large Companies Can Manage Rising Consumer Expectations

According to a recent survey by the Public Affairs Council, 60 percent of businesses experienced rising pressure to speak out on social issues. Furthermore, nearly three out of four companies reported they were involved in recent efforts to protect the environment. With stakeholder and consumer pressure likely to continue rising, large corporations are expected to become increasingly vocal about concerns such as climate change, LGBTQ issues and human rights. In the face of constant pressure, companies must figure out how to balance their business priorities, align their public affairs strategies, and ultimately manage rising consumer expectations around thorny social issues. While much of this requires thoughtful planning and strategy, companies can start by using two tools to protect their brand and become pro-active in a consumer activist environment:

(1) – Active and responsive CEO engagement on social media

(2) – Engaging with coalitions and activist organizations

Companies that have demonstrated they are able to engage local communities and engage with consumers via social media can successfully manage rising consumer expectations while maintaining a company image that is inclusive of varying perspectives.

Corporate positions on social issues directly affect how their employees and consumers view and interact with these businesses. By taking a public stance on an issue, corporations can send a calculated signal to their consumers and employees. As recently as a few months ago, many major corporations publicly denounced President Trump’s decision to pull the United States out of the Paris Agreement. Among these corporations were Facebook, Google, Microsoft and Exxon Mobil. In particular, Exxon Mobile has been facing increased investor pressure to show it’s helping fight climate change. Around the same time as its announcement, Exxon was facing fervent pressure from over 62 percent of its investors who demanded that the corporation disclose what policies it was taking to mitigate the risks posed by climate change. Companies who rightly do not want to wade into controversial social or environmental issues may face swift backlash from investor activists and newly politically-engaged consumers.

CEO Engagement is Crucial

According to recent survey conducted by Weber Shandwick, the amount of Americans who support CEO activism has risen in recent years. Specifically, millennials are driving the bulk of this push. Not only do most millennials say CEOs have a greater responsibility to take a stance on social issues, but they are also more likely to buy from a company who speaks out on an issue they agree with. Even though millennials are the most informed generation when it comes to CEO activism, almost half of all Americans agree that CEOs who remain silent expose their corporation to widespread criticism – which may negatively impact its brand.

Employees also play a large part in driving their CEOs to publicly engage social issues. Almost half of millennial employees reported that they would become more loyal to their employer if their CEO took a public position on a heavily debated issue. Moreover, according to a recent survey by the Public Affairs Council, companies reported that their own employees are the most influential group when it comes to making decisions about the company taking a public position on a social issue. If CEOs are engaged in these issues from the start, it can make employees feel comfortable about their work environment and become aware that leadership starts at the top.

It’s Safe for CEOs to Engage on Social Media

One of the first major instances of CEO activism came after then-Governor Mike Pence and the Indiana State legislature were in the final stages of passing the Religious Freedom Restoration Act in 2015. Many critics of the original version of the bill argued that it would legitimize business discrimination against the LGBTQ community. Marc Benioff, the CEO of Salesforce, became the first major business leader to speak out against the bill over Twitter, threatening to completely shut down any Salesforce programs requiring its customers or employees to travel to Indiana. Other CEOs soon followed his lead, causing Pence to approve a revised version of the law about a week later.

CEO engagement over social media is becoming more common, potentially because it provides some distance between the corporate brand and the controversial topic being discussed. CEOs can humanize this issue while keeping the company directly out of fire from opposing consumers.  After Trump’s Paris Agreement decision, many major CEOs reaffirmed their commitment to the environmental sustainability initiatives of the Agreement over social media. One such announcement came from General Electric’s CEO Jeff Immelt: 

By both taking a stance on the issue and promising to take action, General Electric signaled to its stakeholders that it takes the issue seriously.

While the implications of the Paris Agreement had clear ties to many major companies’ business concerns, CEOs are even starting to become more engaged around issues that do not have a clear and obvious connection to their business’s bottom line. For example, after Trump announced a ban on transgender individuals from serving in the military, numerous CEOs immediately reacted. CEOs of major companies such as Google, Apple and Twitter took to social media to express gratitude for transgender military officers and condemn the discriminatory ban. Potentially due to their millennial-driven workforce and consumer base, technology companies are particularly vocal on these kinds of social issues.

Joining a Coalition

Joining a coalition can also be an effective way of managing stakeholder pressure to become active on social concerns. In the aforementioned Public Affairs Council Survey, 64 percent of companies reported they had joined a coalition to address a social issue. Coalitions are effective because they can leverage the collective weight of an industry, show a company is part of a larger movement and insulate individual companies from being solely responsible for action. For example, in wake of Trump’s Paris Agreement decision, a coalition representing $6.2 trillion of the U.S. economy was formed to demonstrate their intent to adhere to the Agreement. The coalition, “We Are Still In,” includes many major corporations and government leaders and is led by former New York Mayor Mike Bloomberg. 

The collective action of a coalition can strengthen business’ images and help insulate the company from any backlash against their position on a social or environmental issue. Stakeholders want to not only see that their CEOs are taking a stance on an issue, but also that they are taking part in a large effort to resolve the issue at hand. Coalitions allow companies to be seen as a leader on social or environmental issue without being the only company in their industry to come out on what is sometimes a controversial topic.

Looking Forward

Employees, consumers and investors are increasingly looking to businesses to take a stand on social issues. In the age of Trump, many employees now see their company as a big institutional player that can serve as a check on government action or in some cases, inaction. Collective action via coalition and direct CEO engagement on social media can help corporations manage these rising expectations. Although consumer and employee reactions to a particular stance may be mixed, by becoming more active on these issues, companies can take more control over how the public perceives their brand and some may even enact the meaningful change that our electorate continually demands.

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Sources:

Why U.S. businesses said "stay in the Paris accord"

Survey Finds Corporate Employees Support Advocacy on Social Issues

Why Companies Are Getting More Engaged on Social Issues

28 major US companies that don't want Trump to abandon the Paris agreement

U.S. Business Leaders Want to Stay in the Paris Climate Accord

Bloomberg leads mass coalition declaring support for Paris climate deal

A group representing $6.2 trillion of the US economy says they're 'still in' the Paris climate agreement

‘Climate Change is Real’: Business Leaders React to President Trump’s Withdrawal from Paris Agreement

CEO Activism in 2017: High Noon in the C-Suite (article)

CEO Activism in 2017: High Noon in the C-Suite (report)

The CEO Who Took On Indiana’s Anti-LGBT Law — And Won

Tech CEOs are sounding off about Trump’s call to ban transgender service members