Bold Corporate Social Responsibility Can Pay Dividends

Allen Smith, J.D. By Allen Smith, J.D. November 12, 2018
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Bold Corporate Social Responsibility Can Pay Dividends

​Some companies aren't shying away from controversial positions. On the contrary, some are seizing on bold corporate social-responsibility (CSR) initiatives and energizing employees, particularly Millennials.

Consider Patagonia. It sued the Trump administration last year to try to prevent the administration from diminishing the size of national parkland.

And Patagonia completely closed—including its stores, warehouses, customer service offices and headquarters—on Election Day. Employees were excited, said Dean Carter, head of HR, finance and legal for Patagonia, headquartered in Ventura, Calif. The company has about 1,700 employees in the United States.

Approximately 400 companies have joined Patagonia in the Time to Vote campaign, a nonpartisan movement to increase voter participation on Election Day. Participants include Ford, General Motors, Lyft, Pinterest, Spotify, Tyson Foods and Walmart. While some companies closed for the midterm elections, others offered arrangements to encourage voting, such as flextime, paid leave and resources for mail-in and early ballots. Ultimately, there should be a national holiday for Election Day, Carter said, observing that time off to vote isn't mandatory in many locations.

When Patagonia takes bold stances, like suing the government or leading the Time to Vote campaign, the company is acting "in line with [its] values," he said. "We communicate our values loudly and authentically," which includes positions some customers and employees might not like. Millennials want "to be part of a community that stands for something, and more companies are starting to realize that." He said Patagonia would defend what it believes in without regard to how those beliefs benefit Patagonia. "We can't help living our values," which include being inspiring.

"CEOs are deciding to stand up and stand out," Carter said. "In the past, they used to wait for the government to lead."

Going out on a Limb

Not every CSR initiative will resonate with other companies the way the Time to Vote campaign has. But some companies pursue them anyway out of a sense of doing the right thing.

Take WeWork: On July 12, the company announced a policy against serving meat at company events. The policy included poultry and pork, as well as red meat. New research indicates that avoiding meat can substantially reduce one's personal environmental impact. WeWork, which builds office spaces shared by unrelated businesses and entrepreneurs, estimated that by no longer serving meat at company events, it will save 15 million animals by 2023. WeWork employs 3,300 people in the United States, about 2,300 of them in New York, and hosts numerous events. Miguel McKelvey, WeWork co-founder, told staff, "We are energized by this opportunity to leave a better world for future generations and appreciate your partnership as we continue the journey." The company declined to comment on employee response to the initiative.

Jonathan Crotty, an attorney with Parker Poe in Charlotte, N.C., doubted that other employers would adopt a similar policy. "It's so hard to find qualified employees to begin with now; putting in something that might not be popular would be difficult," he said.

However, said Mark Kramer, co-founder and managing director of FSG in San Francisco and a senior lecturer at Harvard Business School, "to earn any sort of public recognition, companies have to take a leadership position on controversial social issues. Employees and consumers both see companies as political actors these days."

He noted such controversial initiatives as Delta's discontinuing the discount for National Rifle Association (NRA) members attending the NRA's convention. This move resulted in a state fuel tax being taken away in Georgia, where Delta is headquartered, although Inc. reported that the tax breaks were reinstated.

Levi Strauss took a stand against gun violence. In November 2016, the company's president and CEO, Chip Bergh, asked that gun owners not bring firearms onto its property, even where it's permitted by law. "As business leaders with power in the public and political arenas, we simply cannot stand by silently when it comes to the issues that threaten the very fabric of the communities where we live and work," he said in a Fortune column. "While taking a stand can be unpopular with some, doing nothing is no longer an option," he stated, announcing stepped-up support for gun violence prevention.

Kramer noted that PayPal abandoned plans for a major distribution center in Charlotte, N.C., because of an anti-transgender law. The law, now repealed, prohibited transgender public workers from using the bathroom that matched their gender identity.

Hobby Lobby took another controversial stance: It refused to pay for certain contraceptives for employees, a decision the Supreme Court upheld.

"Companies are increasingly expected to take stands on social issues," Kramer said. "Companies no longer get credit for simply not being bad."

[SHRM members-only toolkit: Communicating with Employees About Health Care Benefits Under the Affordable Care Act]

Delta, Levi Strauss, PayPal and Hobby Lobby declined to comment.

Employee Reactions

Employees are paying attention to the stances companies take and leaving if they disagree with them. Of 500 surveyed business professionals this year, 62 percent said they wouldn't work for an organization if they disagreed with its stated beliefs, according to the Institute for Corporate Productivity in Seattle.

"Millennials are five times more likely to stay with employers when they feel a strong connection to their employer's purpose," said Leela Stake, partner, global impact, with FleishmanHillard in San Francisco. Stake noted that she got this statistic from a PwC report.

"We live in an era of boycotts and 'buycotts,' so companies should be prepared for both negative and positive reactions," she said, referencing FleishmanHillard's October report on CSR, Navigating Zero Gravity. "And they should be sure to listen to and acknowledge the various sides of an issue. Companies that demonstrate active listening fare better."

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