Activism: Least Important Part of Corporate Responsibility?

Activists at a Black Lives Matter protest supporting racial equality.

Corporations are being widely praised right now for what is being called corporate activism, publicly supporting campaigns like Black Lives Matter or initiatives to reform the criminal justice system. Some companies have publicly stated their support for multiple anti-racial programs and for police reform. Others have endorsed their own employee groups fighting racism and discrimination.

While laudable and a refreshing change from how most companies have typically avoided taking a stand on even the most pressing social causes, this activism and advocacy is only one element of the three legged stool of a broader corporate responsibility which all companies should practice. And corporate activism is arguably less important than the other two.

The most important leg is corporate ethical behavior and action. Ethical behavior requires the company to conduct its business in an honest and thoughtful way, so that its day-to-day operations respect the rights and serve the interests of all it does business with – customers, employees, suppliers, and those directly affected by its operations. Companies need to consider the safety, reliability, and honest presentation of every product and service, and how well the company protects the privacy and data of all they deal with. Companies must prevent corruption and harassment in their operations. In the time of COVID 19, and the anti-racism movement requires companies to think first of racism and the effects of systematic exclusion in their own operations. Today companies should take significant initiative to train and promote employees of color, and make certain that diverse perspectives are present in every decision setting.

Few companies have a consistent record of ethical behavior. Corporate misconduct is rampant in US and international business. Frauds and scandals are commonplace, even among the most prominent and previously respected businesses. Few companies examine routinely the social and ethical impacts of their strategies, products, incentive systems, and policies, and few companies have achieved true racial balance in their organizations. Almost all companies are reactive, addressing ethical questions only when there is a scandal. A focus on “compliance” with law and regulation has pushed aside even a modest interest in corporate ethical behavior.

The third leg of the stool is what is typically called corporate social responsibility or CSR. CSR focuses on good the company does with a percentage of its profits or slack resources, not what it does in its core operations. Today CSR or community relations officers manage philanthropic contributions, volunteer programs, and donation of corporate spaces or resources to worthy projects. A few CSR officers have been given responsibility for environmental impacts and are called sustainability officers. The largest companies publish glossy annual reports on their CSR activities, as if this is the totality of a corporation’s responsibility.

We applaud corporate activism because it finally puts companies on the right side of critical public policy issues. It can engage their considerable influence and lobbying power for the common good rather than for a set of narrow shareholder or management interests.

But it is no substitute for a strong commitment to ethical behavior and action in the company’s own operations.