When Australian Federal Treasurer Scott Morrison chastised superannuation funds for selecting investments for “political reasons” rather than financial return he was flying in the face of a growing trend in issue management.
The Minister attacked the funds for not investing in coal, but perhaps he had overlooked the fact that just months earlier the world’s biggest Sovereign Wealth Fund – the $860 billion Norwegian fund – announced it will drop investment in 52 companies linked to coal.
Using investment muscle in support of a social issue is nothing new. As long ago as the 1990s, withdrawal of business investment in South Africa was a major factor in speeding the collapse of Apartheid.
Similarly, Corporate Social Responsibility and Ethical Investment have been around for decades, helping big business play a role in the community to help protect their operations and maintain their social licence to operate.
But now corporations and CEOs seem to be showing a renewed willingness to play a role in high-profile social issues with little or no apparent direct relevance to their core business. Some people are describing this as Corporate Social Advocacy, or Corporate Activism.
Look no further than the 81 American multinationals which pledged to support President Obama on climate change. Or the Who’s Who of Australian corporates who lent their names and brands to a newspaper advertisement in support of same-sex marriage. Or the more than 200 CEOs and business leaders who signed an open letter to Governor of North Carolina to protest against new legislation which overturns protections for the LGBTI community.
In that case some companies did a lot more than just sign an open letter. For example PayPal cancelled plans to open a global operations center in Charlotte, North Carolina, that would have created 400 jobs, and the Washington Post reported that Deutsche Bank cancelled expansion plans into the state.
Corporate philanthropy is another concept which has been around for a very long time, but now some high profile philanthropists are no longer simply supporting existing good projects and good causes. A good example is West Australian mining magnate Andrew “Twiggy” Forrest who began by championing the issue of indigenous disadvantage, then masterminded the international Walk Free Foundation which aims to shame governments into action on modern slavery and to persuade global corporations to ”slavery-proof” their supply chains. The Walk Free campaign was later rolled into a US charity, but it highlights how CEOs can use their money and status to promote issues onto the global agenda.
Although various forms of corporate intervention are well known, what’s new is the growing pace and profile of such intervention. Sometimes, however, the line between corporate social activism and longer term self-interest is somewhat blurred. Like the decision of the worlds ten biggest PR agencies not to represent climate-change deniers. Or the Male Champions of Change group which brings together some of Australia’s most influential and diverse male CEOs and Chairpersons to use their individual and collective influence and commitment to drive the issue of women’s representation in leadership.
But in some ways it’s less important whether the rising tide of intervention is labelled as CSR or corporate activism or ethical investment or corporate social advocacy or philanthropy or the bandwagon effect. The real trend here is that business and its leaders are increasingly willing to play a role in high-profile social issues, and issue managers everywhere need to pay attention.