Corporate board members might soon get a reminder that the concerns of shareholders and customers can have an impact on their company’s share price. There is growing evidence that when company officials actively participate in what could be interpreted as political actions connected with controversial issues like DEI or endorse political decisions that hurt consumers, there is a possibility that shareholders and consumers will band together and take actions against the company or the individual corporate official. These concerns often fall into the very broad ESG category.
For example, Tesla CEO Elon Musk’s active role in the Trump administration’s Department of Government Efficiency (DOGE), which has led efforts to fire hundreds of thousands of federal workers, has made him—and Tesla—the target of protests across the U.S. and in Europe. According to a news report from Inc.com, using the name “TeslaTakedown,” protesters have started showing up at Tesla dealerships in the U.S. with anti-Elon messaging mostly tied to his work with DOGE. The organizers are also encouraging Tesla owners to sell their cars and urging Tesla shareholders to dump their stock. The early results of the protestors’ efforts have negatively impacted Tesla sales in Europe and caused Tesla’s stock price to slide downward.
Additionally, news reports say a consumer boycott primarily targeting Walmart, Amazon and Target is being planned for late February. Groups of consumers are being urged to execute a “Blackout Boycott” to show that consumers have power to use financial leverage against companies that are pulling back on or eliminating DEI programs. Walmart, Amazon and Target are among many companies that have modified or eliminated DEI programs since last year. The movement is urging consumers to refuse to shop with the targeted companies or other big corporations for 24-hours starting on February 28. It is not clear just how many consumers are buying into this boycott idea, but even if it is ineffective on February 28, the idea could be reintroduced in a different form again later. A significant drop in sales could impact revenue projections for a particular quarter or for the entire year, which might influence shareholders’ decision to purchase a company’s stock.
These recent stakeholder actions demonstrate how important it is for board members to understand which political and social issues their shareholders and consumers are concerned about. Ignoring stakeholder concerns creates a certain level of risk that, if not monitored closely, could lead to a drop in share price, reputational damage, loss of market share or other shareholder actions (votes against directors, shareholder proposals, etc.). To offset these possibilities, boards might want to:
Hold discussions revisiting the board’s stance on relevant political and social issues. With the incidents in the news this month, it might be an opportune time for boards to review their internal policies regarding company officials addressing the public about political and social issues, as well as setting rules for company officials’ involvement in political activities that might have an impact on how the company is perceived. Adjust company policies to fit current circumstances.
Review and improve the ways the company interacts with stakeholders. How many ways does the board receive information about the concerns of stakeholders? Examine how competitors interact with shareholders and consumers and make adjustments to your company’s methods and practices.
Create a strategy to strengthen the company’s reputation with stakeholders. Companies should not take their good reputation for granted. Solid reputations take years to develop but can be destroyed in seconds. Like many issues confronting boards, this requires directors to anticipate areas of weakness before problems arise. Is the board aware of its true reputation among consumers? How should the board capitalize on positive impressions of the company? How can the company improve or correct negative impressions? Implementing strategies that enhance the company’s reputation and build customer loyalty will help the company withstand future political and social missteps by the CEO or other company officials.
