Socially Conscious Consumer Activism

Deciding what to do when a company is asked to announce its position on polarizing issues will require boards to develop a range of responses.

The ongoing push for racial justice in America is drawing attention to yet another issue for corporate boards of directors: how to address the demands of socially conscious consumers.

Trying to figure out what consumers want to purchase is hard enough without also having to determine which social issues they may be prepared to protest or boycott a company over.  Yet, recent events show that boards now have the responsibility of making sure their companies are on the “right side” of a wide range of social issues that consumers care about. Fail to do so and the company risks public protests, reputational damage and the potential loss of revenue.

Many companies were quick to register their public support for the Black Lives Matter movement and its calls for racial justice. Companies quickly professed a commitment to diversity and inclusion in advertisements, public statements and new initiatives aimed at minority workers and their communities. The worldwide protests sparked by the death of George Floyd at the hands of Minneapolis police helped companies assess how the general public felt about the need for racial justice, hastening decision-making.

However, when it comes to police reform, companies have been far less vocal because it is a much more complicated and controversial issue. A recent proposed boycott of Goya Foods over its CEO’s support for President Trump and an advertiser boycott of Facebook due to the social media giant’s refusal to reign in hate speech are some examples of how difficult these decisions can be for boards.

Deciding what to do when a company is asked to announce its position on polarizing issues involving politics, religious beliefs or civil rights will require boards to develop a range of responses. Here are some suggestions that can start board discussions:

• Show public support for the consumers’ position. When it is clear that the majority of people are moving in a particular direction, it may make more sense to agree to their wishes. A public explanation why the company is supporting the consumers’ position will be needed to build good will with affected communities and to avoid potential backlash from skeptics. The old adage, “the customer’s always right,” does have merit in most cases, and doing what’s best for the company’s stakeholders may require directors to put personal values aside. Supporting consumer demands can enhance a company’s reputation for being willing to adjust with the times, and it may even attract new customers. However, directors should tie support of consumer positions to long-term benefits for the company.

• Weather the storm. In some cases, it may be best to accept criticism, state the company position on the matter and wait for any market reaction to subside. Boards will have to determine the benefits of action versus inaction in many situations where consumers push for social change. Absorbing the loss of some customers in favor of keeping the loyalty of the majority may be the best move in the long run for some companies. Boards should consider scripting a response that states the company’s position clearly, but in the least offensive manner as possible. This approach will not prevent damage from occurring, but it may give the company the best chance of recovering more quickly after a minority of consumers have landed their best punch.

• Survey the community and shareholders. If companies are consistently asking their shareholders and the communities they serve about a broad range of issues, it will be less likely they are blindsided by a socially conscious consumer demand. Directors should be willing to talk to shareholders and consumers to see if the company can address any simmering issues before they become demands. Such regular engagement may improve relationships, and that can yield ideas for new products and services as well as industry insights from shareholders who have an interest in helping the company grow. Getting ahead of socially conscious consumer complaints can solve problems before they start.