Should companies consult their shareholders before taking a position on social issues

The list included Wesfarmers and Telstra, as well as the top 20 ASX companies. Not only did most of the ASX 20 declare their support, but also many small businesses. Retail, publishing, and education are just a few of the diverse sectors represented.

This public commitment is part of a larger movement called “Brand activism,” where companies publicly support or oppose a product or a cause.

Examples include Nike’s antiracism campaign featuring Black NFL player Colin Kaepernick and Bud Light’s partnership with trans influencer Dylan Mulvaney.

Brands may adopt a conservative or progressive stance when it comes to their activist messaging. Brand activism is often used to challenge an unfavorable status quo. Organisations have overwhelmingly supported a “Yes” vote in the Voice referendum to improve outcomes for Indigenous people.

This raises issues about the role of the business sector in society and the tensions that exist between commercial and ethical imperatives.

Alan Joyce, former Qantas CEO, and Indigenous leader Noel Pearson unveiling the airline’s Yes campaign at this year’s Referendum. Dean Lewins/AAP

Should companies be held accountable to their shareholders for taking a stance on social justice in public? Does it fall to them to make a public stand on social issues? Will this win or lose their support? What are the consequences of making businesses “moral leaders” given the current climate and environment?

Shareholders may be right in resisting corporate activism.

As of today, businesses are viewed as a means to maximize shareholder value. It follows that managers must answer to investors, and all marketing decisions need to protect and enhance profits.

According to a survey conducted by the Australian Shareholders’ Association, 70 percent of shareholders believe that companies shouldn’t be funding the “Yes campaign.” Research from academics confirms investor concerns. Investors react negatively to corporate activism. It diverts attention, time, and resources away from revenue-generating initiatives.

In reality, the shareholders do not participate in implementing a brand advocacy strategy. Typically, this would come from the company’s executive team. The board would then play a role as an advisor. Councils are expected to act in the best interest of shareholders even though they can make decisions without consulting shareholders.

In addition, by taking a position on a socially political matter, company boards should and could anticipate shareholder anger.

A survey revealed that 70% of shareholders opposed companies funding the Yes campaign. MAP

The tension between profit maximization, social responsibility, and the focus issue is intensified if it has a partisan nature. The risks are higher, and the results are uncertain. It was the same with The Voice.

The Australian Shareholders’ Association has stated its position on the issue of supporting political or charitable causes.

[…] There is broad agreement that companies should support charities aligned with their goals, strategies, and objectives, but there is strong opposition to supporting political causes.

Some companies, including Orica and EnergyAustralia, have justified their neutrality or silence on The Voice referendum by stating that it is not their place to tell their customers or employees how they should vote. The academic view of modern business is that brands can not only reflect but also affect market and social values.

Many more stakeholders are involved in the business than just shareholders.

Social responsibility is not only for non-profits or social enterprises.

Today, businesses are responsible not just to their shareholders but to a wider network of stakeholders. Customers, employees, suppliers, government, communities, and investors are all stakeholders. The environment is also a stakeholder.

Corporations must balance social responsibility with shareholder value when they orient themselves to the diverse interests of these stakeholders. Recent research into “transformative brand” highlighted the possibility for brands to pursue hybrid business and social goals. Brands who do this with a purpose can have a real impact on the marketplace.

Read more: Qantas throws weight behind Voice with Travel for ‘yes’ campaigners.

Because activism ties a brand to a partisan issue, it also divides public opinion. Empowering Indigenous Australians is, shamefully, still a contested issue in this country. Taking a stand on social justice issues raises the stakes on the low-risk initiatives companies have traditionally favored.

Brands that seek to polarise spaces through their activist campaigns must be prepared for a backlash and consider carefully how they can use this to advance their cause.

Brand activism is essential for social and business outcomes.

Companies must support their positions. Many companies declared their support for a “Yes” vote in the Indigenous Voice Referendum. To have a real impact on social issues, brands must do more than just correctly read the current zeitgeist.

Qantas is a long-standing supporter of Indigenous reconciliation. Qantas placed the “Recognise logo” on its aircraft in 2014 and pledged its support to the Uluru Statement in 2019. Qantas should have anticipated the skepticism when they joined the “Yes!” campaign.

This year, the airline made headlines for its record profits and refusal to repay the government bailout it received during the pandemic. The allegations of poor customer service and treatment of employees continue. Qantas’s reputation has reached a new low.

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