Log in

Activist CEO

September 28, 2018 by

A new leadership brand is coming up: the Activist CEO. He or she speaks out or even acts on social issues, ranging from immigration to LGBTQ rights and from climate change to labor laws. CEO activism contributes to the brand and even becomes a factor in customers’ purchasing decisions.

“Our jobs as CEOs include driving what we think is right”, Brian Moynihan, CEO of Bank of America, said in the Wall Street Journal. “It is action on issues beyond business.” Jeff Immelt, CEO of GE, is quoted in Harvard Business Review: “We’re representatives of the people that work with us. And I think we’re cowards if we don’t take a position occasionally on those things that are really consistent with what our mission is and where our people stand.”

Examples are plenty. Many CEOs worldwide co-signed open letters in late 2015 calling on government leaders to create an agreement in Paris that would “meaningfully address the reality of climate change”.  Nearly 100 CEOs co-signed a letter to federal judges in America to overturn President Trump’s executive order banning citizens from seven Muslim-majority countries from entering the US.

Or look at the aftermath of North Carolina’s controversial bathroom bill. The law limited people to the public restroom aligned with their gender at birth. In response to the law, PayPal canceled plans for a new global operations center in Charlotte, which would have created more than 400 skilled jobs. As many other CEOs followed suit, the potential damage mounted, an article in Harvard Business Review explains. Associated Press has estimated that the bathroom law controversy will cost North Carolina more than $3.76 billion in lost business over a dozen years. After a year, the bill was revamped by lawmakers.

But CEO activism is not self-evident. Companies do not have a democratic mandate. Should they have an influence on society beyond their business? CEO activism can be perceived as endangering democracy’s ideal that each citizen should have an equal say in influencing policy outcomes.

Also CEOs should recognize that any statements they make will be associated with their companies. They aren’t free agents who can freely speak their minds.

If they decide to speak out, which issues should they champion? There should be a compelling narrative for why thisissue matters to this CEO of this business at this time, Harvard Business Review says. CEO activists can be effective only if they really understand the issues under debate.