Insead's "New Framework for Corporate Activism" suggests a logical decision-making approach accompanied by relatable examples for what is most often a challenging situation - whether company CEOs should speak out on (frequently controversial) political or social issues.
The "Framework for Corporate Political Positions" presents four possible positions companies can consider in response to an issue, as illustrated graphically here:
Determining which stance is appropriate for the company depends on the particular issue raised, as well as the company's values and business operations and associated potential impacts on corporate performance, as follows:
- Forceful - When a political issue affects a company's bottom line and is against stated values, leaders should feel comfortable taking a strong stand. They should be unambiguous in their statements and clearly link the issue to their company’s values and operations.
- Tempered - When an issue relates to the stated core value of a company but has little material impact, or may cause affront to some key stakeholders, it is better to take a more low-key approach. The response should be framed broadly, tempered with stakeholders’ beliefs and expectations, but not so strong that it could harm the material interests of the company.
- Pragmatic - A pragmatic approach is appropriate when a political issue is of material importance to corporate performance but does not relate to the company’s core values. Companies should be clear about how the issue will impact revenues, costs or risks, rather than focusing on ideological or moral reasons.
- Neutral - When a political issue is not linked to a stated corporate value and not likely to affect profits or performance, companies are advised to abstain from taking a position. In such circumstances, the company may acknowledge concerns of its stakeholders but should affirm its non-political stand.
The Framework is a sensible tool companies may consider to ensure that their decision-making about whether and how to take a public stance on a potentially controversial political or social issue is grounded and consistent over time.
See our recent report: "CEO 'Activism': Management & Board Considerations," and additional information & resources on our Risk Management & Oversight page. This post first appeared in the weekly Society Alert!