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Opinion

Op-Ed: Corporations are finding their politically responsible side

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Salesforce.com chief executive Marc Benioff.
(Karl Mondon / Bay Area News Group)

From the Muslim travel ban to the rollback of transgender rights, President Trump’s policies and rhetoric have put proponents of tolerance and equality on the ropes for two years. But social justice warriors have also discovered a new, rich and powerful ally who can help them in the year ahead: big business.

For decades, corporations mostly limited their political involvement to fighting off regulation, lowering taxes and promoting the free market. When it came to hot-button social issues like gay civil rights, gender identity, gun control and others, CEOs believed that companies should remain neutral to avoid alienating potential customers. No more.

California companies, notably San Francisco-based Salesforce.com, were early leaders in this new corporate political activism. Salesforce.com chief executive Marc Benioff mastered the use of Twitter to campaign publicly against state “religious freedom” bills (which generally allow for discrimination against gays and lesbians) and so-called bathroom bills (trying to dictate which restrooms transgender people have to use) in 2015. He also quietly lobbied his CEO peers to get more political.

CEOs [long] believed that companies should remain neutral to avoid alienating potential customers. No more.
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That activism started to work. In 2016, after Walt Disney Company and AMC Networks threatened to cease film production in Georgia, for instance, the governor vetoed a bill that would have allowed discrimination against same-sex couples. Arizona’s governor vetoed a similar bill that would have allowed businesses to discriminate on the basis of sexual orientation after American Airlines, Delta, Marriott Hotels and other businesses objected. PayPal, Deutsche Bank, Monsanto, MasterCard, Intel and IBM all went on the record opposing state laws targeting LGBTQ people.

So when Trump issued his ban on entry into the U.S. by citizens and refugees from seven Muslim-majority countries in 2017, the momentum was there for corporate activism to move from the state level to the national stage. Apple, Amazon, Uber and other corporations immediately spoke out against the policy. Despite polls showing the ban had significant popular support, Facebook, Microsoft and Google joined more than 175 other companies in calling for the U.S. Supreme Court to strike it down. (The justices upheld a slightly watered-down version of the ban this year.)

Big business has earned its credibility on these issues: 91% of Fortune 500 companies have policies against discrimination on the basis of sexual orientation. (Only 42% of states ban such discrimination.) And many high-profile companies, especially in the technology sector, rely heavily on immigrants and have long advocated for easing restrictions on entry for skilled workers.

No one should be fooled into thinking big business has become suddenly altruistic. CEOs are legally obligated to run corporations in the interest of their shareholders, not the public interest.

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And yet the pressures on business to get political are increasing and coming from numerous sources. Customers demand it; according to a recent study, 81% of Americans agree that “corporations should take action to address important issues facing society.” And 76% agreed that corporations should “stand up for what they believe politically regardless of whether or not it is controversial.”

Surveys also show that millennials strongly prefer employers that reflect their own values. Social media plays a role too: Firms that remain on the sidelines could find themselves the unwanted subject of a viral shame campaign.

Even institutional investors are pushing corporations to be more socially conscious. In January 2018, BlackRock — the world’s largest investment firm, with over $6 trillion in assets under management — issued a letter from Chief Executive Larry Fink encouraging companies to do more than make a profit. “Companies must benefit all of their stakeholders, including shareholders, employees, customers and the communities in which they operate.”

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The speed with which companies can now respond to events was most evident after the Feb. 14 mass shooting at a high school in Parkland, Fla. Within 24 hours some companies began cutting ties to the National Rifle Association. Two weeks later Dick’s Sporting Goods and Walmart announced they would no longer sell guns to people under 21. Dick’s also stopped all sales of military-style rifles. “We’re going to take a stand and step up and tell people our view,” said CEO Edward Stack. “Enough is enough.”

Perhaps it should be no surprise that corporations have become more political in recent years given the Supreme Court’s 2010 decision in Citizens United. By holding that political speech by corporations is at the heart of the 1st Amendment, the justices emboldened corporate executives to use their firms for political advocacy. The result is both worrisome — more corporate money in elections — but also, as the battles over immigration, guns and LGBTQ rights suggest, sometimes welcome.

If, however, corporations are going to continue to play an active role in our political life, perhaps they should be accountable to more than just shareholders. Companies have long paid lip service to this ideal but now, for the first time in years, there are serious proposals to make it part of the very architecture of American corporations. Sen. Elizabeth Warren (D-Mass.) has introduced legislation in Congress that would give workers, and not just shareholders, representation on the boards of directors of large corporations. California recently became the first state to require publicly traded corporations to have women on their boards.

Absent such legal interventions, the marketplace will have to be the engine for corporate political responsibility. And while the marketplace is hardly perfect, it does provide a way for “we the people” — in our roles as customers, employees and investors — to exert some influence over the institutions that govern our lives.

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Adam Winkler is a law professor at UCLA and author of “We the Corporations: How American Businesses Won Their Civil Rights,” a finalist for the 2018 National Book Award.

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