The corporate backlash shouldn’t be a surprise. Companies have increasingly played a more active role on social issues.
Indiana and Georgia, two states whose policies have a history of being aggressively pro-business, recently found themselves in trouble with powerful members of that constituency.
No, they had not attempted to raise the minimum wage, repeal their anti-union laws or institute mandatory paid vacation. Their legislatures had adopted (or in Georgia’s case seemed poised to adopt) so-called religious freedom laws.
Facially these laws may have appeared to have a great deal to commend them – perhaps the city of Kennesaw, Georgia, would not have initially refused to allow a local building to be used as a mosque. But by design, timing and legislative history they were written with one purpose: to enable businesses to refuse service to and to discriminate against same sex couples and LGBT individuals (lesbian, gay, bisexual, or transsexual).
As a result, many corporate executives took a stand against such discrimination. Whether they did so because the bills were bad for business, smacked of intolerance or were simply morally wrong, they show how companies can help lead the way on social issues.
The disingenuous protestations of Indiana Governor Mike Pence had as much sincerity as Captain Louis Renault’s amazement at discovering gambling at Rick’s nightclub in Casablanca.
The governor’s claims that he was “shocked, shocked” that the bill would allow discrimination shows him to be either a spineless prevaricator or one of the most ignorant individuals in American government today. Its very purpose was to allow such discrimination; the primary example offered by proponents was to let those religiously opposed to homosexuality avoid providing flowers (or pizza) at a gay wedding.
Other individuals and groups, however, were legitimately shocked by the possible consequences of such bills. These groups extended far beyond the individuals immediately affected and included many of the two states’ biggest corporations and businesses, as well as professional and amateur sports leagues.
These organizations expressed their concern about these bills in ways both public and private. Arguably, their concerns played major roles in the Georgia bill’s defeat and the Indiana law being amended to prohibit its use to discriminate on the “basis of race, color, religion, ancestry, age, national, origin, disability, sex, sexual orientation, gender identity, or United States military service…”
The business lobby
One may ask why would corporations and businesses bother to voice such public opposition to these laws? Additionally, one might wonder how common this is? The answers are obvious once identified and much more common than one may think.
Corporations and businesses always voice their concerns about legislation that could affect them. What many of us do not consider is the breadth of such legislation. We focus on seemingly core issues such as employment and the environment, but we fail to note the major role they play on immigration laws or education.
This results from the fact that much of their advocacy in such areas is not particularly public, reasonably so since such legislation often requires marked technical knowledge of issues which many voters aren’t passionate about, such as the number of H1B and J1 visas issued annually.
The issue of potential discrimination against same-sex couples and LGBT individuals did, however, raise tremendous passions and visibility and, in very real ways, loomed as potential sources of damage to many businesses. As a result, companies brought tremendous pressure to bear on the leading political actors in the two states and produced results.
Why companies weigh in on social issues
The question remains, why? There are three reasons, which, combined in various ways for different businesses, led to their visible opposition to these bills.
The first is the perceived need to avoid guilt by association. Companies such as Coca-Cola that trade in reputation and are clearly identified with a geographic locale, as the beverage maker is with Atlanta, must worry about their reputational risk.
Coca-Cola is particularly susceptible to that, and any potential damage to the brand presents a major threat to the company. Anything divisive or contentious cuts against its fundamental brand message of inclusiveness, joy and peace, and threatens its market share.
Similarly companies such as Indianapolis-based Eli Lilly and Company, while less brand sensitive, is equally concerned about reputation because of its need to recruit the most talented individuals – scientific researchers, executives and salespeople – and have them move to its Indiana headquarters.
Bad publicity surrounding the state’s openness to diversity and difference hinders that ability and seriously compromises Indianapolis’s appeal to those individuals Lilly needs to employ. From the NCAA and Angie’s List to the cities of Seattle and San Francisco, numerous organizations raised major concerns about doing business with Indiana. After the issue burst onto front pages last month, for example, many companies and even Washington State’s government were discussing boycotts of all things Indiana.
When one examines the companies and groups that publicly opposed this legislation, it is obvious that they were ones that are brand sensitive, whether Coca-Cola or the NCAA. Or they are ones that needed to recruit the most talented individuals available, such as Lily Corp or companies in high-tech industries. They knew that this issue would hurt them competitively, whether in terms of market share or hiring.
Globe-trotting corporate executives
Beyond this one must also consider the fact that individuals in charge of such large multi-national and high-tech companies are, and I am reluctant to use this word, more worldly, than the majority of the American population.
By this I do not mean smarter, I mean that by the fact of their education, travel and experiences they have seen more and, as a result, are less bothered and surprised by or judgmental of people and their differences. They focus more on people’s ability to fulfill their task or job and extraneous matters are of less importance.
This change in the US corporate culture is significant and is undoubtedly surprising to those whose understanding of the corporation is still structured by a 1960s model of conformity and uniformity.
This worldliness also demonstrates a marked difference from the majority of the United States’ population. Only 34% of US citizens have a passport and half live within 25 miles of their mothers. Additionally, nearly 60% of Americans still reside in the state in which they were born.
It also suggests the different perspective between Eli Lilly and a company like Hobby Lobby, which led the successful lawsuit against the Affordable Care Act’s contraceptive requirement. The latter, as a closely held family company whose employees do not, on the whole, require relatively scarce technical skills, can feel more comfortable in being perceived as discriminatory than can Eli Lilly. Researchers with the skills to develop new medicines are much scarcer than individuals capable of managing a store.
Also, a company like Hobby Lobby lacks the global reach of Apple, Coca-Cola and Eli Lilly. In the language used above, it is a less worldly company both literally and metaphorically.
Probably nothing demonstrates this better than the response offered by former Coca-Cola CEO J Paul Austin in 1964 after Atlanta’s plan to host a dinner honoring Martin Luther King Jr for winning the Nobel Peace Prize received a tepid response.
It is embarrassing for Coca-Cola to be located in a city that refuses to honor its Nobel Prize winner. We are an international business. The Coca-Cola Co does not need Atlanta. You all need to decide whether Atlanta needs the Coca-Cola Co.
Needless to say, the response soon improved markedly.
Corporations as moral compasses
Finally, as hard as it may be for some to accept, some of these companies may actually be convinced that these positions are morally and socially correct and feel committed to put their corporate weight behind advancing them for that reason.
This is not unheard of. Many companies have had such commitments. Patagonia’s commitments to its employees and the environment are legendary. Costco leads the way among retailers in employee compensation because it is both good in and of itself and equally good for business. Coca-Cola, despite the unbelievable complexity of its reach, supply chain and distribution system, is an acknowledged leader in corporate attention to human rights. The list goes on an on.
This does not suggest that these or any other corporations get everything right or that there are not intense struggles internally about what positions to take and how publicly. While many business decisions can prove detrimental to the environment, to workers and to the public’s health, often corporations take the lead in driving major positive social transformations.
And when they do so, they ought to be recognized and commended.
Photo: AP/Rick Bowmer