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A New Framework for Corporate Activism

Cathay Pacific CEO Rupert Hogg was forced to resign after his airline (30 percent owned by Air China) was accused by Beijing of not doing enough to reign in employees who showed support for Hong Kong’s pro-democracy protests.

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Knowing when – and how – to appropriately speak out on political issues is becoming a core skill for business leaders.

It is not always easy. Given how politically polarised the world has become, taking a stand can have financial implications and put companies in a difficult position alienating customers, employees and other stakeholders who hold the opposing view. This is on top of longstanding questions about the legitimacy of unelected executives’ participation in politics. Sometimes, however, they are dragged into political debate.

Cathay Pacific CEO Rupert Hogg was forced to resign after his airline (30 percent owned by Air China) was accused by Beijing of not doing enough to reign in employees who showed support for Hong Kong’s pro-democracy protests.

The airline’s shares plunged to 10-year lows, rebounding only after it condemned the protests and vowed to follow Chinese aviation regulations.

Delta Airlines in the US faced similar pressure: US$50 million in tax benefits was pulled after the airline eliminated a discount programme for National Rifle Association members following the horrific high school shooting in Parkland, Florida.  (In fact, the decision reflected the airline’s “neutral status in the current national debate…

Bold or cautious – what action should you take?

As the chaos and uncertainty of Brexit continues, the impact on UK business is starting to bite.

Industry’s strategy of abstention and neutrality has materialised into a freeze on spending and hiring, and economists warn of an increasing risk of recession. The government has warned that leaving the European Union without a deal could lead to delays at ports, food price hikes and disruption to medical supplies.

Any deal that might be successfully negotiated with the EU and approved by Parliament is likely to cause significant economic harm to UK industry, not least because it would put the country in a far worse relationship with its largest trading partner.

As public confidence in politicians sinks ever lower, surely it is time for business in the UK to show its hand.

In the UK, most executives still baulk at the idea of entering the political fray, unlike in the US where leaders in all sectors of business actively engage in controversial political and social debates.  In fact, with a shift in workplace demographics, consumers and employees increasingly expect their workplace to show where they stand.

The Edelman Trust Barometer, a poll of 33,000 individuals across 28 markets around the world, showed 64 percent think CEOs should take the lead on change rather than waiting for their government to impose it, and 79 percent want CEOs to be visible in sharing the company’s purpose and vision.

We have seen Marc Benioff use Salesforce’s success as a platform to speak out against North Carolina’s repressive transgender “bathroom law” and against the Indiana government’s “religious freedom legislation” which discriminates against the LGBT community. Walt Disney Co., Netflix, and other corporations have considered possibly exiting Georgia if the state’s “heartbeat” bill goes into effect, while Tim Cook, CEO of Apple, has been vocal on the environment and LGBTQI+ rights.

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INSEAD Knowledge is the expert opinion and management insights portal of INSEAD, The Business School for the World. Knowledge showcases the latest business thinking and views from award-winning faculty and global contributors

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