The 2016 U.S. presidential election highlighted a deep divisiveness among American consumers. Since then, consumer trust in government has fallen, replaced by a heightened consumer expectation for corporate citizenship. But it isn't only the U.S. Edelman's 2018 Earned Brand Study found that 64 percent of global consumers want CEOs to "take the lead on change rather than waiting for the government to impose it." Similarly, the study determined that 53 percent of consumers believe that corporations are more able to contribute solutions for social issues than the government.
Perhaps more important for business leaders, the Edelman study found that 64 percent of global consumers across all age groups and income levels make belief-based purchase decisions. In other words, they "will choose, switch, avoid, or boycott a brand based on where it stands on the political or social issues they care about." A similar study by growing technology firm Morning Consult found that, in the U.S., 59 percent of Democrats and 55 percent of Republicans consider corporate political stances to be important when purchasing products. Business schools teach future executives that the primary aim of a corporation is to increase shareholder value. If that is true, and 64 percent of consumers buy according to their beliefs, has taking a stand on issues become a CEO's fiduciary duty?
Political ideals as part of a value proposition
Companies can now add their political ideals to the value proposition presented to consumers. Those that don't may lose revenue to those that do. This idea directly contradicts the norms of corporate communication of the 1990s, 2000s, and even the early 2010s. Then, it was common for brands to stay out of debate, send out carefully curated press releases, and hide any executive missteps---especially the political ones. Companies, and executives, weren't supposed to have opinions. The overtly divisive political climate no longer allows brands to dodge the big questions. Brands are being brought into political frays. There are a dozen examples in which the U.S. president has demonstrated that he can direct change in the private sector by sharing his perspective or concerns about corporations on social media. Consumers demand to know what brands, and leaders, think. So, how can you tell them without causing harm to your business?
How to choose when to respond
Brands and their leaders have chosen to voice political opinions in a multitude of ways. Some brands incorporate responses to societal issues into their brand values, believing that their company exists for a purpose and advocating for that purpose in all aspects of brand identity. Some brands choose to make broad comments on important movements in popular culture. Others choose to actively pick a side on a divisive political issue that affects consumers, shareholders, and society at large. In September of 2018, Nike featured Colin Kaepernick as the face of its 30th anniversary "Just Do It" campaign. Kaepernick, a former quarterback for the San Francisco 49ers football team, was the leader of the National Football League player protest against police brutality. Participating players chose to kneel or stay in the locker room during the ceremonial national anthem that kicks off all NFL games. The protests were deeply divisive along racial and political lines. Many Americans, including President Trump, refused to acknowledge the protest as a peaceful demonstration and characterized it as disrespectful to the nation and to the military. On the other hand, many veterans and active duty service members expressed their support for the method of the protest. In response to Nike's campaign, conservative consumers took to social media to demand a boycott of Nike goods. Many of them went so far as to destroy any Nike products they owned, posting pictures and videos of tattered and defaced products. The campaign went viral, earning Nike more than US$43 million in media exposure, US$32.7 million of which was positive. Nike's ethnically diverse consumer base, two-thirds of which is under 25, embraced the advertising campaign. As a result, Nike saw their stock price rise 5 percent in less than one month.
When aligning to social issues backfires
However, brands are not always so successful when commenting on social issues. In 2017, Pepsi released a short commercial featuring model Kendall Jenner. The commercial portrays "protesters" walking down the street holding signs that read: "LOVE" and "join the conversation." Jenner is seen abandoning a photo shoot to join the protest. She then takes a can of Pepsi and hands it to a crowd-control police officer, as a photographer in a hijab photographs the moment. As the officer takes a sip, the protest becomes a party. The societal ills at the heart of the protest seem to disappear as everyone, including the police officers, begin to laugh and dance. Like the Nike Kaepernick ad, the Pepsi commercial went viral. Unfortunately for Pepsi, the consumer response was not favorable. They saw the advertisement as an appropriation of imagery from the Black Lives Matter movement and the civil rights era. Within 24 hours, Pepsi issued an official apology and took down the video.
If only Daddy would have known about the power of #Pepsi. pic.twitter.com/FA6JPrY72V
??? Be A King (@BerniceKing) April 5, 2017
The Pepsi ad failed because Pepsi didn't seem to have a grasp of who their audience is. The video ultimately was dismissed by many as tone deaf and insensitive---especially to people of color for whom these protests are about life-or-death issues.
Making public statements
Taking a stand is not limited to advertising. Business leaders have released public statements addressing political hot topics with varying levels of formality. Facebook CEO Mark Zuckerberg wrote a status update expressing disapproval of the President Trump's travel ban. More formally, 500 business leaders joined together and signed their names to an open letter in support of the Deferred Action for Childhood Arrivals (DACA) policy. On 27 January 2017, President Trump signed Executive Order 13769, which banned people from certain predominantly Muslim countries from entering the U.S. , and was widely referred to as the travel ban. Within days, Mark Parker, who serves as Nike's president, chairman, and CEO, sent a company-wide email explicitly denouncing the executive order, saying: "This is a policy we don't support." With millennials now making up an increasing percentage of the workforce, employers should consider how they interact with this generation of employees, as 44 percent of millennials said they "would feel increased loyalty toward their own CEO, if he or she took a stand on a hotly debated issue." The list of ways corporations have taken a political stance goes beyond written statements. In response to the travel ban, Lyft pledged US$1 million to the ACLU and Airbnb offered in-kind support by providing free housing to those affected. Other companies choose to publicly cut ties with personalities or organizations that represented an opposing stance. Most drastically, companies have taken legal action against the government. From technology companies banding together to file amicus briefs to the U.S. Supreme Court to outdoor retailer Patagonia filing a lawsuit against the U.S. president, it seems like every large corporation is participating in public political debate.