An Israeli flag in reflected in a window during in a rally in solidarity with Israel at the synagogue in the Espace du Judaisme in Toulouse, on October 11, 2023.LIONEL BONAVENTURE/AFP/Getty Images
Paul Dunn is a chartered accountant and a professor of business ethics at the Goodman School of Business at Brock University.
Politicians around the world have condemned the recent wave of brutal attacks by Hamas against Israel. So, too, have business leaders. Antonio Neri, the CEO of Hewlett-Packard, called the attacks “unjustified and inexcusable.” Sundar Pichai, Alphabet’s CEO, was “deeply saddened by the terrorist attacks,” and Satya Nadella, the chief executive of Microsoft, said he was “heartbroken by the horrific terrorist attacks on Israel and the escalating conflict.”
Previously, business leaders only expounded on economic matters that affected their companies’ finances. Now they are commenting on social, environmental and political issues.
Such is the way of the modern corporate landscape, and while some might criticize this practice, make no mistake: This trend is a good thing.
These business executives know that business is not divorced from society. Business and society have an interpenetrating relationship in which each influences and is influenced by the other. Businesses are corporate citizens operating within society and, as such, are obligated to comment on social issues.
Mark Carney, a former governor of the Bank Canada, understands the link between a social protest and its effect on Canadian businesses and the economy. In 2022, he warned about the economic harms of the truckers’ blockade and called for a solution to disperse the protesters.
Apple CEO Tim Cook, who came out as gay in 2018, advocates for LGBTQ rights by condemning the rise of discriminatory legislation throughout the United States. Similarly, Marc Benioff, the CEO of Salesforce, not only argues for equality but implements gender equality within his companies.
Recently, Barbara Humpton, the president and CEO of Siemens USA, wrote an open letter to U.S. President Joe Biden with suggestions for government infrastructure initiatives. She identified some key opportunities: digitalizing manufacturing, creating healthier and safer buildings and investing in rail systems, electric vehicles and clean energy. She had pragmatic suggestions to help solve social and environmental problems.
There are of course a few caveats to how far a business leader should go. Their comments and behaviour should be linked to the company’s core values or mission.
Patagonia, the U.S. outdoor clothing retailer, for example, has a long track record of championing U.S. legislation to protect the environment. Patagonia does not complain nor whine. Instead, the company takes a stand by donating 1 per cent of its sales to environmental groups. It even sued then-president Donald Trump when he reduced protections for public lands.
A CEO’s comments should also be constructive. Siemens is a multinational specializing in automation and the digitalization of the manufacturing industry. Ms. Humpton’s suggestions to Mr. Biden are constructive and based on Siemens’s intimate understanding of infrastructure issues. She identified the issues and then made useful suggestions about what the government should do to demonstrate leadership.
As well, the credibility of a CEO’s comments increases if the message is respectful. People can disagree without offending or degrading one another. The executives condemning Hamas – Mr. Neri, Mr. Pichai, Mr. Nadella – are outraged but civil in their condemnation of the attacks.
Finally, authenticity is key. Leaders should eschew opportunistically capitalizing on an issue. In 2017, Pepsi was severely criticized for trivializing the Black Lives Matter movement with an ad featuring model Kendall Jenner handing a Pepsi to a police officer during a protest rally. The company belatedly admitted that the ad missed the mark.
Overall, a CEO should comment on social, environmental and political issues provided the executive is transparent, consistent and demonstrates leadership by addressing issues that are relevant to the company’s mission and values. Research by Anahit Mkrtchyan, Jason Sandvik and Vivi Zhu found that, on average, CEO activism is associated with positive stock market returns. So investors are not opposed to socially engaged leaders.
More importantly, ethics is an essential aspect of business decision-making. In 2022, after Russia invaded Ukraine, more than 90 Canadian business leaders sent an open letter to Prime Minister Justin Trudeau, Deputy Prime Minister Chrystia Freeland and Minister of Foreign Affairs Mélanie Joly endorsing the government’s sanctions against Russia and President Vladimir Putin and calling for even tougher penalties. Many exited Russia at a financial cost. Nevertheless, they urged other businesses to follow suit, knowing full well that taking an ethical stand can be costly to their businesses.
The corporate executives who are condemning Hamas unequivocally are similarly taking a strong stand. They’re aware that not all their stakeholders will agree with their opinions. Nevertheless, as corporate citizens they have an ethical obligation to use their high-profile status to speak out on issues that are relevant to both the company’s mission and values as well as society’s norms and standards.