The Role of Businesses in Social Issues: Staying Focused on Core Competencies
In recent times, there has been an increasing push for companies to engage in social issues, often driven by heightened awareness and advocacy for various causes. While the intent is commendable, I hold a firm stance that unless a company’s core business is to engage in specific social issues, they should refrain from doing so.
When Social Issues and Core Business Align
There are businesses whose primary function is to address social issues. These companies have built their entire existence around creating positive social impacts, and their business models are intricately tied to these causes. Here are three notable examples:
1. Charity: Water
Social Issue: Access to clean and safe drinking water.
Core Business and Impact: Charity: Water is a non-profit organization committed to providing clean and safe drinking water to people in developing countries. Their sole focus is on funding water projects, such as building wells and sanitation facilities, to ensure sustainable access to clean water for communities in need.
2. Warby Parker
Social Issue: Vision care and affordable eyewear.
Core Business and Impact: Warby Parker addresses the issue of access to affordable eyewear. Through their Buy a Pair, Give a Pair program, they distribute a pair of glasses to someone in need for every pair sold. Partnering with non-profits, they ensure that individuals in low-income communities receive necessary vision care.
3. Better World Books
Social Issue: Literacy and education.
Core Business and Impact: Better World Books is an online bookstore that funds literacy and education initiatives globally. By selling and recycling books, they support literacy programs and libraries around the world, aiming to reduce waste and promote reading and education.
These companies are directly engaged in addressing critical social issues as their primary business function. For them, engaging in these social issues is not just a choice but a necessity to fulfill their mission.
The Case for Neutrality in Business
For most other businesses, however, the situation is different. Companies whose core business is not directly tied to a social issue should remain neutral. Engaging in social issues, particularly those not strategically aligned with the company’s goals, can be fraught with risks. This is especially true in today’s polarized environment, where half the population may support a cause while the other half does not.
Take, for example, the off-road and Jeep communities. Several social efforts within these communities focus on promoting responsible and sustainable outdoor activities. Initiatives such as Tread Lightly, Leave No Trace, and BlueRibbon Coalition (BRC)/Sharetrails.org are well-supported. These efforts align closely with the interests of the community and are relatively uncontroversial.
However, for most companies, engaging in social issues can be likened to celebrities voicing their opinions on matters outside their expertise. While someone might enjoy a celebrity’s performance in a movie, it does not mean they seek the same person’s advice on dietary habits or political opinions. Similarly, very few people look to Coca-Cola for voting guidance or Disney for moral direction.
Fiduciary Responsibility and Strategic Focus
As corporate fiduciaries, executives have a responsibility to their shareholders to focus on the company’s strategic goals and avoid unnecessary risks. Engaging in non-strategic social issues is akin to playing Russian roulette with the company’s reputation and stakeholder interests. It is not within the CEO’s or any executive’s mandate to engage in social issues that do not align with the company’s core business.
In conclusion, while there are commendable examples of businesses dedicated to addressing social issues as their primary function, most companies should focus on their core competencies and remain neutral on social issues. By doing so, they can better serve their stakeholders and avoid the pitfalls of engaging in controversial topics that do not align with their strategic goals.
For more insights on business strategies and leadership, visit my blog at JT Pedersen’s Blog.