Corporate Virtue Signaling is Complicated
Recently, many businesses have been getting more involved in politics. Major League Baseball pulling the All-Star game from Atlanta is the latest high profile example in a trend that I’m watching with interest.
When there is an issue on the table that affects an organization’s mission or operations, then of course it makes sense for a company to get involved. But lately, we’re seeing more corporate activism on issues that aren’t central to that company. This is unchartered territory for many corporate leaders.
The most important priority for a business is to protect and grow their investors’ capital. There are many ways for people to support causes through non-profits and other civic organizations. When investors put money into a business, it’s primarily there to grow, not to make a statement.
Of course, there are many worthy causes and our world is far from perfect. But what is the right role for corporations? I believe we’re watching experimentation in action.
The cynic in me wonders if some recent corporate actions are more calculating than they let on. It can offer free publicity, be a tool to attract / retain talent, cozy up to political insiders, etc.
In general, I believe it is very risky when companies have mission-creep beyond being stewards of their investor’s capital. It could very well offer a short term bump, but what about in the longer term?
It’s easy to get overconfident and confuse personal opinions with moral righteousness. When there is a major disagreement, businesses need to be more careful than ever about the stands they take. I will be watching with interest to see how business leaders adapt to changing public demands.
