Why do businesses take a stand on political issues?

unnamed.jpg

By Sharaf Khan

The ongoing same sex marriage campaign in Australia has again brought to light the question of the role of business in high-profile social issues. In March this year, more than 30 CEOs from companies including Qantas, ANZ, Commonwealth Bank, Telstra and Holden, signed a letter to Prime Minister Malcolm Turnbull in support of marriage equality[1]. But what prompts businesses to take a public stand on issues that may alienate their customers, staff or other stakeholders?
 
While the personal beliefs of business leaders may influence the specific causes that their organisations are activated on, what makes businesses different to individuals or to society generally, is their ultimate commitment to profitability. Therefore, for a business to make a decision to speak out publically on a political issue, there must be a business case for that action.
 
The first part of this business case relates to the nature of the cause. In recent years, progressive causes like marriage equality and climate change have become far more likely to attract corporate support than conservative issues[2]. Whether this is due to a shift towards progressive values in society or the increased importance of younger demographics is unclear. This has angered many conservative politicians, with Minister for Immigration and Border Protection, Peter Dutton claiming that business leaders should refrain from jamming their “politically correct views down our throat[3]”.
 
What we’ve seen in both the US and Australia, is a stronger push towards public endorsements when issues reach a high level of support amongst the general population[4]. Taking marriage equality as an example, most polling indicates that the majority of Australians are in favour of changing the Marriage Act[5], and this gives businesses confidence that coming out in favour of marriage equality will have a positive impact on their brand. It also enables an organisation to convey to its current and prospective staff that it cares about the same issues that they do.
 
While businesses will obviously want to maximise any benefit they can derive from supporting a particular cause, they also know that their silence can also have a negative impact. Deloitte Australia recently partnered with the Australian Human Rights Commission to publish a report entitled Missing out: The business case for customer diversity[6]. The report found that LGBTI customers were much more likely than the general population to judge a business on their reputation on diversity issues. A quarter of those surveyed in the report said that a business’ position on marriage equality would impact their purchasing decisions. This figured increased to over 40% for young people[7] .
 
While many senior business figures are undoubtedly passionate advocates for the social causes their organisations support, it is important to remember that these decisions are based overwhelmingly on building reputation, social capital and sales. For those in the community who campaign on these politically sensitive issues, the support of big business may be seen as welcome assistance. What we should be cognisant of is letting business dictate too much of what is on any government’s policy agenda. Without the motivation of profit, it is vital that citizens still lead action on social change to ensure that the full spectrum of issues receive attention, rather than just those that fit within the corporate values of large businesses.
 
[1] http://www.australianmarriageequality.org/open-letter-of-support/
[2] https://www.gsb.stanford.edu/insights/when-business-gets-political
[3] http://www.afr.com/business/big-business-backs-marriage-equality-campaign-20170315-guyrn4
[4] https://www.washingtonpost.com/news/wonk/wp/2015/06/26/why-companies-are-speaking-up-about-gay-marriage/?utm_term=.81ef002f2d6b
[5] https://www.theguardian.com/australia-news/2017/sep/19/marriage-equality-support-falls-but-yes-vote-still-leads-guardian-essential-poll
[6] https://www.humanrights.gov.au/sites/default/files/document/publication/20170227_Missingout_Customer%20Diversity.pdf
[7] https://theconversation.com/the-market-for-virtue-why-companies-like-qantas-are-campaigning-for-marriage-equality-82905