CEOs who are called upon to respond to pressing social issues on behalf of their companies should view the task not as an obligation but as an opportunity, says Joyce Cacho, chair of Sistema.bio and supervisory board director of World Benchmarking Alliance.
“The opportunity here links to the word ‘alignment,’ and that’s alignment of mission, purpose, vision, company policy, strategy and operations. It’s not about jumping out and having something to say about the hot topic of the moment. It’s imperative to shift from a reactive to a proactive approach linking to your articulated company policy.”
Charles Zimmerman, lead director of Clemens Family Corporation and nominating and governance committee chair of Univest Financial Corporation, says board members must know their organizations, their shareholders and what’s going on in the culture surrounding their company.
“We need to be bringing those issues to the boardroom for a discussion. That’s where the opportunities and threats are going to come to the forefront. We have an obligation to bring that voice. We’re not obligated to speak on every issue, but we are obligated to know what’s going on and make sure that those issues are part of the conversation.” Decisions about whether companies need to respond to an issue in the news cycle should never be taken lightly and should be rooted in the company values, Zimmerman says.
“What’s happening in culture should drive you to examine your core values and see if they are adequate. And just having values on a piece of paper or stuck on a wall somewhere does no one any good. Grow your policy from your values, not in response to what’s happening outside. Then when you are in a conversation, you can say, ‘Here’s how we’re fulfilling our values’ because you’ve thought through it proactively rather than responding secondarily to what’s happening.”
Trust is an essential attribute of the CEO/board relationship at all times, but especially when deciding if it is right to respond to a social issue.
“Trust is built through communication, competence, character and caring. We need to be nurturing relationships, including between the CEO and the board, so trust will grow. If you don’t have that relationship, there’s no issue that can be solved. You need to make sure that the CEO and the board have that ability to communicate and have grown a relationship of trust,” says Zimmerman.
“Social” is of course the “S” in “ESG,” so when talking about social issues, it’s impossible not to think of the ever-present acronym. Many opponents of ESG with respect to business believe that eventually the pendulum will swing back in the direction of CEOs being more focused on ensuring the best financial return for their shareholders than on responding to social issues that are shaping decisions and impacting a wider variety of current and future stakeholders, like employees, customers and the media. Cacho believes that this negative response, or “blowback,” to ESG initiatives is actually a positive.
“It’s a good thing because it is forcing the marrying of ESG to business strategy, and pushing companies into being transparent, being accountable, attaching it to key performance indicators. And the accounting and finance person in me says the less this is about marketing and the more it is about accountability and getting credit for what we do as companies, the better off our companies will be.”
Cacho adds that conversations around social issues are particularly important in family businesses, with younger generations being more driven by social issues and wanting the companies they may inherit to reflect their values.
“The conversation around social issues needs to respect what they are going to inherit, and the fact that they will want to inherit the company because it says something about them that aligns with their view of the world. Their admonition to the previous generations really is something that we need to pay attention to.”
Zimmerman agrees. “We’ve got a conflict in generations that we need to make sure we are engaging and not just ignoring. Some of the older generations say, ‘Well, they’re just kids.’ No, they’re adults, and their opinions need to be heard. And some of those opinions are reflected more accurately in culture today than some of the older opinions.”
And Cacho has a message for companies who choose to sit out the discussion on social issues. That silence can be as deafening as the loudest scream.
“Silence is heard. Fill the silence with your own intentionality. Fill it with your own alignment. Let your silence be part of your strategic plan, as opposed to ‘Oh, we didn’t know. It doesn’t have anything to do with us.’”