Activism, BLM, Culture, Diversity, Social Media, Top Stories

Will Corporate Social-Justice Initiatives Be More Than Just a Fad?

On June 16th, PepsiCo officials tweeted the details of their newly launched “Journey to Racial Equality”—a multi-part $400 million campaign that includes everything from “mandatory unconscious bias training” to adding “100 black associates to our executive ranks.” Previously, the company marketed itself with sunny slogans such as “Joy of Pepsi,” “The Choice of a New Generation,” and “For Those Who Think Young.” But its modern corporate mission, as announced in 2019, is far more ambitious, and requires Pepsi to “integrat[e] purpose into our business strategy and brands whilst doing more for our planet and people.” And while it’s not clear how selling sugary drinks and salty, high-carb snacks serves any particular purpose (except high profits), the company promises that its recent announcements are “only the beginning. Over the next few years, we will expand our pursuit of racial and social justice in communities around the world.”

Though I’ve studied business ethics for over 20 years, I’ve never seen a social-justice plan quite like Pepsi’s. But given the lavish media attention on offer for corporations that make announcements of this type, I’m sure it’s just the tip of the iceberg. Capitalism is about responding to demands from stakeholders—customers, employees, suppliers, and other constituents who can impact your bottom line. Corporate leaders are now responding to the demand for social change—or at least the appearance of social change. And part of the package that consumers want is the sort of religious zeal that they have come to expect from friends and celebrities on their social media feeds.

The idea of “corporate social responsibility” has been around for decades. But it now has become more central to the self-definition of many businesses. Last summer, the Business Roundtable, a collection of Fortune 500 CEOs, inserted a moralizing tone in its updated statement on the purpose of a corporation—an explicit rejection of the idea that companies should be agnostic about their purpose within society. With signatories like Amazon on board, such declarations are bound to arouse skepticism. But even the fact that large corporations feel the need to pay lip service to social-justice principles is notable. Clearly, we’ve moved away from the so-called “Friedman maxim”—that the social responsibility of business is simply to increase profits.

While we think of corporate social purpose as a progressive concept, it’s notable that many religious conservatives have embraced it, too. The mission statement of the fast-food chain Chick-fil-A, for instance, describes its corporate purpose as being “to glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come into contact with Chick-fil-A.” Adherence to Christian principles has meant not only that Chick-fil-A has taken controversial positions on marriage and LGTBQ issues; but also that its restaurants remain closed on Sunday, a costly move given the eating habits of most fast foodies. One might expect companies to find their bottom lines suffer when they embrace principles that limit their market appeal or invite boycotts. Yet, Chick-fil-A continues to experience impressive growth and success. And among progressive-tilting companies, data described recently in Quillette showed no negative effect.

One important distinction is that Chick-fil-A is a closely held company that has reflected its owners’ religious values from the time of its founding. Pepsi, on the other hand, is the corporate equivalent of a born-again parishioner. And there is a certain manic quality to its announcements, some of which don’t seem as if they were thought through. “Unconscious-bias training,” in particular, is a questionable exercise that has failed consistently in bettering workplaces since the 1960s. (And the science behind it has recently been shown to be flawed.) Pepsi says it wants to more than double its spending on black-owned suppliers, and build out black-owned supplier capability. But if this is simply a zero-sum initiative that requires Pepsi to abandon its historic supplier relationships, while outbidding local companies that had previously been served by minority-owned businesses, it’s not clear how this furthers social justice.

Even putting aside the details of implementation, it’s odd to observe corporate officers become sudden evangelists for a popular cause—especially in the case of a company such as Chevron, which has been accused of polluting and harming black communities. Its executives now publicly share their thoughts on the Black Lives Matter movement as if they had spent their whole careers focused on social justice instead of pumping oil. This includes vague but fashionable word salad about the “learning journey” they’re supposedly taking. “Advocate for the outgroup when you are part of the ingroup,” says Lee Jourdan, the chief diversity officer. “Just like with safety. If you see it, own it. If you hear it, speak it. Advocacy carries with it a dimension of credibility that self-advocacy does not.”

“As I reflect on all that is happening, I take courage today from a few things,” added Executive Vice-President Jay Johnson in the same curated batch of publicly released Chevron quotations on “racial injustice and discrimination”: “Lee’s observation that we are all on a learning journey; that our company encourages us to take that journey together and that so many of you are willing and thoughtful teachers whose examples eloquently challenge us to live by the values in The Chevron Way.” (As demonstrated by a recent Reuters article titled “Chevron diversity ratio to improve as layoffs progress,” many ex-Chevron employees are on the same “learning journey,” too, albeit involuntarily.)

All of this represents something of a revolution in business ethics, which once was focused primarily on context-specific trade-offs in capitalist exchanges—the treatment of workers in poor countries, for example—as opposed to individual executives announcing fealty to distinct formulations about our society and its inequities. In part, this is a result of the modern hyper-focus on branding, as well as the requirement that corporations remain popular (or at least less unpopular) with the young internet mobs who now can crowdsource boycott campaigns. Unlike television commercials and billboards, woke tweets are free. While Pepsi stands out for announcing concrete dollar figures when it comes to helping black workers and suppliers, the vast majority of social-justice-posturing companies offer little except bromides. Where cost-benefit calculations are concerned, the benefits may be questionable, but the costs usually are certainly low.

Notwithstanding the global downturn of 2020, many of the other issues that typically have concerned corporate officers have faded somewhat over the last decade. Specifically, financial capital stopped being a scarce resource, due to a combination of governments printing money, sustained low interest rates, and a deep-pocketed cohort of international billionaires. When cash was scarce, the most important stakeholders were investors and bankers—the gatekeepers to capital. When cash is abundant, the most important stakeholder is the “community” (as it’s defined on any given day) and the high-value employees who, often being products of liberal schools, are most likely to choose employers that publicly embrace progressive values. The largest companies, such as PepsiCo and Chevron, are also the ones that can afford to staff diversity and equity departments with well-paid executives, and spend tens of thousands of dollars so that equity-industry consultants and best-selling authors (Robin DiAngelo being the current favourite) can fly in for one-off lectures about how racist they are.

One brilliant equity-industry innovation has been to frame the debate about diversity around the concept of “compliance”—thus tapping into pre-existing corporate sensitivities in regard to environmental, financial, and workplace regulatory regimes. And the rapid growth and power of this new industry reminds me of the way that credit-rating agencies embedded themselves into our financial backbone leading into the crisis of 2008. By branding themselves as “agencies” (which suggests studied objectivity) and not profit-seeking corporations (the reality), everyone was made to imagine that they were simply there to serve the public good.

During a recent presentation made to faculty by equity administrators at my own university, for instance, we were told that the Canadian Charter of Rights and Freedoms, the Ontario Human Rights Code, and the Ontario Policy on Accessible Education are all so complex that no non-expert could possibly navigate their provisions. The equity question wasn’t one of ethics, you see, but one of compliance. And once experts are brought in to ensure compliance, it becomes difficult to reject their counsel—especially for the decision-makers who brought them in to begin with. Moreover, the message they offer businesses is always presented as urgent. Leading antiracist theorist Ibram X. Kendi, in particular, tells us that “patience” is a dirty word “to those incarcerated by inequity. Patience is a nasty word to those with injustice kneeing down on their neck.” And so a company such as PepsiCo, which spends 10 years rolling out a new kind of Frito Lay potato chip, will announce, in one manic outburst, a dozen new policies that will fundamentally alter its staffing and logistical practices.

Consider the example of Bank of America, which tweeted in the days after Floyd’s death that “the events of the past week have created a sense of true urgency,” one that motivated the company to commit $1 billion to “assisting people and communities of color.” This is a bank, remember, that barely survived the past few economic crises, including a subprime crisis that was rooted, in large part, in loans made to disadvantaged borrowers. But such are the ways of corporations in this new era, when cash is common, and brand is king.

What all this means for the future of capitalism is unclear, since the entire basis of the capitalist system is the expectation that economic actors will act on self-interest (broadly defined to include the long-term benefit of healthy relationships with stakeholders) while the government and civil society tend to needs that can’t be (or aren’t) served by market forces. As noted earlier, modern corporations have generally leavened their profit-seeking activities with at least some regard for business ethics. But it was always taken for granted that these ethical concerns acted in constraint on the principal mission of the corporation—and this mission inspired a unique path for the company to take that would ultimately enrich shareholders. What’s different now is that the current strain of social-justice ideology presents itself as a totalizing creed—which means that it isn’t enough for CEOs to accede to the idea of social justice as a mere boundary check on the company’s profit-seeking activities. Social justice must now appear to be at the center of corporate operations—which creates the absurd paradox of junk-food companies telling the world that what they’re really trying to do is improve humanity.

Ideological trends are unpredictable. Just a few decades ago, remember, American companies were all seeking to align themselves with “family values.” And even today, we’ve seen companies push back against “community” demands for purely symbolic changes to their product lines. (That includes Trader Joe’s refusal to re-brand its products, deferring instead to the established decision-making processes that have served the company well.) So the long-term prognosis on woke capitalism is unclear. But in the short run, the companies that succeed likely will be those that balance short-term messaging against long-term business interests and established corporate practices.

Consider the news that IBM had decided to cease investment in facial-recognition software, a development that became part of the recent BLM news cycle. CEO Arvind Krishna even sent a letter to Congress stating that “IBM firmly opposes and will not condone uses of any technology, including facial recognition technology offered by other vendors, for mass surveillance, racial profiling, violations of basic human rights and freedoms, or any purpose which is not consistent with our values.”

But, as Christopher Padilla, VP of Government and Regulatory Affairs, explained: “It was not like the clouds parted and suddenly we decided not to do facial recognition. IBM has been thinking about this since 2014 when questions around this topic of ethics in AI and government arose from the revelations from Edward Snowden.” And indeed, it turns out that IBM officials had spent years thinking about the issue, and had staked a position that had mass buy-in within the company. Yes, there is an economic opportunity cost to taking such a position, but the process leading to that position was deliberative, and was more in line with traditional business-ethics analysis than the policy-by-tweet practices on display at other companies.

Much of what I say here will be seen as dismissive of social-justice concerns. But there is a difference between social justice itself, and the social-justice postures of corporations (and I don’t just mean when it is cynically applied green/pink-washing). Moreover, I would ask committed social-justice activists if, in formulating policies that advance their cause, they really want to act as fans and apologists for a billionaire corporate class that, freed from the need to husband cash and capital, now preens as an agent of social change. Activists have long been skeptical of corporate propaganda. And the need for such skepticism remains one of the few constants of our age—especially if the motivations of these executives are sincere.

 

David Weitzner is an assistant professor of management at York University. His books include Fifteen Paths: How to Tune Out Noise, Turn On Imagination and Find Wisdom; and, forthcoming from University of Toronto Press, Connected Capitalism. Follow him on Twitter @WeitznerDavid.