We've detected you are on Internet Explorer. For the best Barrons.com experience, please update to a modern browser.
CHROME SAFARI FIREFOX
We've detected you are on Internet Explorer. For the best Barrons.com experience, please update to a modern browser.GoogleFirefox
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
https://www.barrons.com/articles/when-corporate-america-takes-to-twitter-51591124577
More Companies Are Taking a Stance on the Protests—Even When It Comes with Risks
Carleton English
Photograph by Spencer Platt/Getty Images
Once upon a time, companies were reluctant to wade into debates over social issues for fear of alienating their customers. Today, many feel they must weigh in, although their efforts sometimes fall flat. And while they might not be rewarded for it, they don't seem to be getting punished for it either—even when they miss the mark.
Following the killing of George Floyd last week, publicly traded companies and other popular brands issued statements denouncing racism, and some have even offered support for the Black Lives Matter movement and protesters across the country. Getting their statements right, however, hasn't been easy, and critics on Twitter (ticker: TWTR) were quick to point out any miscues, especially when a company's words didn't match its previous actions toward employees and other stakeholders.
"Together we stand in solidarity with the Black community—our employees, customers, and partners—in the fight against systemic racism and injustice," Amazon (AMZN) tweeted Sunday afternoon.
The response from social media was swift with Twitter users noting that the e-commerce giant recently fired a black employee who requested safer working conditions amid the coronavirus pandemic. Others noted Amazon's partnerships with U.S. police departments to share data from its Ring doorbell cameras, which critics say could create a surveillance network that disproportionately affects persons of color.
Amazon did not respond to requests to comment. Shares climbed 1.2% on Monday and were down 0.6% at 12:53 p.m. Tuesday.
Other companies were chided for offering generic statements denouncing racism but no real action. Anthropologie, owned by Urban Outfitters (URBN), posted a photo of a Maya Angelou quote on Instagram along with the caption, "...Our hearts, with yours, are breaking at current events, and now is the time for change…Our priorities are improvement, respect, and education—now is the time to learn and grow."
Commenters, however, wanted to know what actions the brand was taking to support the black community. Another took issue with Anthropologie not acknowledging the Black Lives Matter movement directly, "#BlackLivesMatter was not included in your caption so I'll put it here."
Reps from Urban Outfitters did not respond to requests to comment. Shares gained 2% Monday and were flat early Tuesday.
"Brands that have taken an educational standpoint are better received than brands putting out a statement with no call to action," said Gabriella Santaniello, president of A Line Partners, a retail research firm.
Nike (NKE), meanwhile, was championed for its minute-long "Don't Do It" ad, which was a play on its popular "Just Do It" slogan. The ad, which made its debut on Friday, urged followers not to ignore racism.
While some called out the sports apparel maker for unfair labor practices, others noted the brand's support for former NFL player Colin Kaepernick, whose kneeling during the national anthem to raise awareness about Black Lives Matter four years ago fielded nationwide controversy.
Speaking to its labor practices, Nike in a statement to Barron's, addressed the measures it takes to promote safe working conditions and combat "risks of forced labor, modern slavery, and human trafficking."
Nike shares are up roughly 20% since signing Kaepernick in 2018, and much of the Kaepernick-related merchandise has quickly sold out.
Wall Street has also weighed in, with BlackRock's (BLK) Larry Fink and JPMorgan Chase's (JPM) Jamie Dimon denouncing racism in memos to staff. Bank of America (BAC) on Tuesday announced it was making a $1 billion, four-year commitment to address the racial and economic inequality made worse by the coronavirus pandemic. Most notably Citigroup's (C) chief financial officer Mark Mason penned a powerful post on the bank's blog.
"Despite the progress the United States has made, Black Americans are too often denied basic privileges that others take for granted. I am not talking about the privileges of wealth, education or job opportunities. I'm talking about fundamental human and civil rights and the dignity and respect that comes with them," Mason wrote, adding that he and his wife have made donations to NAACP Legal Defense and Educational Fund, Advancement Project, and Color of Change.
All four stocks are rising (although that may be more about a steepening yield curve than anything they said).
Taking a stance on social issues isn't exactly new, says Amy Burros, deputy director for the Council of Institutional Investors, who points to some companies' stances on combating gun violence, racism, and President Trump's immigration policies. Some have even provided funding for the issues they care most about.
"Business leaders seem to be stepping up partly out of frustration with the political paralysis or climate in Washington that has created a vacuum on big societal issues—or, worse, contributed to the poisonous climate," Burros said.
And it's probably not all be about the common good either because this kind of marketing could give companies an edge as they vie for talent and loyal customers. "Younger workers and customers increasingly want the companies they work for and do business with to share their values," Burros notes. '[G]iven the competition for the best talent, more companies are eager to show they are diverse and inclusive."
To be sure, Burros notes that there are some risks of alienating employees and customers when CEOs and other company leaders take a stance on a social issue. Nike, for example, was threatened with boycotts when signing Kaepernick, but instead sales rose dramatically. In some cases the risk of backlash for taking a stance may be an instance where the bark is bigger than the bite.
"[It] may make some institutional investors a bit anxious when the CEO speaks up. But I have not heard much grousing or cheering," Burros said.
Which isn't to say taking a stand isn't entirely risk-free. Burros notes that there are some risks of alienating employees and customers when CEOs and other company leaders take a stance on a social issue. Nike, for example, was threatened with boycotts when signing Kaepernick, but instead sales rose dramatically. In some cases, the risk of backlash for taking a stance may be an instance where the bark is bigger than the bite.
"[It] may make some institutional investors a bit anxious when the CEO speaks up," Burros said. "But I have not heard much grousing or cheering."
And maybe that's because intuitional investors have changed with CEOs and company workforces. The move toward taking a stance comes as various stakeholders—employees, customers, and even shareholders—have demonstrated that they want the companies to be more vocal. And many companies have noted that having a diverse workforce is important to them, which makes it natural for them to weigh in on matters of racial justice, the Council of Institutional Investors said.
That's just good business.
Write to Carleton English at carleton.english@dowjones.com
Once upon a time, companies were reluctant to wade into debates over social issues for fear of alienating their customers.
Barron's Archive
Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.