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.

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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.

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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.

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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.

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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.

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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?

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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.

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