Research Shows that Corporate Activism May Lead to Alienation of Stakeholders

In light of corporations increasingly engaging in social activism, recent research has discovered that many shareholders, employees, and customers do not agree with their companies’ social and political activities.

The survey, which included 2,500 Australians (1,000 consumers, 1,000 employees, and 500 shareholders), indicated that most stakeholders were not aware of their companies’ social and political activities.

Specifically, 58% of employees, 66% of shareholders, and 44% of consumers did not follow their companies’ advocacy for social causes.

These numbers were even higher for political causes, with 83%, 74%, and 65% reporting a lack of engagement.

Corporate Social Activism Misaligns With Stakeholders

Co-author of the report, Emilie Dye, mentioned that over 60% of employees and 41% of shareholders felt that corporate support for political causes did not align with their personal beliefs.

“Among consumers, 60% say the corporate political advocacy rarely or never aligns with their views,” she added.

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“In fact, 6% of employees say they have left a job because of their employer’s activism.

“The results indicate that far from being a mass movement, driven from the ground up, these activism initiatives are considered peripheral—if not largely ignored—by most shareholders and employees.”

While younger generations increasingly desire businesses to engage in contentious public debates, Ms. Dye stated that two-thirds of Gen Z respondents (born between 1997 and 2012) preferred companies to concentrate on providing excellent service and high returns, and avoid public debates.

The report also highlighted that consumers were twice as likely to abstain from purchasing from a company they disagreed with, compared to those who would support a company they agreed with.

When asked about companies’ engagement in social activism, 24% of respondents believed it was to boost profits, followed by fear of public backlash (22%) and gaining favor with the public and politicians (20%).

“The data shows that while corporate activism may attract a small, vocal minority, it runs the risk of alienating a broader base of stakeholders, including consumers,” Ms. Dye concluded.

Supporting this notion, another co-author, Simon Cowan, mentioned a “critical misalignment” between corporate activism and stakeholder values.

“This report should empower managers who feel pressured to take a stand on controversial social issues, and caution those who have been convinced to do so,” he added.

The CIS report comes at a time when companies in Australia and worldwide are delving into political, environmental, and social issues.

Despite significant donations from top companies to support the movement, it was ultimately rejected by Australian voters.