Corporate leaders are speaking out on social issues

Many leaders are finding their voice and influencing dialogue on potentially controversial social, political, and environmental issues, a new survey says.

The results of a July 2021 survey of members of the Society for Corporate Governance show a growing trend toward companies speaking out on a variety of potentially controversial social, political, and environmental issues as a matter of principle or in response to increasing expectations and pressures from stakeholders.

Taking a public stance on controversial and sensitive topics poses both risks and opportunities for organisations to consider, notes the Board Practices Quarterly, a report from Deloitte and the Society based on the survey findings. Public positions could alienate some stakeholders and appeal to others. Corporate culture could be harmed or enhanced. Trust and brand reputation could be bolstered or eroded. Remaining silent on controversial and sensitive topics could pose similar risks.

The survey of primarily corporate secretaries, counsel, and other in-house governance professionals drew 125 responses representing primarily public companies of varying sizes and industries. Nearly half (45%) of all respondents say their CEOs made a public statement on a political, social, environmental, or other public policy matter on behalf of the company over the past year; 14% of respondents say other officers or directors made such statements. Among respondents who indicate their organisations took public stances, the most common topic addressed was racial injustice, followed by social justice and environmental issues.

Where a company decides to speak out on social, political, environmental, or other public policy issues, the CEO is the designated spokesperson for 65% of respondents, while this duty falls to a corporate communications leader for 32% of respondents. One-third indicate the designated spokesperson would depend on the issue being addressed.

Companies may rely on certain documents or policies to govern when or whether a company’s leadership might speak out or engage publicly on controversial or sensitive issues on the company’s behalf. Survey respondents indicate that governing documents include a company-specific framework (31%), a code of ethics (15%), or corporate governance guidelines (15%). For 11% of respondents, the document or policy was board approved. Nearly one-third (30%) say they do not document such decisions, and 12% note their organisation does not document such decisions but is considering doing so.

Management-level oversight of the company’s engagement on these emerging issues can vary by company size and type, the survey findings suggest. For example, among public companies, 70% of large-cap companies and 63% of mid-caps say they have a management-level committee that oversees the company’s engagement on these issues, compared with just 21% of small-cap companies. Among private companies, 44% of respondents say they have such a committee or similar structure for oversight.

More than one-third (37%) of respondents say their boards or board committees have discussed whether and when a company or any of its officers or directors should speak on the company’s behalf on these types of issues over the past year. An additional 8% say the topic is under consideration or on an agenda for an upcoming meeting of the board or a board-level committee.

A plurality (42%) of respondents say their CEO is permitted to speak out or engage publicly without approval of the board; however, most identify one or more boardlevel committees, the full board, or a combination of the full board and one or more committees as having oversight responsibility for such engagement. Some respondents say oversight responsibility falls to the nominating and governance committee (24%) or a sustainability or similarly focused committee (5%), while 20% say the body charged with oversight responsibility depends on the nature of the issue. Most companies document or memorialise board or committee oversight through committee charters (57%) and corporate governance guidelines (42%).

More than half of respondents indicate that, in the past year, their companies’ stakeholders contacted or requested engagement with management, the board or board committees, or individual directors on a political, social, environmental, and/or public policy matter. Almost half (44%) say major shareholders reached out, and 20% say that the contact or request to engage came from customers, employees, business partners, and others. Among those who say stakeholders contacted or sought engagement on an issue, the most common topics related to environmental, social, and governance issues; climate change; and diversity, equity, and inclusion. Some respondents cite lobbying, legislative initiatives, and political contributions as the communication or engagement focus.