March 20, 2014 4:31 pm

Activists force companies out of comfort zone amid consumer shift

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Brewers wrapped themselves in the rainbow colours of gay pride instead of the emerald green of Ireland this week, as St Patrick’s day controversies underscored companies’ rising vulnerability to popular protests.

Guinness, Heineken and Samuel Adams all scrapped their sponsorship of parades in New York and Boston under pressure from campaigners who had labelled the parade organisers as homophobes for banning gay and lesbian paraders from identifying themselves.

The corporate climbdowns have a significance beyond the growing support for gay rights in the US. They show how it has become easier than ever for activists to pressure companies into policy changes. This pressure can come from organised groups, such as Greenpeace, a nemesis of the oil industry, or spontaneous critics like those who forced a tax U-turn in the UK at Starbucks.

Traditional methods

Arctic Shell

Greenpeace’s campaign against Shell in the Arctic shows how old-fashioned activist methods remain potent
See below

The change is partly about social media and “clicktivism”. Twitter and Facebook are turbocharging critical messages as never before, and corporate executives are finding it harder than ever to control the terms of public discourse.

But there are also fundamental shifts in what customers, suppliers and the rest of society expect from companies.

Daniel Diermeier, a professor of management at Northwestern University’s Kellogg School of Management, says companies are being dragged into a new world of “private politics” that has two key features.

First, activists, not governments, are leading the push for change. Second, companies cannot isolate themselves from public debate and are now expected to take positions on all manner of issues, even if they are only tangentially related to their businesses.

“The things companies have to worry about are much broader than ever before. We now have higher expectations about what companies are responsible for,” Prof Diermeier says. “In the olden days they would have said: ‘I’m selling beer, I’m not going to get involved in gay rights’. But the expectations that companies get involved in social justice and policy issues are now much higher.”

In the past three years, Facebook has introduced new rules to regulate gun sales, fruit producer Chiquita Brands has stopped using fuel from Canada’s tar sands and Starbucks volunteered to pay more tax than it owes in the UK to defuse allegations of tax dodging.

Old-school politicians, however, have not been cut out entirely. British members of parliament channelled mostly uncoordinated online criticism of Starbucks into sustained pressure on the coffee chain. And this week in the US, 28 attorneys-general urged retailers including Walmart, Walgreens and Rite Aid to remove tobacco products from pharmacy shelves, following an example set by CVS Caremark.

All this leaves companies feeling “rattled”, says Prof Diermeier, who notes that protests can emerge without warning or planning. “They are asking themselves nervously ‘are we ready?’ And the answer is often ‘no’.”

Public relations advisers say companies need to remove the walls between the marketers, who traditionally talk to consumers, and the corporate affairs people who deal with non-governmental organisations, the media and governments, because in the outside world their messages blur into one.

You’re constantly reading the tea leaves. Now the internet is the most colossal form of tea leaf reading ever made available

- Richard Levick, chief executive of a Washington public relations firm

Then companies must be able to monitor how public opinion is changing and identify potential threats. “You’re constantly reading the tea leaves,” says Richard Levick, chief executive of a Washington public relations firm that carries his name. “Now the internet is the most colossal form of tea leaf reading ever made available.”

The head of a New York PR business says companies need to start reacting like political campaigns. Some have noticed the celebrated grassroots organisation of Barack Obama’s presidential campaigns, realising that if they are under attack a band of loyal customers on social media could be an extra line of defence.

Mitch Stewart, a veteran of both Obama races who went on to found 270 Strategies, a campaign consulting firm, says: “We’ve talked to a number of corporate interests who are desperate to build a better relationship with their consumer base.”

But what position should companies take on the issues? “You’re always looking for symbols to be able to buy yourself goodwill with different communities,” says Mr Levick. “This is an easy one for Guinness. Withdrawing sponsorship? What does that mean? I don’t write a cheque. That’s pretty painless.”

It is not, however, riskless. Campaigns about gay rights, guns and religion drag companies into the US’s culture wars, where public opinion is by definition polarised. While gay activists applauded the beer makers this week, the News Corp chairman Rupert Murdoch took to Twitter to urge Irish people to boycott Guinness.

Bill Donohue of the US Catholic League did the same, calling the companies bullies that “have nothing but contempt for the constitutional rights of Irish Catholics”.

The era of digitally-enhanced protests is breathing new life into old phrases such as corporate social responsibility. It came to the fore in the 1980s due to controversies over environmental pollution, child labour and business investments in apartheid-era South Africa, although it was always more company jargon than a populist rallying cry.

Labour and environmental problems have not gone away, but the difference today is that companies have less say over the responsibilities they want to embrace. They are increasingly being chosen by outsiders.

Take Walmart. It has tried hard to promote its use of renewable energy, its work on women’s economic empowerment and its drive to source more products from US factories. But those efforts have been eclipsed by activists who have drawn more attention to allegations that Walmart underpays its US workers and buys clothes from unsafe factories in Bangladesh.

Walmart rejects the charge of stinginess and said it was “neutral” on calls to lift the US minimum wage after Gap raised its own minimum rate. Walmart launched a plan to improve factory safety in response to a deadly fire in Bangladesh, but it spurned a parallel initiative developed by European companies with labour unions and activists.

Its case points to the limits of activism. The closer protests come to challenging the core of a company’s business model, the less likely the company is to change. Walmart’s business is built on low prices and it depends on low costs, which means they are close to non-negotiable.

Demanding that an oil company get out of oil is a similar uphill struggle, says John Sauven, executive director of Greenpeace UK. But whether companies are being assailed on issues at the core of their businesses or the peripheries of their vision, he says they can no longer afford to stay silent.

“If you’ve got no antennae, no values, no mission, then you will be at the mercy of whatever group wants you to do X, Y, Z,” he says. “If you want to be in charge you’ve got to . . . position yourself as a forward-thinking and progressive company, even if that’s difficult.”

Greenpeace tests new water

The fate of the Brent Spar oil platform is a reminder that activism against companies has been around for much longer than Twitter. In the 1990s Shell, the oil company, received British government approval to dump the rig into the North Sea.

But that sparked vigorous opposition from Greenpeace, the environmental group, which in 1995 sent activists to occupy the rig and stoked a public outcry that eventually led Shell to drop its plan.

John Sauven, executive director of Greenpeace UK, was part of that campaign and says it would have developed much faster today. “There would have been tens of millions of people online, on Facebook, Twitter. It would have had far more depth, far more spread … It would have been extraordinary to see that kind of thing play out.”

Arctic Shell

Greenpeace’s more recent attacks on Royal Dutch Shell’s Arctic drilling programme have underlined the changes wrought by digital media. In collaboration with others, Greenpeace launched a widely noticed campaign with a fake press release, a fake website and a series of hoax ads in 2012 that Mr Sauven said were “parodying the nonsense [Shell] were talking” about safe drilling. This year Shell suspended the programme.

Mr Sauven said that social media had speeded up the ways companies responded. “They are much more connected themselves, being able to understand or evaluate what is happening. And they are much swifter. If we launch a campaign now sometimes the company will be on the phone within 24 hours,” he said.

But he stressed that activism was not solely about confrontation. Co-operation with companies is becoming increasingly important, not least because multinationals are concerned about environmental threats to their own future supplies of water, food and other raw materials. “None of us alone can solve a problem,” he said.

“The kind of alliances and partnerships that need to be built are very different from what was happening 20 years ago.”

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