Almost two weeks ago, something remarkable happened on Wall Street. I’ve been trying to collect my thoughts on the subject before writing about it. But the story starts, actually, back in January 2018 when BlackRock CEO Larry Fink, in his annual letter to CEOs of corporate America, caused a buzz that was the talk of Davos. I wrote about it here. In his letter, Mr. Fink, who represents billions of investor dollars, called for a new definition of the corporation. He stressed that the corporation of the future would no longer resemble today’s corporation that values quarterly profits above all else. He envisioned a corporation that generated profits, yes, but not at the expense of workers, their families or the environment. He called for a corporation that valued long-term thinking and civic engagement even if it meant profits would not be maximized. Then, last week, the Business Roundtable, an association of CEOs, mostly from Wall Street, announced that they, too, are endorsing this new paradigm of corporate responsibility. There is no reason to think that Mr. Fink’s original letter was anything but honest and heartfelt. But what are we to make of this latest news from Wall Street? Authentic or fake news?
There’s an old saying. Maybe Mark Twain said it, “When you’re being run out of town, hold your head high and make it look like you’re leading a parade.” That could be the form of communication that’s going on here. The American people are getting pretty fed up. After decades of trusting in “trickle-down” economics, they’re waking up to the fact it’s been a “siphon-up” economy all along. Income disparity is greater than it’s ever been and still growing worse. Families can’t make it without two incomes and a mountain of debt. The major problems of our day are going unaddressed: healthcare, infrastructure, climate change. Unemployment is low, yes, but everyone is underpaid and we all know people who still can’t find work. In this political year (aren’t they all political years now?) people are seriously entertaining ideas from the left, like Student debt amnesty, Medicare for all, Reparations and the Green New Deal. They’re looking for truly systemic change.
And, into to this frothy environment, the relatively new phenomenon of the purpose-driven brand has made the scene. You may also think of it as cause marketing, social engagement or some other heretofore unknown corporate activity. The Business Roundtable doubtless has noticed the success that progressive brands like Patagonia, Nike, Tom’s Shoes, Body Works, Ben & Jerry’s have had capturing the imaginations and loyalty of the public. They see how businesses that bond with customers over shared social interests have customers for life. They also see how younger generations regard most corporations as pretty much straight-up evil. And how between 50 and 67 percent* of Generations X, Y and Z would never agree to work for a brand they didn’t like.
Wall Street also knows that it has stepped in it repeatedly. Security breaches, money laundering and outright theft of their own customers’ money – these things happen so frequently no one is the least bit surprised anymore.
Perhaps most terrifying to Wall Street CEOs, today, is the power that markets have to influence, persuade, even boycott. Social media, for all its faults, gives the grassroots the power to organize – quickly and effectively. The Street knows that one false move can place them instantly in the crosshairs of an angry, online mob. So, when the Business Roundtable finally understands their exposure, should we believe they’ve had a true epiphany? Or should we think they’re trying to get ahead of the parade before it turns on them?
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Right now, the public seems very, very skeptical about the Business Roundtable’s “conversion”. That’s to be expected, given Wall Street’s well-known history of screwing over widows and orphans in their search for profits. (Anybody remember Enron?) And so far, all they’ve done is talk about their so-called awakening. That talk is cheap hardly needs mentioning. But they really haven’t had much chance to demonstrate their new devotion to civic engagement and corporate responsibility. As mentioned, it’s been less than two weeks. So maybe, just maybe, we should give them some breathing room and take them at their word … for now. Let’s give them a chance to convert their talk into action.
Maybe we’ll see American Express take a hit to their profits by instituting a state-of-the-art consumer data security solution. Maybe we’ll see General Motors save a town and its community by repurposing an old plant. Maybe we’ll see Exxon invest billions to clean up the Louisiana low country. I ain’t holding my breath but maybe. And, if the major corporations do start acting in ways that show a true change of heart, if they’re willing to sacrifice short-term profits in favor of long-term societal benefits, let’s not then punish them for being late to the party.
Sometimes, when a new disciple joins a cause, the disciples who joined last week have an unjustified sense of superiority. The new recruits are made to feel less worthy. That would be a shame in this instance. The more corporations that actually do adopt this long-term way of thinking the better it is for all of us. Let’s not make anyone regret their conversion.
Equally appalling would be if investors caved in to their own greed and started divesting from corporations that are trying to become good citizens. Corporations can’t reform if their investors won’t let them. Let’s reward good corporate behavior by investing in it.
There’s plenty of reason to doubt that Wall Street corporations are as “woke” as they now claim to be. But let’s not force them back to their old ways of doing things. Let’s encourage them, one by one, because some will be more enthusiastic converts than others, to embrace this new attitude of corporate responsibility. Let’s reward open, transparent communication and build a new, sustainable economy that works for everyone.
* Depending on which survey you believe.
Best Branding Reads – Week of September 2
How to Know When It’s Time for Transcreation
An excellent read for any brand manager who’s marketing in multiple countries.
Leveraging The Unifying Power Of Brands
The always-interesting Chris Wren brings us a powerful and inspirational case study.
The Gen Z Opportunity: Brands Must Walk the Talk
You’ve got to give this market a voice in the management of your brand. Scary? Or thrilling?
6 Recession Strategies For B2B Brands
Here’s another tip. Develop and launch a powerful brand strategy BEFORE the recession hits
A subtler S for Sony TV channels
Hard to believe a major corporation like Sony couldn’t find a more exciting solution than this.
Muji’s brand-new pop-up is half store, half design gallery
Again. Retail is not dying. It’s transforming.
How should brands measure success on Instagram if ‘likes’ are no longer relevant?
Brands will have to get serious about creating real relationships with their markets.