Flagging support: CEOs take risks if they get involved in broader social issues

The sudden announcement of the departure of Woolworths chief executive Brad Banducci has thrown a spotlight on the dangers of chief executives becoming involved in social issues.

While Banducci argued that the timing of his announcement on Wednesday had long been planned and had nothing to do with his disastrous interview this week on Four Corners, or his recent involvement in the controversy over not stocking Australia Day-themed goods, the timing of his announcement means he is exiting bruised by recent events.

While businesses have learned not to align themselves with any political party, given the real possibility of governments changing, high-profile business leaders have seen fit in recent years to become commentators on social issues of the day.

Issues such as same-sex marriage, the Indigenous voice to parliament, the merits of celebrating Australia Day and the war in the Middle East have become areas drawing in some business leaders.

But the pendulum may be swinging the other way, with the risks outweighing the perceived social halo – despite the prevailing corporate speak for having ­“purpose-led” organisations.

As Banducci found out, when his company tried to explain its reasons for not stocking Australia Day goods this year with a statement saying that not all staff supported the celebration of the day, taking a stand on social issues can be a high risk strategy.

The more he tried to explain the situation with full page advertisements and a media blitz, the worse it got, prompting Peter Dutton to call for a boycott of Woolworths stores.

While the same-sex marriage plebiscite was passed with a strong majority, with many business leaders who had supported it comforting themselves that they had been “on the right side of history”, the voice proved much more ­socially divisive issue.

While a majority of ASX top 20 companies publicly supported the voice, including Qantas, Wesfarmers, Coles, mining giants BHP and Rio Tinto, the big four banks and Telstra, in the end it could only garner support from about 40 per cent of voters.

Questions have been asked at shareholder meetings about the decision by company leaders to spend shareholders’ money supporting campaigns like the voice, with several large companies kicking in as much as $2m each.

Woolworths’ Big W was making public announcements in support of the voice during the campaign last year, but scrapped them after feedback from staff and customers.

While corporate support for the voice went down well with the Albanese government, it generated criticism from the opposition, with treasury spokesman Angus Taylor arguing that boards and senior executives should focus on their core business.

He said Australians had “never liked being told what to do by big business and big government”.

Former Qantas CEO Alan Joyce. Picture: Bloomberg

Involvement in social issues risks corporate leadership being seen as using their unique and well paid platform – as well as company money – to take a stand on social issues they feel strongly about.

Qantas was one of the most high-profile supporters of the voice, a move culminating in then-CEO Alan Joyce being photographed last year with Anthony Albanese and Indigenous former AFL star Adam Goodes at the launch of a Qantas jet featuring a logo supporting the Yes campaign.

What was planned as a publicity-winning photo ended up raising questions for Qantas, with the Prime Minister also receiving some heat by being so closely linked with Joyce’s own fading star and perceived hubris.

Corporate leaders have argued in the past that taking a high-profile stand on social issues goes down well with the increasing ranks of more idealistic younger workers. But getting it wrong risks alienating other staff who have different views, as well as customers who may not agree.

Retail shareholders take a mixed view on the leaders of the companies they invest in taking a stand on social issues.

Rachel Waterhouse, chief executive of the Australian Shareholders’ Association, which represents small shareholders, says the ASA has no position on whether it is right or wrong.

“Some shareholders will be of the view that CEOs should make constructive, responsible public comments on matters that affect their organisation and the community,” Waterhouse says.

“They are of the view that CEOs and the companies they lead should provide leadership on social issues.

“Other shareholders are of the view that CEOs are not selected to be a political voice and that it is not their role to make an active contribution to social issues, which should be left to government.

“They are of the view that the role of the CEO is to generate a profit, in conjunction with the executive team and employees generally.

“ASA has no automatic opinion on companies making statements on or being involved in social issues, as the merits of each company’s approach and stance need to be reviewed on a case-by-case basis.

“What is appropriate for one company may not be for another.”

Waterhouse says employees and customers can be attracted to a company if their leadership speaks out on social issues. As economic and social change continues and trust declines in governments to provide solutions to economic and social challenges, pressure and expectation is building in society for companies to address pressing social issues.

“These issues range from protecting the environment to gender and racial inequality to same-sex marriage, among others,” she says.

“Consumers and employees increasingly believe that CEOs who defend people’s rights are demonstrating great leadership.

“Social media intensifies the scrutiny on CEOs and their companies to make statements on or be involved in pressing for change.”

But as the mixed feelings of small shareholders shows, she warns that there are also risks involved.

“Social issues are often sensitive issues, with political ramifications,” she says.

Corporate leaders in Australia enjoy a public profile that is often larger than in companies around the world. Many have enjoyed being seen to be at the forefront of social commentary, and ahead of the more conservative Liberal-National Coalition.

But the risks are high and the lesson of Banducci’s crash out will have many others heeding the lessons about staying in their lane.