Businesses Must Make a Stand on Important Social Issues
A Note From The Editor
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Money and influence has been a part of politics for as long as we have had politicians. It has largely been a scourge, however, since the vast majority of money comes from a very small number of individuals and organizations with an unequal and unfair balance of wealth, power and influence.
The issue has become more clouded with the rise of Citizens United, a constitutional law that resulted when the U.S. Supreme Court in 2010 "held (in a 5 - 4 decision) that the First Amendment prohibited the government from restricting independent political expenditures by a nonprofit corporation."
In other words, through "non-profit" political action committees (PACs), there is now no limit to the amount of money an individual or corporation can contribute in total to all candidates. This has resulted in a deluge of money into politics led by the wealthiest business owners, such as the politically conservative Charles and David Koch, owners of the multinational conglomerate Koch Industries, who committed to spending over $889 million to 2016 campaigns.
That certainly makes my double-digit dollar contribution seem a little inadequate.
Recently, however, corporations have been taking a larger role in supporting and influencing popular social ideas, namely those involving civil rights. For instance, North Carolina finds itself in an ugly battle with several large corporations who are pulling out of the state due to the recent adoption of a so-called "bathroom law," which would “require that transgender people use the bathroom and locker room matching their birth-certificate gender, rather than the gender they identify with."
As if using public bathrooms wasn't already uncomfortable enough.
Many believe such laws discriminate against the L.G.B.T. community and create a slippery slope toward more legislation that could ultimately violate the rights of L.G.B.T. members.
Since signing the bill into law in North Carolina, over 160 businesses have publicly called for its repeal, including influential corporations such as Apple, Pfizer, Microsoft, Marriott, Bloomberg, Capital One, United Airlines and William Sonoma. Companies taking immediate action include Lionsgate Studio, which is relocating the production of an upcoming television sitcom to another state, Deutsche Bank, which will no longer proceed with the plans to open branches, and PayPal, which has canceled plans to open a company global operations center. Additionally, the NBA has hinted at moving the scheduled 2017 All-Star Game in Charlotte if the law is not repealed.
Some estimate the economic impact of these corporate actions could range from $186 million to $1 billion in total revenue to the state and state businesses.
North Carolina is not the only state to feel the wrath of companies leveraging their influence for social good. In 2015, 36 states had passed or had proposed legislation that promoted "religious freedom" laws, which allow individuals and companies to take certain actions without legal repercussions if said individuals or companies assert that their exercise of religion has been, or is likely to be, substantially burdened otherwise.
One possible outcome of these laws is that a restaurant may refuse service to a homosexual or transgender individual based on the restaurant owner’s religious stance on sexuality. Again, this type of law sets a very dangerous precedence for many other actions by individuals and corporations that could infringe upon the constitutional rights of anyone based solely on one’s religious beliefs.
One of the most notable states affected by corporation action has been Indiana, which in early 2015 passed a Religious Freedom Restoration Act. The legislation resulted in backlash from corporations ranging from Angie’s list to American Airlines and even prompted an open letter response from Apple CEO, Tim Cook. Since passing its legislation, experts have estimated the move has cost Indiana more than $60 million in tourism revenue alone as well as up to 12 conventions. Indiana has since moved to amend its law.
Smart move, Indiana.
In addition to having an impact on laws already on the books, corporations are also having a major influence on similar plans being proposed in other states.
In Georgia, the state's governor promised to veto a proposed Religious Liberty Bill after Disney threatened to stop making movies at its Pinewood studios outside of Atlanta if passed. The move by the studio, which is where Disney had anticipated making a number of its upcoming Marvel Comics films, could potentially cost the state $6 billion.
Citing opposition from large banks Citigroup and Wells Fargo, South Dakota’s governor vetoed a law similar to North Carolina’s "bathroom law", and former Arizona Governor Jan Brewer rejected similar legislation based on the impact it might have on the state’s $20.9 billion tourism sector.
And while some may argue that influence by large, multinational corporations is as much a bane to politics as that of wealthy individuals or PACs, it is important to point out that it has been the action of many, not just a few, corporations and individuals that has had an impact and promoted this change. In fact, small businesses who believe that they cannot have an equal impact need look no further than Missouri, where over 150 small businesses have signed an open letter to state legislators in opposition to legislation similar to Indiana’s.
More importantly, as consumers, and in particular social media-savvy Millennial consumers, continue to realize that they can have influence by taking actions with their wallet (spending), corporations run the risk of disenfranchising their customers because of a lack of action and a clear corporate social responsibility (CSR) policy. Ultimately, taking action -- or inaction -- could influence not only politics but your bottom line as well.
All of this is to say that entrepreneurs can have a positive impact on important social matters that have popular support. With the involvement of a small number of PACs and wealthy individuals, which represent an overwhelming part of money and influence, it has never been more important for entrepreneurs and small businesses to do so.