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The silence of the lambs

August 05, 2015: Business leaders are among the most powerful people on the planet. At the helm of huge corporations, with billions of dollars of assets to leverage, their decisions have a profound influence on all of us.

At the same time, however, those very same business leaders only very rarely seem to speak out on many of the public issues that actually affect us.

Consider when the former Toronto Mayor Rob Ford was engulfed in a crack-smoking scandal that put the city in the headlines for all the wrong reasons. The response from the city's business elite was a deafening silence.

Nonetheless, the scandal must have prompted considerable anxiety among business leaders about its effect on the business and investment climate of Canada's largest city.

Are CEOs right to hold back in such instances or should we expect them to take a more prominent position in public debates? There are no black and white answers to this; it largely depends on context.

So here are four things to consider when deciding whether the silence of business leaders is a good thing or not:

1. Some social issues face a leadership vacuum that business leaders can help fill
Earlier this year, a group of 43 CEOs of major multinationals signed a open letter urging governments to strike an ambitious climate deal at COP21 in Paris. Likewise, the CEO of the biggest oil sands producer, Suncor, recently called for more stringent climate regulation, including a high price on carbon.

These announcements, unthinkable even a decade ago, give at least some indication of the kind of muscle that business leaders might be able to flex in filling the great big hole in leadership around climate change. Quite simply, such signaling from the business community helps empower political leaders to do their jobs better.

Of course, if these CEOs had spoken out saying that no action on climate change was needed (despite all the evidence to the contrary), as indeed has happened in the past (most notably from successive Exxon-Mobil leaders), we would be bemoaning the addition of their voices into the debate. So it's a double-edged sword, with substantial risks as well as opportunities.

2. Hypocrisy won't work
There is a tendency to criticize business leaders for making pronouncements like these because their actions do not always match their impressive sounding words.

Richard Branson, for example, was branded a hypocrite by Naomi Klein for failing to follow through on his promise to divert US$3bn of Virgin's revenues to developing biofuels and other clean energy projects.

"Greenwashing", as this is known, can be a major problem when companies and their leaders go public with grandiose plans that they either cannot deliver on, or that they actively undermine behind the scenes with lobbying and back room deals.

Business leaders already face a major trust deficit when it comes to their credibility as spokespeople. Survey after survey has confirmed that CEOs and business executives in general are not trusted as a credible source by the public.

So any attempt to hoodwink the public is unlikely to work, not least because most of the public don't believe them in the first place.

3. Aspirational talk isn't all bad
For all the problems of greenwashing, business leaders making aspirational statements about social issues shouldn't automatically be criticized.

For one thing, in the context of challenging, complex problems, it is often imperative that business leaders do go outside their comfort zones and articulate "stretch" goals that they cannot necessarily know if or how they can achieve.

Consider Interface Carpet's mission to reduce their waste to zero by 2020. When they started their 'mission zero' journey in 1994, former CEO Ray Anderson did not have a plan for how this would be realized only that he needed to set a vision that was inspiring enough to galvanize the entire company. Since then, Interface has cut waste to landfill by more than 90 percent and GHG emissions per unit of production are down almost 75 percent.

The company is rightly lauded as a sustainability leader that others should follow. The lesson is that there is scope for business leaders to be aspirational but sooner or later they need to back up their words with sustained action.

4. There is surprisingly little risk attached to CEOs speaking out personally on issues not directly connected to their company. Business leaders rarely take the plunge and speak about public issues not directly tied to their business.

Despite being smart, influential people used to tackling complex problems, they are usually either too busy or too concerned about prompting a backlash to say publicly what they think about such issues.

The silence really is deafening. But according to unpublished research conducted at the Schulich School of Business last year, when CEOs do take the plunge, there is rarely any kind of negative media response.

Looking back over a number of years across a range of issues such as Obamacare, same sex marriage, the fiscal cliff, the Rob Ford scandal and the proposed Quebec secular charter, the mainstream press reaction to the rare instances of individual CEOs speaking out has been largely neutral.

This suggests that corporate leaders may well be overestimating the risks associated with speaking out on public issues, especially those where their own self-interest is less obvious.

The bottom line is that business leaders could probably be part of the conversation on a whole swathe of public issues. But if they are to participate, it has to be in the right way, and that means three main things:

  • transparency about what their company stands to gain or lose with respect to the issue (i.e. is it a matter of self-interest or not?);
  • clarity about what they or their company is doing or planning to do to address the issue (i.e. are they open to a charge of hypocrisy?);
  • a willingness to encourage others, especially those without such power and influence, to also participate - and to engage fairly in the unfolding debate rather than seeking to dominate it.

It's a tall order. But if nothing else, it might help earn back a bit of that trust in business leaders that is so sorely lacking.

- Authors Andrew Crane and Dirk Matten are two business school professors from the Schulich School of Business in Toronto, Canada. Crane is the George R. Gardiner Professor of Business Ethics and Matten is the Hewlett Packard Chair in Corporate Social Responsibility. They are best known for their books and research articles on business ethics and corporate citizenship.

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