Corporate Purpose Reigns Supreme
Date: July 25, 2023
The recent Supreme Court decisions have captivated audiences and continue to drive conversations. We have heard comments across the political spectrum, read letters from the State Attorneys General, and spoken with corporate leaders. Fortune collected statements from companies that filed an amicus brief in support of affirmative action last summer.
- “GM remains committed to fostering a culture that embraces diversity, equity, and inclusion (DEI) and will continue our work to cultivate a pipeline of talent that reflects our customers and the communities in which we live and work.”
- “Johnson & Johnson believes a diverse, equitable and inclusive workforce and environment enables the delivery of positive business outcomes and cultivates innovation, which benefits the patients we serve.”
- [Wells Fargo] believe[s] having diverse representation and perspectives, equity, and inclusion across the bank are critical to our ability to serve the evolving needs of our colleagues, customers, and communities.”
At the top of the list for companies is the impact these decisions could have on diversity efforts: hiring practices, talent retention, supply chain, and overall corporate strategy. Leading companies know that whether or not diversity happens is a false choice. Diversity is a fact. And they are compelled by their stakeholders to pay attention to how they show up each day in their business practices—living the values they espouse—and meeting the needs of an ever-more diverse population.
Darren Walker, CEO of the Ford Foundation and a Director at Pepsi, states that some, “equate the benefits of diversity with unfairness… the idea that necessary diversity initiatives are somehow reverse discrimination or that they correlate with lower standards or lesser outcomes. The data suggests exactly the opposite. Study after study demonstrates that, across organizations, diversity enhances critical thinking, creativity and collaboration, as well as productivity, profitability and performance. It is a national tragedy that diversity is now a contested issue rather than a common interest.”
Leading companies increasingly see diversity as an American competitive advantage. The question is how a company should act in an increasingly diverse, and too often divided, world. While there remains room for improvement, the companies we speak with indicate that thoughtful corporate diversity programs add sustainable value to the enterprise—broadening the applicant pool, opening new markets, generating new ideas—and advance critical values of inclusion, engagement, and opportunities for all.
A recent article by Lydia Polgreen in the New York Times that caught our attention amidst the DEI and affirmative action conversations stating that, “For those on the left who take comfort in seeing big companies take bold stands on issues they care about, I’m here to tell you that those companies care much more about their bottom line than your beloved issue.” Of course, there is push and pull. Companies can’t do good work if their business underperforms or shuts down. It must be a virtuous cycle. Leading companies understand customer needs, which shows social issues—including DEI—matter, and business responds in kind. They need a thriving society in which to engage in commerce. And they would be foolish to ignore social trends.
We agree with the “bigger truth”, as the author points out, is that “Corporations, far from dictating cultural mores from some capitalist Mount Olympus, reflect and co-opt the social trends around them.” Yes, companies are very aware of what is going on around them and they don’t seek to dictate one single truth. Leading companies seek to do what is right, guided by their purpose, values, and culture (part of what Milton Friedman called the “rules of the game”)—communicated to them by their stakeholders—including employees, customers, investors, communities—and society at large.
Of course, companies must also respond to the government, including the 13 states attorneys general who made the leap from the Supreme Court decision on affirmative action to that of workplace DEI efforts, as well as the 20 states attorneys general that spoke out in support of corporate DEI programs. We found the comments by Washington University professor Pauline Kim most helpful. He says, “Companies have for years sought to have employee rolls reflect the demographics of a multiracial nation, saying a diverse workplace is good for business. Pew Research found, in a February poll, that 54% of Americans feel their company pays the right amount of attention to diversity initiatives,” with just 15% saying their companies are paying too little attention. Kim added that the Supreme Court’s recent affirmative action case, “does not have direct application to employment.”
Companies realize that individuals are frustrated by government and have turned to corporations—for many, their employers—to advance their interests, and recognize that those interests can often be asymmetrical. This is something that companies balance across their business. A recent Chief Executives for Corporate Purpose (CECP) Pulse Survey found that 58% of companies were full steam ahead on communicating about their ESG, CSR, DEI, and purpose commitments, while 12% indicated they will continue their efforts but with less fanfare.
The lesson here is that diversity is not a thing anyone can prevent. And it’s okay and natural for corporate values to meet corporate value. These practices are a strategic imperative for any company that wants to compete, attract and keep talent, meet key audience needs, and innovate to address the business and societal challenges of tomorrow. Leading companies know this and are not backing down from their important work addressing societal needs because it is good for business.
CECP, of which more than 200 global corporations are affiliated, is a trusted advisor to companies on their corporate purpose journeys. Through our “when and how to speak out” framework, our strategy advice, and benchmarking, we help companies navigate these rough waters, helping them stay true to their values. The answer to all these tough questions is right there for them, embedded in their purpose.