Three Ways to Manage Consumer & Shareholder Activism: Lessons from ExxonMobil
Prior to ExxonMobil’s annual shareholder meeting, stockholders are making a push for the company to consider climate change as a more integral part in business strategy.
These sentiments reflect a growing movement — fueled by pension fund managers, institutional investors and individuals — to pressure oil companies to be more transparent about how climate change and related policies may influence business operations.
In today’s digitally connected world, it is nearly impossible for corporations to conceal information about environmental and social issues. It follows that transparency and accountability are paramount to maintaining a positive public image as well as keeping shareholders happy.
ExxonMobil is an interesting case study not only because it’s the world’s biggest oil company and the poster child of the fossil fuel industry, but also because it has been subject to numerous protests and scrutiny from the public and shareholders. What’s more, the corporation went from funding climate denialism to encouraging president Trump to abide by the Paris Climate Agreement, and will discuss the possibility of a climate risk assessment of business operations this Wednesday. Ultimately, the oil and gas giant’s unique history provides insights into managing shareholder and consumer activism.
Here are 3 ways to manage consumer and shareholder activism:
1. Publically disseminate company policy: communicating a clear stance on social and environmental issues is critical to maintaining the image of transparency and accountability to the public as well as current and potential investors.
Exxon and other oil and gas companies often argue that climate risk is already penciled into financial valuations; however, many have not openly disclosed these risks and Exxon shareholders rejected a 2016 resolution to publish a report specifying climate considerations. Although there has yet to be a resolution, growing shareholder concern is inspiring discussions about disclosure and transparency.
A trendsetter in the petroleum industry that released a climate risk assessment in 2015, is BHP Billiton. The extraction company received positive press coverage and provided investors with information they were looking for.
While it is ultimately up to stockholders, companies that share pertinent information on how their business fits into larger global conversations mitigate the risk of negative PR, establish a position as forward thinking leaders and can increase investor trust and confidence.
2. Ensure employee satisfaction and understanding of brand ethos: Just as having a clear stance for investors and the media is vital to brand reputation, it is also important that employees are treated fairly and can succinctly articulate a company’s vision and policy.
To set the groundwork for company-wide practices, ExxonMobil distributes a Standards of Business Conduct report, which outlines the brand’s expectations for employees, managers and executives, and provides a playbook for how to speak about the company. While a report is a great way to set protocol, inspiring your internal community with workshops, trainings and engagement opportunities can strengthen employee understanding of brand ethos and purpose.
Improving internal awareness of and participation in corporate purpose can have a myriad of benefits for your business — such as increased productivity, reduced turnover rate, and improved morale — all of which enhance overall company performance and can attract investor interest. What’s more, practicing socially responsible business and increasing employee advocacy can reduce the risk of internal protest, which can also influence investor decision making.
3. Join global movements: Cultural conversations that touch upon issues bigger than your brand or industry in isolation are excellent ways to establish new partnerships, gain earned media and demonstrate leadership.
The Paris Climate Agreement is the first international pact in which nearly every country around the world has ratified the accord. Although ExxonMobil is alone responsible for more than a cumulative 3 percent of global emissions and for years ardently denied the causal relationship between burning fossil fuels and climate change, the company recently acknowledged the need for mitigation and supports the Paris Climate Agreement.
By supporting a global movement, which will advance with or without its approval, Exxon is hedging its bet against getting left out of the conversation and without the ability to influence policies that affect its business.
Essentially, joining global movements and being recognized as a key member and influencer can help you carve out a competitive advantage, not only in terms of public image and B2B relationships, but also in regards to investor relations.
Financial institutions now consider a myriad of metrics that assess the social and environmental impact of corporate securities as well as traditional P & L statements. Additionally, the spotlight on corporate behavior is magnified by widespread use of social media and the internet. In turn, both individual and institutional investors consider how companies incorporate purpose into business strategy. Therefore, it is critical to manage consumer and shareholder activism by addressing issues as they arise, properly disseminating information, and joining cultural conversations.
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