Why Companies Are Driving Social Change

Hostility from businesses to a controversial new law in Indiana marks a growing trend. Nate Chute/Reuters

After significant backlash both within Indiana and nationally, Indiana-based businesses emerged as the most visible and compelling opponents of the controversial Religious Freedom Restoration Act, signed by Republican Governor Mike Pence in March.

Hundreds of companies, including large employers such as Eli Lily, Levi Strauss and NASCAR, protested the original bill and threatened to take their business elsewhere if the legislation were not rescinded or amended to protect the LGBT community.

This is not the only example of the ability and newfound willingness of companies to drive social change. In recent weeks, Starbucks's bold but flawed "Race Together" campaign, the announcement by Microsoft to enforce paid sick leave for contract workers and the tech community's stand on gay marriage are proof that a major new trend is emerging.

Harvard's Aaron Chatterji and Michael Toffel dubbed the role of corporations in promoting social change as "CEO Activism," but that doesn't quite capture what's happening. This isn't a one-person movement.

Since the passage of civil rights legislation in the 20th century, companies increasingly look more like America. Where companies historically sidestepped controversial political positions in order to avoid offending a segment of their customer base, they now see social change as an imperative to their own values. That ethos has prevailed with rare exception.

In a 1964 message that presaged Indiana, the chairman of Coca-Cola—a company that did nothing to challenge segregated soda fountains in the '40s and '50s—told an Atlanta business audience reluctant to host Martin Luther King Jr., "It is embarrassing for Coca-Cola to be located in a city that refuses to honor its Nobel Prize winner. We are an international business. The Coca-Cola Co. does not need Atlanta. You all need to decide whether Atlanta needs the Coca-Cola Co."

Today, companies like Starbucks are at the vanguard of pushing social change. "Race Together"—an effort to promote conversation about racism in the wake of a spate of police violence involving unarmed black teens and men—was a rare miss for Howard Schultz and Starbucks. Importantly, Schultz uses corporate resources to influence policy and the public dialogue.

Of Race Together, he said: "This is not some marketing or PR exercise. This is to do one thing: use our national footprint and scale for good."

It's easy to be skeptical of companies getting mixed up in politics. But Race Together, and the type of activities taken in Indiana, differ fundamentally from the marketing trend known as "corporate social responsibility," which is often aimed at driving the bottom line rather than taking risks.

But Indiana businesses showed courage. They took sides.

While big companies can command media attention to promote social change, there is a shift happening under the radar as well; specifically, promoting change from within.

Take Hilton Worldwide. Hilton is an essential part of a growing movement to promote veterans' hiring, a great need in our country. Hilton recognized before most that veterans were a natural fit for their corporate structure and their values of integrity, ownership and teamwork. As a result, Hilton Worldwide has made a quiet commitment to hire 10,000 veterans within the next five years and to provide the training and educational opportunities to support their transition.

There is also a huge role for smaller scale, less "brand-name" activism. I run a small technology company that was founded to "do well by doing good." I left my career as a teacher and guidance counselor to fill a void I recognized in the market: There was a need to provide educators with tools that could engage students of all ages emotionally, as well as cognitively.

As Plato said over 2,000 years ago, "All learning has an emotional base." Individuals must be absorbed in a learning experience in order for them to apply the lessons in real life—for the betterment of themselves and society. I have been working to build those tools ever since.

I see the same void now in corporate America. In order for businesses to retain their most valuable employees, they must recognize not only individuals' professional goals but their personal values and ambitions. Greater activism from employers generates greater commitment from employees and customers and an energy gleaned from being part of a higher purpose.

Economic gain may be a by-product, but it's no longer the reason for activism. There is risk to taking a stand. Someone will resist change. But if companies big and small focus on our own employees and on the many issues that need fixing, the potential for businesses to affect meaningful change on issues from national security to civil rights is endless.

Sharon Sloane is CEO of Will Interactive, a company that designs and develops interactive educational tools.