Most research on corporate activism focuses on its impact on the company: whether it alienates investors, generates brand loyalty or sparks boycotts. There isn’t as much insight into the power a letter has on the issue it addresses.
The most important thing a letter does is publicly commit the individual or company to change, said Malia Lazu, a lecturer at M.I.T. Sloan School of Management and head of the Lazu Group consulting firm. A signed statement of a chief executive’s commitment to an issue, she said, “gives people who want to hold corporations accountable an I.O.U.”
The public commitment is a reason some chief executives shy away from such statements, and some aren’t yet willing to go beyond words.
Several companies that were asked to sign an April statement in support of voting rights requested that the letter omit a sentence that committed them “to oppose any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.” (The organizers, Kenneth Chenault, a former chief executive of American Express, and Kenneth Frazier, the chief executive of Merck, refused to do so, and several of the companies that objected to the line signed the letter anyway.)
Words matter because consumers and potential employees are paying attention to whether companies keep their promises. A year after companies flooded social media with nominal shows of support for Black Lives Matter, many activists have taken note that these promises haven’t resulted in action.
U.S. companies have pledged about $65 billion toward racial equality since last year’s demonstrations, including donations to civil rights groups and investments in training programs for employees of color, according to Creative Investment Research, a consulting firm in Washington. Only $500 million has been spent so far, said William Michael Cunningham, the firm’s founder and chief executive and an adjunct professor at Georgetown University.
In May, Mr. Cunningham submitted a petition to the Securities and Exchange Commission requesting a rule requiring companies to disclose their activity surrounding their Black Lives Matter pledges.