The outcry last year over Indiana’s Religious Freedom Restoration Act (RFRA), and the law's potential use by employers to discriminate against lesbian, gay, bisexual, and transgender (LGBT) workers, was hardly the first time businesses have found themselves drawn into cultural and ethical debates. But it was a recent example of the ways corporate responsibility is evolving and gaining in importance for large and small companies alike. For businesses that commit to acting in a socially responsible way, wading into these fights can be far more of an opportunity than a liability.
Until recently, Gap and Levi Strauss & Co. have taken quite different paths when it comes to social issues. Gap has been outspoken on issues such as equal pay, while Levi Strauss has remained on the sidelines.
That changed last year when the two retailers joined with other major companies in denouncing the Indiana law. In a joint statement shortly after its passage, Gap and Levi's railed against the measure as "legalized discrimination," saying that "discriminatory laws are unquestionably bad for business, but more importantly, they are fundamentally wrong."
In American's deeply polarized political climate, stepping directly into a controversy might seem like either a risky business move or a bit of canny opportunism—and perhaps to some extent it was a bit of both. But leaders at both companies clearly determined that the issue was too important for them to stay silent.
They were right. Customers now expect more of brands than they used to. We want not only a great product, we care about how it was produced and what ideas the company that makes it stands for. What's more, this deepening relationship with consumers' beliefs and identities is impacting small businesses, too.
More courageous, and arguably more important, than the move by Gap and Levi Strauss in the wake of the Indiana law's enactment was the outcry by the state's small businesses. Many of them quickly joined a group called Open for Service, through which companies openly stated their support for the LGBT community. The organization soon went international, drawing over 2,000 new members within a few weeks. With stickers in shop windows, a directory of registered businesses, and a fund for future social business ventures, Open for Service showed that small and local businesses could make their voice heard, too.
And for them, that was a much bigger gamble. Companies operating only in Indiana risked losing serious income from customers who supported the RFRA. But it also raised those businesses' profiles for what they deemed to be the right reason—making a gesture of inclusiveness in a divided community. It also ensured support from the Open for Service movement, just as Gap and Levi Strauss’s stance bought them more loyalty from LGBT customers, not just in Indiana but everywhere.
The RFRA remains a controversial issue. Some supporters of the act argue that they are the ones truly acting out of a sense of social responsibility by protecting the exercise of religious freedom. And there's no doubt that the companies that take this position believe just as passionately that they're doing the right thing. But that points up a new dimension to social responsibility in business: the imperative to act on a sense of passionate purpose.
Whatever you believe socially responsible behavior looks like, the expectation is now that that represents what your brand is all about. 87% of consumers in a 2013 survey said they consider a company’s social responsibility to be important. No longer are these social issues things that companies can wade into selectively, tepidly, or not at all.
By stirring up emotions and taking a stand, companies not only invite criticism, they also galvanize support. It gives not just customers but also current and prospective employees more reason to care about your company. It helps define corporate culture and shape your company's identity in a much deeper way than any marketing effort could.
Indifference can kill a business, just as surely as hatred can. But by accepting that you will be criticized in exchange for giving your staff and customers something to care about—beyond jeans and fleeces—you'll be able to add real energy and purpose to the work you do.
Business leaders all have the power to make a difference, whether they're running a huge corporation or starting up a small business. The Indiana RFRA, far from showing the danger of businesses taking a social stance, reminds us that companies of all sizes can have a real impact on society. Amid the political blowback, Indiana Governor Mike Pence rushed to alter the RFRA.
It's been apparent for some time that social responsibility is no longer optional. What's becoming clearer now is that for many companies, the controversies those efforts stir up can actually prove beneficial—not just to business, but to the world at large.