By Stephen A. miles, David F. Larcker, and Brian Tayan
In recent years, we have seen a growing trend of stakeholder issues becoming prominent in discussions of corporate governance. This phenomenon is broadly known as ESG (environmental, social, and governance) and is characterized by pressure on companies to increase the attention they pay to and the investment they make in initiatives to advance the interests of all stakeholders—not just shareholders—including employees, suppliers, customers, and society.1
One source of this pressure comes from an unexpected constituent: the company’s own employee base. To a greater extent than in the past, workers are pressuring employers to take policy stances and advocate on behalf of social, environmental, or political issues not necessarily directly related to the company’s core business.2 The issues involved are extremely broad and include environmental sustainability; reducing waste, pollution, or carbon emissions; workplace equality; diversity and inclusion; human rights violations; immigration policy; government defense contracting; gun control; free speech; and protesting statements of policymakers or politicians. Employee activism is related in spirit to unionization efforts—the crucial difference being that unionization efforts focus on improved working conditions for employees (through wage increases, benefits, safety, etc.) while activism encourages broader social and political activity which may or may not benefit an individual employee.