How diversity is driving US businesses to get involved in controversies like the Confederate flag

Companies used to leave social policy to the politicians. But recent controversies in the US over same-sex marriage, LGBT rights, and the use of the Confederate Flag have highlighted a new trend of corporate activism. The need for diversity is driving the change.

Should the Confederate flag be removed from public view? Not a question you might expect to have bothered businesses. But times are changing and with them the attitudes of the wider public and the decisions made in company boardrooms.

US public opinion on the issue of the Confederate flag has taken a dramatic turn since news of a racially motivated attack in South Carolina, where nine church-goers were killed. The man accused of the murders was pictured posing with the flag on several occasions.

According to research carried out in 2013 by YouGov, tolerance for the Civil war-era flag was high in 2013, with only 38% of Americans voicing outright disapproval of seeing it displayed in public. Since the shooting, a census by Public Policy Polling shows there has been a strong reversal in public sentiment, with 64% of respondents now objecting to the sight of the flag flying on public buildings.

Major retailers, who have stocked Confederate merchandise for decades, have been notably swift and vocal in their response. Amazon, Wal-Mart, Sears/Kmart, eBay, Etsy and Google Shopping have all banned sales of products that bear images of the Confederate insignia.

“We have decided to prohibit Confederate flags and many items containing this image because we believe it has become a contemporary symbol of divisiveness and racism,” eBay said in a statement.

These developments come against the backdrop of other major companies taking stands on issues of political and social justice.

In April, Wal-Mart Chief Executive Doug McMillon emerged as an unexpected advocate of gay rights, after he helped derail a much-criticized “religious freedom” bill in Arkansas. A month earlier, Mark Benioff, Salesforce CEO, launched a campaign against Indiana’s proposed Religious Freedom Restoration Act that would have permitted businesses to discriminate against LGBT people. And the US Supreme Court was urged to abolish laws banning same-sex marriage by an intimidating alliance of 28 of the country’s largest financial companies, among them Goldman Sachs and Thomson Reuters.

This corporate shift towards values of tolerance is in part a reflection of how customers’ attitudes are changing and businesses’ attempts to stay with them. Evidence is also mounting that diversity is good for the bottom line.

A study of top US firms found that having women leaders in innovative companies boosts growth, while Credit Suisse research showed that companies with at least one female board member outperformed those with none by 26% over six years. Meanwhile, experiments have shown that ethnically diverse groups of financial market traders are more accurate than ethnically similar ones, and diverse teams boost the quality of academic research.

The dividends from a less homogenous workforce are leading a growing number of CEOs to conclude that diversity and corporate activism are two sides of the same coin.

Authors: Anna Bruce-Lockhart is a Digital Editor and Mark Jones Commissioning Editor with the World Economic Forum

Image: People with LED lights form a giant pink dot at the Speakers’ Corner in Hong Lim Park, Singapore to promote acceptance of the LGBT community.   REUTERS/Tim Chong