When Companies Vote with Their Balance Sheets

The trend of consumers voting with their wallets is no longer new. In fact, shared values are increasingly becoming a foundational requirement for people when they make purchases…some studies say as many as half of consumers are values-based buyers. And when we move beyond just purchasing to consider brand loyalty and highly desirable brand advocacy, we know that at least a third of American are CorpSumersTM - people who use shared values as the criteria when they make decisions about purchases, investments, and employment decisions, and serve as advocates encouraging others to do the same. This segment grows every year and is already a bigger segment than Moms or Millennials. 

We know that both CorpSumers and values-driven buyers have long supported brands built with a purpose – Tom’s, Patagonia and even Nike – which may not have been founded with purpose in the Tom’s model but has certainly made their values clear in recent years. But what happens when companies actually vote with their balance sheets – the proverbial wallet of corporate America? Companies are no longer ceding advocacy positions to consumers, employees or NGO’s. And what began with companies taking a stand on policy issues that are aligned with their business interests like immigration, trade or most recently Land O’Lakes advancing farmer advocacy, has evolved to companies advocating around larger issues like Levi’s taking the lead on voting advocacy and participation in the democratic process. All of these companies are doing important work and deserve to be commended. But they aren’t really risking anything. They are leading with their values, but they aren’t voting with their wallets.

This week we’ve seen some examples of companies giving up significant revenue streams in accordance with their values. Dick’s Sporting Goods has reportedly destroyed 5 million semi-automatic weapons, moving past the commitment to stop selling them and eliminating the possibility of guns they had in inventory falling into the wrong hands. And Krogers and Walgreens joined Wal Mart and Rite Aid in their decision to eliminate e-cigarettes from stores amidst the safety concerns related to vaping. These companies are sacrificing significant revenue opportunities due to placing a higher value on public health and safety than profits. And when it comes to the topic of guns, these brands are risking the backlash of a very vocal and active pro-gun consumer base who see any restriction on gun sales as a threat to their liberty and freedom.

Skeptics will say that these decisions are not about values, but rather about risk mitigation. No one wants to be held legally or morally responsible for a school shooting if a gun is purchased in their store; and no one wants to be sued for a clerk that sells a vaping device to a minor with a terrible outcome. And still others will say the biggest, most successful companies do this because they can afford to do it. What’s five million in guns against two billion in sales? People on the other side will say motive doesn’t matter, so long as the “cause wins”; animal welfare groups don’t care if people become vegetarians for health reasons or moral reasons – so long as they stop eating animal protein. 

I choose to view these decisions as a testament to the rising importance of values in corporate decision making. If we go back to CVS’ decision to end tobacco sales in its stores, that decision was rooted in the core belief that they could not truly be a healthcare company if they sold cigarettes. We know that C-Suites are both incentivized and duty-bound to serve the shareholders’ interests first, which makes giving up five million in revenue difficult under any circumstances. But they also know that employees today (and increasingly in the future) expect their employer to share their values and demonstrate those values. And they know that their customers expect the same. It’s pretty hard to serve your shareholders without them.

Companies are voting with balance sheets. Consumers are voting with their wallets. We might just be on to something.