25 Sep 2018 19:42 IST

Nike’s high-risk CSR strategy may just not do it

For a company, aligning with social activism may prove to be risky, if not thought out well

Corporate social responsibility (CSR) has captured the imagination of company boardrooms around the world. Financial Times defines it well, as “a business approach that contributes to sustainable development by delivering economic, social and environmental benefits for all stakeholders”.

Traditional capitalists may disagree with the very concept of CSR. Investors pour money into a company for one, and only one, purpose: profits. There are numerous objective measures to evaluate corporate performance such as return on assets or return on equity (RoE). It is a lot easier to compare the RoEs of two companies than how much more socially responsible one is over the other. Subjective measures don’t compute easily.

But as corporations amass wealth and government tax regimes don’t keep up with this breakneck speed of business, there is a compelling argument to be made that governments alone can’t be held responsible for the public good. And it is the corporations that indiscriminately use up Earth’s dwindling natural reserves to make the products and services that we all consume. Many of the largest environmental disasters — Exxon Valdez and BP’s Horizon oil spills, GE’s Hudson river dumping — have been caused by corporations.

Environmental activism by corporations — to nurture our resources and be responsible neighbours — is welcome. But social activism of the kind Nike engaged in two weeks ago, when it launched an ad campaign around football quarterback Colin Kaepernick, is risky and could prove dangerous.

Black Lives Matter

To analyse what Nike did, we need to understand America’s social divisions by race, 50 years after the passage of the Civil Rights Act of 1964. America has come a long way since then. While racism still exists, it is a relatively small problem today as a matter of public policy. Organisations cannot hire, fire or refuse a service on the basis of race. Federal law prohibits discrimination in housing, healthcare and bank lending. Universities openly embrace race as a factor in college admissions, with the express goal of increasing minority enrolment.

We’ve had blacks ascend the pinnacles of government power. Thurgood Marshall became the first black Supreme Court justice shortly after the Act was passed. Colin Powell became the first African-American Secretary of State after a stint as the Chairman of the Joint Chiefs of Staff, the most powerful position in the US military. Condoleezza Rice followed him. She had previously been the National Security Adviser for George W Bush. Barack Obama became the first African-American president. Both of his attorneys general were black.

But out on the streets, it’s a different matter. During President Obama’s term, the number of black people injured and killed by white police officers shot up, no pun intended. Some of these killings were grotesque. In Ferguson, Missouri, an unarmed black male was shot by a white on-duty officer because the latter felt threatened. In Sanford, Florida, an ordinary citizen and “neighbourhood watch coordinator”, George Zimmerman, fatally shot Trayvon Martin, a 17-year-old African-American high school student in “self-defence”. Martin’s offence? Appear “threatening and suspicious”.

While the world quickly passed judgement on these horrific incidents, it failed to look at the peculiar circumstances that define America as a nation. Crime in the US is a federal matter — rules for what constitutes a misdemeanour or a first-degree murder vary across states. Gun laws across states are different too — there are more guns than there are people — and these operate under the Second Amendment of the Constitution, which bluntly says that the right to own a gun cannot be infringed.

The right time to protest

Police officers, soldiers and fire-fighters worldwide are in professions that are diametrically different from every other occupation. These brave men and women wake up every day and head towards danger. The rest of us rarely confront danger, and if we ever come close to it, we run away from it.

On the street, police officers have to make a decision in a split second. Is the suspect armed and dangerous? Could he shoot first? Every state allows police officers enormous discretion and latitude to use lethal force to protect themselves and the lives of others.

Whenever discretion is used, mistakes occur and these have resulted in the unfortunate deaths of numerous black males in the last decade. Colin Kaepernick, an NFL player for the San Francisco 49’ers football team, wanted to shine a light on this issue during a game, when TV cameras were on him. During the national anthem, he knelt instead of saluting the flag. His argument was that he couldn’t respect a flag that doesn’t respect blacks — because, black lives matter.

Ordinarily, Kaepernick has every right to engage in activism for a cause, because it is protected by the First Amendment, which guarantees that free speech cannot be abridged by the government. But he got an important detail wrong. He does not have the protection of free speech from the National Football League, a private, for-profit consortium of wealthy owners promoting a sport for entertainment value.

In addition, Kaepernick does not have the right to protest when at work. In doing so, he upset millions of fans and veterans who respect the flag, and paying customers of the NFL. Attendance at games fell and TV viewership went down. If Kaepernick wanted to make a statement, he could simply walk to the Golden Gate Park in San Francisco and protest on his own time.

Social activism and commerce

If you want to test Kaepernick’s theory, try protesting for your favourite social cause when you’re in the office and on the clock. You will be warned by HR and then, probably fired. This is what happened to Kaepernick. He has not played professional football since 2016, because, after he became a free agent, no team picked him up. Companies don’t want trouble-makers who end up driving revenue down.

Individual, social activism has no place in commerce unless the cause has been picked up by your company as a CSR activity. This is what Nike has done — created a series of powerful TV, print and banner ads that build on the brand’s famous ‘Just Do It’ tagline.

“Believe in something, even if it means sacrificing everything,” says the ad. It refers to how Kaepernick sacrificed his career and income by kneeling. The ad also indirectly takes a hit at hundreds of thousands of police officers who go to work each day without knowing if they will return home. And these officers earn in a lifetime what Kaepernick earned in a single year. “Believe in something, even if it means sacrificing everything” — isn’t this what police officers do every day? So why don’t Nike ads feature police officers and fire-fighters instead of Kaepernick? It clearly cannot have it both ways, so, is Nike questioning the sacrifice of the first responders?

Kaepernick’s split second errors in football could cost his team a goal. But a split second error of a police officer could result in death. What is Nike’s position here?

So far, Nike’s high-risk strategy seems to be paying off, in part because the rest of the ad’s text is fairly non-controversial, and the company’s stock price has risen as strong demand for its shoes continues. But aligning itself so boldly with a player who is synonymous with throwing oil on a fire could be a dangerous move. Time alone will tell if this gambit will work.