Corporate Activism: A case study of GE's stand on bathroom bills and lessons learned.

Author:Dimitrief, Alex

A political stand on LGBTQ rights by GE five years ago met with acclaim in many quarters but also led to criticism from some legislators and to a contentious proposal at an the company's annual meeting claiming strategic hypocrisy. But the harshest criticism came from employees who disagreed with the company's position and lamented that "political correctness" had run amok at GE.

It's the backstory to the challenges GE's leadership faced after taking on the issue, and one that offers lessons for directors to consider as more and more companies ponder corporate activism.--Eve Tahmincioglu

September's unprecedented letter from 145 CEOs to Congress in support of gun control portends that a growing number of divisive political issues are about to become the business of business. In the same vein, a recent Edelman survey suggests that nearly half of consumers are more likely to make purchases from a company whose CEO has taken a stand against gun violence.

As the Business Roundtable beats its retreat from "shareholder primacy" to "stakeholder governance" and more customers, employees, government officials and investors insist (in increasingly sophisticated social media campaigns) upon alignment on social issues that are important to them, it will become harder for CEOs to choose, as most traditionally have, to stay out of the fray.

At the same time, corporate activism never pleases everyone. When it comes to contentious social issues, taking a stand is bound to displease (and, in many cases, anger) stakeholders on the other side of the issue. I learned this the hard way when I helped to formulate GE's positions on LGBTQ issues in 2015 and 2016. This experience also taught me that when it comes to environmental, social, and governance issues (ESG), companies choosing to pursue the "S" must pick their spots, ensure that the interests of all stakeholders are considered and communicate the company's position appropriately

The Context: A sea change in LGBTQ rights.

I became general counsel of GE in October 2015 in the midst of a sea change in America on LGBTQ rights. Beginning in 2012, federal district courts issued a series of rulings in favor of same-sex marriages that culminated in the Supreme Court's ruling in June 2015, in Obergefell v. Hodges, that the Constitution guarantees same-sex couples the fundamental right to marry. Many credit these cases for turning public opinion in favor of LGBTQ rights more quickly than most proponents believed would be possible.

But the Supreme Court's landmark decision was also met with pockets of resistance in states with conservative legislatures. Arkansas and Indiana had enacted religious freedom laws that allowed services to be denied to LGBTQ people when providing those services conflicted with a provider's religious beliefs; similar legislation was awaiting the signatures of governors in Georgia and Mississippi and pending in nearly 20 other states. In North Carolina, the state legislature overrode an ordinance adopted by Charlotte to allow transgender people to access bathrooms according to gender identity and required that public bathrooms be separated by biological sex; similar "bathroom bills" had been proposed in at least a dozen more states.

At GE, our code of conduct had long prohibited discrimination based on a person's sexual orientation or gender identification. But, in parallel to broader developments in America, the concept of genuinely equal rights for LGBTQ people was taking on new and expanding meanings within GE, for straight as well as LGBTQ employees. I remain grateful to GE's Gay, Lesbian, Bisexual, Transgender and Ally Alliance (GLBTA) for providing heterosexuals like me with what Bruce Bawer has aptly termed "an education of the heart and soul." I also came to realize that GE could not be the best company in the world without attracting, retaining and promoting the best LGBTQ talent in the world.

GE's Approach

For these and many other reasons, I believed that it was important for GE to set a visible standard as the type of company where LGBTQ employees did not have to choose between successful careers and their authenticity. Our CEO had already taken issue with Indiana's religious freedom law, but new bills seemed to be popping up all over the country.

To achieve a going-forward consensus, I proposed to form a task force comprising leaders from government affairs, law & policy, human resources, communications and the GLBTA to navigate the issues raised by the various...

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