Companies are increasingly finding themselves liable to attack from pressure groups. If a company is subject to attack then not only could it lose customers, stock market value and experience brand damage but in the worst circumstances the personal safety of directors and employees can be put at risk. Increasingly, activists are looking not only to target the “core” business but also the network of financiers, insurers and suppliers on which the company relies. The focus of activists may not just be on the primary target but also move on to secondary and even tertiary targets and methods of campaigning, all with the same aim in mind. It is important, therefore, that companies not only prepare themselves fully for potential attacks, building systems which minimise potential exposure, but are also able to deal with the wider and more complex results of an attack.
Many companies believe that they are immune from attacks from activist organisations. Whilst the most high-profile attacks are made on companies engaged in what may be deemed to be ‘controversial’ industries – animal testing, tobacco, extraction industries and so on, these are not the only companies that may be at risk. Increasingly, groups can spring up to campaign against companies who provide services and products that they do not consider controversial. Companies may unwittingly become involved and become targets as the activists shift their focus to secondary and tertiary targets. Other increasingly common actions include shareholder activism, which is escalating, causing increasing pressure to be applied to director remuneration and corporate governance procedures. Companies should identify their risks and possible sources of attack and move to counter them.
Companies can face attacks from larger, more respected pressure groups such as Greenpeace, Friends of the Earth and so on but can also be placed under pressure by smaller more extreme, often electronic-based, activist groups. There are a huge variety of ways in which companies may be exposed but these may include:
- Membership – many large organisations have members who can be persuaded to letter write, boycott products and so on.
- Lobbying – many activist groups and pressure groups will use existing political structures to try and exert pressure on government to take action against companies, i.e. by increasing regulatory or environmental sustainability requirements etc.
- Shareholders – shareholder activism has placed pressure internally within a company as shareholders vote down motions at AGMs, and also introduce their own, often controversial, motions.
- Legal action – many pressure groups are using legal recourse to attack companies, i.e. Greenpeace recently launched a High Court case against the loans made to British Energy. This is especially the case in the United States where there has been an even greater reliance on such ‘class actions’.
- Electronic communications – the spread of email and the internet has meant that the power of the activist is often in their homes. Companies can find their websites bombarded with emails, phones can be barraged with calls and networks of activists are becoming increasingly powerful as they communicate more easily, enabling quick and successful action often across countries and even continents.
- People power – demonstrations and activities such as occupations often cause maximum disruption to companies.
- Press/PR – many pressure groups are extremely adept at using press, marketing and advertisements to increase the prominence of their cause and will often use these against companies.
- Violence – increasingly companies have found that direct action has lead to violent attacks.
- Spread the attack – activists are looking not just at the direct target of their attack but also those that supply the companies, and the financial network that surrounds them. Banks, insurers, suppliers etc. can all find themselves under pressure.
Traditionally people found an outlet for their activism through political parties. Many have now lost faith with traditional political institutions and are now looking for new ways to voice their concerns. What is most noticeable about the way in which activists operate is that they are now thinking smarter, quicker and more effectively than many businesses. Business has to learn to catch up with the activists.
In essence there are political, legal and communications issues to address in dealing with the preparations for and aftermath of activist attacks. It is possible to go further in pushing for more and better protection from government and also in considering the possibility of working with other companies in a similar position, to ensure protection. Nobody is immune – just because you think you operate in an ethical manner does not mean that others share that view or believe that the businesses you deal with are spotless.
As A Rule, Spring 2004