Political activists increasingly target corporations: the best reaction is to take heed and adapt.
Companies are becoming increasingly aware of the power and impact of activists. Far from being a minor irritation, activist attacks on companies can lose those companies customers, damage brand reputation, and cause stock-market values to fall. In the worst-case scenario, activist attacks can compromise the personal safety of directors and employees.
Activist techniques have become increasingly sophisticated in recent years as the spread of electronic communications has empowered smaller more radical activist groups. Networks of activists are becoming increasingly powerful as electronic communications spread. They can communicate more easily, act quickly and successfully, often across countries and even continents. Companies can find their websites bombarded with emails, phones barraged with calls and ecommerce systems hijacked. Older, established groups are still important, but businesses are more aware of how to deal with them.
The company itself may not end up the only target; activists now also look at the whole support network of a company as potential points of leverage. A company’s insurers, bankers, shareholders, supporters, customers, employees, suppliers, landlords and consultants can all find themselves under attack. Huntingdon Life Sciences (HLS) and its network, for example, have been subject to wide ranging attacks from the Stop Huntingdon Animal Cruelty (SHAC) campaign.
Activists have also begun to comprehend the power at the disposal of shareholders, increasingly bringing shareholder activism to the fore as a weapon. The TUC has launched a campaign to increase shareholder activism by pension funds, and the Association of British Insurers (ABI) has suggested that its members should play an active role in company resolutions. Accordingly, a survey by consultancy Watson Wyatt reveals that one in two chairman of FTSE 350 companies says that shareholder activism had made them look again at their remuneration packages.
As well as electronic methods of campaigning, many large activist organizations have memberships that they can use to write letters, boycott products and so on. Nestlé backed down on its decision to call in a £3.7 million (€5.4 million) debt from Ethiopia following such mass protest. The use of people power through demonstrations and occupations can cause maximum disruption to companies. But activist groups can often exert pressure on governments to take action against companies as well; for example, by increasing regulatory requirements. Activists can use lobbying, media relations, marketing and advertisements just as effectively as companies can.
Activists can also use the law to attack companies. This tactic is more “advanced” in the US where “class action” cases are frequently employed. Greenpeace in the UK has used the law to complain about loans made to British Energy, for example. Activists understand their legal requirements and are often careful to work within, as well as outside, the law.
The response:
Facing such challenges means that companies should look to protect themselves. Firstly, they should identify their risks and possible sources of attack and move to counter them. It is important, however, that companies not only prepare themselves fully for potential attacks, building systems that minimize potential exposure, but are also able to deal with the wider and more complex results of an attack. Companies need to consider ways of fighting back against the activists.
The stakeholders of a business are its most important allies and should be engaged in a permanent campaigning role, defending the company and telling the community about what it does and how important it is. This involves the positive promotion of the company’s activities, and for many, this will be a novel approach. Just because a company knows its value and contribution does not mean that others do and their support should not be taken for granted.
It is crucial that companies seek to tackle opponents on the basis of their understanding, aims and values, seeking to divide them where possible.
Much of the above has to do with companies coming to terms with the 24-hour media. Many have very effective media operations but many do not, and unless there is a clear understanding of this environment, any action taken will be undermined, especially as activists know how to use the media. Obviously, the circumstances are important but a business should be ready to come clean quickly if they are found to [be] acting “improperly”, for instance.
The law can also be used to great effect in defending a business. The High Court has recently permitted temporary exclusion orders to protect the UK branches of several Japanese companies that are customers of HLS. Companies need to continue exerting pressure on the government to tighten up laws further to protect their staff and should also campaign for protection – collective action to attack, collective action to defend.
Activists are way ahead of businesses in many fields and a clear challenge has been laid down. There are political, legal and communications issues to address in dealing with the preparations for and aftermath of activist attacks. Business has to rise to the challenge.
Company and Shareholder, February 2004