RiskMap 2020

The activist society passes judgement | Top 5 Risks | RiskMap 2020

Top 5 Risks

Caspar Leighton

  2   The activist society passes judgement

People have become angrier and more ready to organise around grievances in 2019. In cities from Paris to Santiago, Hong Kong to Beirut, Johannesburg to Delhi, and countless others, we have seen single-issue protests escalate into displays of broader discontent. Not only is  activism on the rise, but it has shown an ability to change tack, scale and impact with often alarming alacrity.

Businesses caught up in this world of upheaval would be right to identify an element of contagion. In the street, in chatrooms and courtrooms, in shareholder meetings and employee forums, the dynamics of activism are changing. Issues broad and narrow find amplification and organisation via social media and other forms of digital communication. Discontent about corruption in Dakar channels similar sentiment in Nairobi, taking heart and trading tactics. New wave activism predominantly rests on the fuel of longstanding grievance, the heat of a trigger event and the oxygen of communications technology.


The purpose of business, the business of purpose

In tandem with the growth of activism there has been a redefining of corporate purpose beyond the rather weary concept of CSR. Business has become a much more influential political, social, and geopolitical actor at the expense of governments. It has acquired new responsibilities and become an appropriate focus of social demands. In August, the Business Roundtable redefined the purpose of a corporation. Shareholders were relegated to fifth place after customers, employees, suppliers and communities. Silvio Dulinsky of the World Economic Forum writes that “In any free society, companies exist to fulfil a concrete need. They make a profit and remunerate the capital of their investors…but make no mistake: the purpose of business is to serve society.” The Edelman Trust Barometer, an annual survey of attitudes towards business, NGOs, government and the media, consistently shows greater public trust in business than in government, and trust entails expectation. Increasingly, corporations are being expected to live and breathe the values of multiple stakeholders and this pressure will grow in 2020.


In reality, grand statements from august institutions around corporate purpose are a tardy response to public sentiment and facts on the ground. This is especially the case with fossil fuel divestment. Pressure from environmental activists on funds to divest from fossil fuels has converged with sentiment from the financial establishment about the long-term viability of fossil fuels. Whether it’s Bank of England Governor Mark Carney warning that businesses without a carbon neutral strategy don’t have a future; the European Investment Bank ending investment in fossil fuel companies; or activist hedge funds turning on companies that don’t meet green criteria, climate change activists are seeing markets move in their direction. Even by the start of 2018, global sustainable investment had reached USD 30.7 trillion in the five major markets according to the Global Sustainable Investment Alliance – a 34% increase in two years.


We’re not gonna take it

Shifts in investment patterns are a useful way to track investor sentiment and, by extension, public sentiment. Many of the requirements of sustainable or ethical investment have filtered up from activist movements. But that doesn’t cover the new wave of activism we are seeing and which is set to grow in 2020. It’s different: dynamic and forceful but often amorphous and sometimes leaderless.

A lot of people have simply had enough. A confluence of circumstances has created combustible ground across the world: a narrowing of opportunities for those coming of age since the global financial crisis; global warming becoming the climate emergency; and, critically, a revolution in communications technology.

The protests in Chile started when the Santiago metro put up fares on 6 October. Within three weeks a million people were out on the streets of the capital. The #MeToo movement took off when US actress Alyssa Milano tweeted, “If all the women who have ever been sexually harassed or assaulted wrote ‘Me too’ as a status, then we give people a sense of the magnitude of the problem.” Tax rises in Lebanon, fuel price hikes in France, the aquittal of Trayvon Martin’s killer in the US: all sparks that have turned existing grievances into activist movements with a hashtag as an organising framework.


Snowflakes and Snowdens

The worlds of business and activism don’t just touch each other at external fault lines. Most activists work somewhere, and employees everywhere are members of the activist society. Fault lines can emerge within an organisation. Millennial and Generation Z employees expect more of their employers than remuneration and a pleasant working environment. The 2019 Deloitte Millennial Survey found that 59% of millennials would look to leave an employer within two years if they didn’t see it having a positive impact on communities, while 63% would look to leave if their employer was falling down on inclusion and diversity.

Many businesses have made decisions around how to engage with certain forms of activism, with varying proportions of concern and business sense. During September’s Global Climate Strike several organisations and businesses shut down their websites and redirected traffic to the Global Climate Strike website. Clothing companies Patagonia and Burton, cosmetics brand Lush, and ice cream producer Ben & Jerry’s all supported the event. Getting behind a day of environmental action in a way that likely has a net positive business impact is something of a no-brainer. It is hard to imagine there was much debate at Patagonia HQ on whether to get behind the Global Climate Strike – it was brand and value consistent. Three thousand technology company employees joined in actions in the US city of Seattle.

But when employees challenge corporate hierarchies, cultures or client engagement because of principles, hard decisions follow. After a demand from employees and several resignations, Google in July 2018 severed a US defence contract to analyse drone footage. Big US tech firms in a race for lucrative Pentagon contracts will henceforth need to convince the Department of Defense that their employees are willing as well as able to do the work. Increasingly, businesses will have to hear and heed the voices of their own activist societies.

Welcome to 2020

Activism isn’t going away. It’s been here all along, but it’s different now. New wave activism has many channels and manifestations. It’s out there and it’s in your organisation. History tells us time and again that the activist goal of today can be the regulation of tomorrow – and the societal norm of the day after.

There is a category of transnational issues no business can ignore. Backed by a coordinated, global activist community, and with a 90%+ prevailing legislative wind behind them, they are: global warming/the climate emergency and broader environmental issues; diversity and inclusion; gender equality; and modern slavery. These already carry legal obligations in many jurisdictions. They carry ethical and moral obligations everywhere. Even if you think something is not an issue in your company, you might be wrong and critically, a client might disagree, and you could lose their business.


Being wrongfooted by the activist society can take many forms. The large-scale protest movements seen across the world recently present multiple challenges to operations. Looking to 2020, preparedness around disruption to transport, employee access, supply chains, and physical threats to assets and people will be tested.

When activism challenges business, explicitly or implicitly, to publicly pick a side for or against a government or powerful interests it is uniquely challenging. Civil society activists in Egypt have begun monitoring what foreign companies do – or don’t – say regarding domestic policies, increasing the reputational risk for those organisations without a sophisticated social outreach programme. But taking a stand can pay off. In February 2018, a gunman killed 17 people at a high school in Parkland, Florida. In response, Dick’s Sporting Goods ended sales of assault-style weapons and phased out guns altogether in almost a fifth of its stores. It took a USD 150m hit in lost sales, but its share price was only modestly affected, and climbed 14% in the year following the change. At the end of November, Dick’s reported its best quarterly sales gains in six years. The gun lobby might be howling, but investors are humming.

The sharp end of activism can bring intimidation, direct action, employee revolts, litigation and disinvestment. Yet businesses that regard the activist society through the prism of threat will never keep up. It is a risk that carries penalties for falling foul of it and rewards for getting it right. The priority for business is to decide what matters most. The shifts in the corporate, investment and activist domains are making this an increasingly complex task.

But critically, most businesses have the structures in place that can be turned to the new challenge.

  • An environmental, social and governance (ESG) programme needs to be a radar for all your interfaces with society, an accommodation of values and purpose; in short, the framework of a sustainable business.
  • Stakeholder mapping is not something to do at market entry and then file; it should be a dynamic process to match a shifting landscape.
  • A compliance programme that focuses only on the law will fail to protect your business in the long term. The most successful compliance programmes take a 360-degree view of risk and are inserted into sales/deal teams to surface risks before they become liabilities. They track political and social trends as the foretellers of new regulation.
  • Political and security risk monitoring is not doing its job if it just looks for threats and ways to mitigate them. It needs to foster engagement and sophisticated understanding of all aspects of a market.


The global risks highlighted in RiskMap 2020 stress the need for strategic approaches to a world that will be subjected to the tactical urges of politicians and protagonists. The same applies the challenge of activism. Remain strategic, don’t get pulled into tactical spats. Some activist causes will come and go, others are the shape of things to come and hold as much opportunity as risk if handled deftly.

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