Mercantile activism – corporate engagement in traditionally political issues – occurs in cycles, usually around once every century, when the federal government is repeatedly unwilling or incapable of fulfilling some important aspect of its responsibilities. This happened in 1907 when J.P. Morgan developed the Federal Reserve, the nation’s bank. It is happening again because the success of capitalism depends on progress and Congress has become historically dysfunctional. History and frustration have created a cover for CEOs to take stands on controversial issues, now including guns, abortion, and climate change. Don’t expect this to stop anytime soon. While Washington may turn every issue into politics (including the weather), Wall Street currently has the power to turn everything political into business.
We have just passed a critical tipping point – given the emotional urgency of these issues, companies are realizing for the first time that there’s a greater risk to not engaging than engaging. Threats of massive consumer boycotts are not materializing. Dick’s Sporting Goods overall sales are up since they reduced gun sales. The risk is now found in standing still.
I hope you enjoy the read.
Richard Levick
