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Picking sides, CEOs hope they’ve chosen the right side of history

Posted at 1:31 PM, Mar 04, 2018
and last updated 2018-03-04 13:31:33-05

America is polarized. And for CEOs, it’s hard to avoid getting caught in the middle.

The gun uproar is just the latest issue forcing companies to choose sides in political and culture wars that companies have typically wanted no part of.

Corporate leaders are being pressured to speak out, feeling the heat from angry customers and idealistic young employees.

When it comes to mass shootings and gun violence, Dick’s Sporting Goods CEO said on CNN’s “New Day,” “We don’t want to be a part of this story any longer.”

But companies don’t have much choice.

Despite trying to get out of the story, Dick’s Sporting Goods became the focus, forcing its rivals to choose a side in the gun debate, too.

Walmart joined Dick’s, raising the age requirement for buying guns to 21 from 18. It also stopped selling toys that look like modern sporting rifles and non-lethal airsoft guns — popular with kids and teenagers.

Kroger and L.L. Bean also raised the age to buy guns. Outdoor sports retailer REI halted orders from with supplier Vista Outdoor when Vista, which sells guns, did not release a statement after the Parkland massacre.

From a credit card issuer, to car rental agencies, to moving companies and airlines, dozens of companies are distancing themselves from the NRA and guns.

Dick’s was rewarded. In the two days after Dick’s raised its minimum age to buy guns, its stock rose while the overall market tanked.

Conscience capitalism can have near-term costs, however.

Delta Air Lines moved to what it called a “neutral position,” ending discounted airfare for NRA members to the NRA annual meeting. That move didn’t sound “neutral” to Georgia lawmakers, led by Republicans, who eliminated a jet fuel tax break that would have saved Delta tens of millions of dollars.

Sure, companies may alienate some customers — or infuriate lawmakers. But there is a bigger prize: a demographic swell of younger Americans beginning what could be lifelong brand affiliations.

Related: Companies learn the hard way – There’s no easy way to take sides in polarized America

Baby Boomers — the largest consumer generation in history — are heading into retirement. By next year, Pew Research says, Millennials will outnumber Baby Boomers. And this big generation of young consumers are more likely to spend money with their conscience. A survey in January from Weber Shandwick found eight in 10 American consumers say it is more important to buy from companies that “do the right thing.”

It’s beyond guns: Look at Papa John’s. The pizza chain inserted itself into the NFL Anthem debate, blaming football players who took a knee for declining NFL viewership and slowing pizza sales. Its stock suffered, and it was replaced by Pizza Hut for the coveted NFL sponsorship. (Papa John’s says the parting was mutual.)

Kids and companies are the new leaders.

Leaders have to pick sides. Sometimes, that could be bad for business. But longer term, CEOs want to be on the right side of history.