Best of frenemies: how to engage with ESG activists

Be proactive in finding partners before it’s too late

For such companies, the first step to fruitful partnerships is to be proactive to stay ahead of the criticism curve. Many companies seek to work with activists to repair their already damaged reputation after being targeted by activists. It’s just too late. Once a company is branded an enemy of the movement, it is likely to be shunned by activist groups who fear reprisals from their peers.

This happened in 2013, when 70 environmental groups berated the EDF for working with a group of energy companies that support ‘fracking’ shale rock to extract oil and natural gas. The practice is opposed by environmental movements because it uses large amounts of water and chemicals.

To avoid such reputation-damaging public disputes, companies must act pre-emptively and enter into collaborations before activists direct their ire. Additionally, they should select partners who have complementary expertise in areas where the company is lacking. For example, McDonald’s worked with EDF because of the group’s expertise in waste reduction and product life cycle analysis.

Choose recognizable brands to increase credibility

EDF’s high status also made the merger seem less of a “greenwashing” effort. For-profit companies are often met with skepticism when pursuing ESG goals, leading to accusations of hypocrisy. But partnering with prominent nonprofit organizations with expertise in environmental and social issues can help companies overcome these perceptions. The recognizable brand of their partner gives the companies more credibility.

And don’t be afraid to select groups that are openly critical of your industry’s practices – it sends a stronger signal that you’re listening and are more willing to address ESG issues. But be careful: supporters of these more radical groups are less forgiving of cooperation with the private sector. They often refuse corporate donations to preserve their purity.

Build a mutually beneficial relationship

In order to convince her to work with you rather than against you, it is important to offer a symbiotic relationship. Emphasize that you can make significant positive changes in society because of the massive environmental, social and economic footprint of a multinational company. Activists can leverage your company’s market power and visibility, ultimately shaping responsible business practices.

For EDF, McDonald’s spending power offered the prospect of transforming entire product categories and markets, as well as public opinion about its 18 million daily customers. The group was drawn to the idea of ​​setting new standards for fast-food chains that might try to follow McDonald’s in cleaning up their doings.

When it comes to making such a collaboration a success, it is important to improve trust and understanding between both parties by learning from each other, sharing information and being transparent. For activists, this can mean going inside the company and even working on the front lines to get a better feel for the business model. This can help to develop solutions that bring societal benefits but are also economically viable.

Companies are facing increasing pressure from activist groups and stakeholders to do more to address ESG issues. But the problems facing society today are simply too complex for any one institution or sector to solve. What is needed are strong relationships that go beyond philanthropy and involve the commitment of resources by multiple parties to address an issue at a deeper level. Such connections can bring benefits to businesses and society at large.

This content is based on Responsible Research in Business & Management’s award-winning research article, Frenemies: Overcoming Audiences’ Ideological Opposition to Firm-Activist Collaborations , published in the Administrative Science Quarterly.