Bank CEOs should take to heart the phrase "no good deed goes unpunished."
I've written about banking for about a decade now, and I honestly believe the vast majority of bank executives want to do good in the world when they can. But in our ever polarized society, what does that even mean anymore?
Take diversity, equity and inclusion, for instance. In the aftermath of the killing of George Floyd in March 2020, American corporations, including many banks, jumped in to pledge millions of dollars to help fight racism and discrimination and sought ways to increase the diversity within their own ranks by hiring or promoting chief diversity officers and recruiting from historically black universities.
Fast forward a few years, and there is now a growing backlash about DEI programs, including critics who claimed that Silicon Valley Bank was too "woke" and that contributed to its demise in March 2023.
And this is just one example — there are numerous others, such as climate change, abortion access, LGBTQ rights, just to name a few — that consumers, lawmakers, advocates and others, on both sides, push for corporations, including financial institutions, to take action regarding. This doesn't even take into account a company's own employees and shareholders who also likely have their own beliefs that they hope that management will support.
So how do executives successfully navigate these thorny issues? Essentially, that question doesn't have a straightforward or easy answer, according to the new book, "Higher Ground: How Business Can Do the Right Thing in a Turbulent World" by Alison Taylor.
Taylor draws on her more than two decades of experience working with businesses in areas such as political and social risk, sustainability, human rights and ethics to take a deep dive into what it means to run an ethical business. (She is also a professor at the Stern School of Business at New York University and the executive director of Ethical Systems, which does research in business ethics.)
"The idea that corporations might step up and do the right thing sounds so appealing. Corporations are powerful actors in society, and their decisions matter profoundly to everyone," Taylor writes.
"But responding to these calls brings unwelcome scrutiny and unexpected turns. So how is any leader to proceed? There's no capsule answer, no magic pill to help you understand what it now takes to establish and maintain a good, trusted business," Taylor continues.
To be sure, Taylor covers a range of topics within "Higher Ground" beyond how executives should weigh what to publicly do and support in terms of environmental and social issues. She also tackles everything from the importance of company culture to developing and ensuring ethical behavior to explaining what real corporate transparency is.
But I personally have always found it interesting when corporations do decide to publicly speak out or take steps to address something that is happening beyond their purview. Doing this obviously runs the risk of upsetting a key stakeholder who holds a different view than what the company says or does.
And CEOs should be aware that it is not only public statements and actions on issues that could draw unflattering scrutiny, Taylor warns. They also must be careful about internal communications or decisions that can be thrust into the spotlight given the ubiquity of social media today.
"Before the mass adoption of digital discourse, the messy innards of corporate life were revealed only in the wake of scandalous revelations," Taylor adds. "Now anyone with an interest can dissect clumsy emails, assess tense town hall meetings, chortle over toxic gossip posted on Slack, and roll their eyes at accounts of drunken groping at charity fundraisers."
She added this warning: "Wise executives now assume that anything they say or do may become public knowledge."
In "Higher Ground," Taylor provides some good, concrete advice that bankers could follow to help assess the risks of addressing a particular social or environmental issue. She recommends that the "first step is to identify all of the environmental and social issues that are directly relevant to your business operations." (The emphasis appears in the original text.)
From there, she encourages executives to consult what she deems "friends, critics and critical friends" from both inside and outside the company. The idea of "critical friends," in particular, stuck with me. I imagine a "critical friend" to be that person — that outspoken board member or leader of a community nonprofit — who overall is a champion of the business but is also willing to provide more pointed criticism as necessary.
Taylor then encourages management teams to "prioritize ruthlessly." Failing to do this could mean a company ends up in "a swamp of undifferentiated virtue signaling." She rounds out this advice by telling readers to decide when and how to proceed and embedding the determined priorities into the overall corporate strategy.
"If your focus is sharply strategic, and you clearly see the challenges and opportunities each issue presents, you'll find it much easier to incentivize the core business to focus on these issues," she adds.
Some of Taylor's advice might be a bit basic for executives who already have well-developed practices around developing a strong culture, transparency and ethics. For instance, Taylor extols that "the most important principle is respect."
But, as I said at the beginning of this review, I sincerely believe that most bankers are trying to do good and at times this can seem an almost impossible task given the competing interests that executives have to grapple with. It seems as if Taylor would agree.
"I set out to write [this book] because so many people — many with good intentions — appeared to be lost. It even seemed that we no longer shared a common language to discuss the challenges we face. I wanted to help cut through the noise and suggest a path forward, upward," Taylor writes.
