CSR and Sustainability, Extractives, Government, Human Rights, Investors, NGOs, Stakeholders, Supply Chain

Should companies sue NGOs over financially-damaging campaigns?

Picture the scene. Your company is under attack. A campaign has happened that has cost you millions of dollars in lost business.

Big brands, fearful of their reputations and their own sustainability commitments, have cut you out of the their supply chains, or will do shortly.

You know that doing this is a serious shift, as taking you out costs them time and money, and so getting back in later will be tough, given your competition in the global market place for a spot in their supply chains.

Your internal technical experts, and some scientific advisers have said you are in the right, that the campaign is not grasping the complexity of the issue. It’s also not taking into account the years of work your company has put in to become more sustainable.

Your company has spent millions of dollars on all this in the last ten years. Hired people, and taken some hits along the way about the speed of your progress.

Your communications team is fairly helpless in the face of the campaign, social media being what it is today.

Your CEO is apoplectic with rage. The board supports him/her. Outrage and emerging bitterness abounds in your company. You can almost feel the rage in middle management, as purchasing and supply chain executives know their bonuses may suffer.

The lawyers have been in, and assure you your legal case against the campaign group, or the industry standard that has suspended you, is pretty solid.

So should you sue the campaign group? Or the progressive (a term I use relatively) industry association that has suspended you after pressure from NGOs?

No.

Never.

Why? It’s quite simple. If you are in the right; you can and should try to win the argument by other means. There are plenty of these, but you’ll need to put the internal corporate rage aside to engage with them.

A legal case, even if you win, may give you some short term satisfaction.

It may gain you a few million in damages, if the campaign group can actually pay. You might bankrupt a couple of what you see as ideologically-driven campaigners, and make other individuals, and groups, think twice before messing with your company.

But that’s not a good enough outcome. Given the importance of reputation today, and given how your victory will be a pyrrhic one on that note alone, you won’t win long term. Here’s a few reasons why:

  1. Your company will become a pariah in the social and environmental movement. For decades. This happened to McDonald’s after McLibel, even though they ‘won’. Oil companies gave up on the idea decades ago.
  2. You’ll get little sympathy in the media, generally. Yes you might get a supportive WSJ editorial or a note from an economist at a right wing think tank, but generally the media will turn against you. Freedom of speech matters to most in the media.
  3. Your consumers will find out about it, over time. That knowledge dispension is accelerating, and in some cases is almost instant.
  4. You’ll become a target for outraged consumers, for aggressive micro-NGOs, even hackers and internet hacktivists.
  5. Your employees might be on your side for a while. But the reputational impacts WILL wear them down. Their friends and family and internet browsing will likely see to that.
  6. Governments will be leery of you. They are very sensitive today to not wanting to be seen to be in the company of overly-controversial companies.
  7. It will affect the decisions communities and even countries make to accept your presence in future. This matters, a lot. It alone could cost you more than the whole current issue.
  8. Even though you are convinced you are in the right today, you’ll likely find that you’ll look back, or future managers will, and concede the campaigners did have a point. Context is everything, and changes fairly fast these days. Taking legal action against a campaign group likely indicates you are not the kind of company that changes quickly enough to keep up.
  9. Suppliers may not want to be associated with you in the future. Right now, they’ll want the cash to keep flowing. But over time, many will look elsewhere. Who wants to be associated with the company that sues say, Greenpeace? Not that many, over time.
  10. You will have trouble attracting talent. This could be from labourers to the boardroom, over time. A former senior executive at Shell told me that after their issues back in 1995, they struggled to hire any research chemists for some years afterwards.
  11. You can’t delete the internet. Remember that. If you don’t believe me check out the Wayback machine here.
  12. Investors will look extra hard at you in future. Are you know a bigger risk? What, many might wonder, were you trying to hide? Remember, you might be completely in the right, in your own mind, but few others will swallow that whole.

There are other reasons than the ones above. I’ll stop there. If I haven’t convinced you by now, I never will. Just bear in mind I used the words “over time” so frequently in a deliberate way.

When your CEO is ranting at you, remind them of the legacy they all want to leave. They want to say yes, in the future, to the self-posed question: “Was the company in better shape when I left it, and “future-fit” for the coming years?”.

Having good relations with other companies, suppliers, employees current and future, NGOs, and the world around you is the key to them answering “yes” to this legacy question later. They may need reminding of that.

So what are your options if you feel wronged, and decide not to go legal? I’ll address those in a further post.

In the meantime I look forward to comments.

I have a feeling there may be a few from readers.

 

Some places you can meet (generally) nice people who can help you:

3 Comments

  1. Great provocative post, Toby. The advice to the company is pretty solid, although many who find themselves in that situation will find it hard to take.

    I suppose the question it raises is this: who holds the NGOs accountable? If it’s never a good idea for the companies to sue, then does that mean they get to operate with impunity careless of whether they get their facts wrong as they damage companies who provide jobs to people that need them?

    Some years ago, this question seemed to be looming which led to the creation of the international NGO accountability charter. But that seems to be invisible these days.

    I don’t think it’s ever healthy to have a force in society that escapes all mechanisms of accountability, so what’s the appropriate (and proportionate – accountability not muzzling) mechanism for campaigning NGOs?

    • Toby Webb

      Thanks Mallen. I wish I knew. It’s worth considering the differences between campaigners here. It seems to me that on environmental issues, campaigners are usually on more solid ground. The examples you and I both know of , of campaigners twisting the facts, seem to me to be more on social issues, where subjectivity is much more of a challenge. i.e. FPIC/community rights issues. I appreciate the chemicals debate is an environmental one and many disagree on that. But in that area it seems to me the precautionary principle can and does work, without destroying economies (remember the business lobby hysteria about REACH?). Still, to your point, I don’t know. The financial supporters of campaigners, i.e. consumer donors and foundations, are hard to reach on that point, and I suspect their views as a generalisation are: “well, they can’t get everything 100% right all the time, and the error rate is low enough to justify continuing to fund them”. We’ve not managed to change consumers with eco labels and certificates, so why do we think we can with NGO accountability? Foundations are a different matter I suppose, but they are likely taking a Utilitarian view, which if that’s their only choice given capacity challenges, I would support overall.

    • Anita Neville

      I think that’s an excellent question. I agree with Toby, on balance my advice would be don’t take NGOs to court. I am sitting on the other side of the desk these days and I am starting to ask at what point is it OK to publicly challenge NGOs for not using the right data or maps for example when you’ve given them the data directly. I don’t want to see the third sector muzzled, the world would be poorer for it. But equally I want to see informed debate. And in this rapid information, digitally driven world, mis-information can easily become ‘fact’ by virtue of how many places it is repeated and how quickly. So we need another option.

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