The days when activists focused on fights over social issues while businesses concentrated on the pursuit of commercial profit are gone. Through pronouncements, boycotts, sponsorships, lobbying, investments, and divestment, businesses and their executives are at the forefront of some of the most important and contentious issues of our time, from the Russian invasion of Ukraine to voting rights to  gender equity.  As a result, the traditional understandings of capitalism and activism in American life have changed, a topic that I explore in a recent article and a new book.

Throughout U.S. history, corporations have played a critical role in social activism. Because businesses, their executives, and their consumers do not exist in a social vacuum, corporations have taken on different roles in the ebbs and flows of social change.  For instance, during the 1960s, many corporations openly supported the civil rights movement even in the face of serious and dangerous resistance. Many businesses played a crucial role in lobbying presidents John Kennedy and Lyndon Johnson in the epic political battles that ultimately led to the passage and enforcement of the landmark Civil Rights Act of 1964 and the Civil Rights Act of 1968.

While corporate social activism is not new, the current times, tools, and context have made it meaningfully different. The roots of this new corporate social activism can be traced to three large, interconnected developments in business, law, and society: (1) the evolution of corporate purpose from shareholder primacy to expansive stakeholder governance; (2) the convergence of the public and private sectors; and (3) the expansion of corporate political rights.

More specifically, evolving expectations of corporations to focus beyond near-term shareholder wealth has driven businesses to think more about stakeholders other than shareholders.  The privatization of traditional public functions like prisons and policing, along with unprecedented public interventions in private businesses like government bailouts and mask mandates, have made business engagement on social issues a natural extension of the convergence of the public and private spheres.  Likewise, Supreme Court rulings such as Citizens United and Hobby Lobby that allow the use of corporate funds to engage in political campaigns have understandably prompted the greater use of corporate resources to address social issues.

Furthermore, these developments have been powered and amplified by social media and new financial technology.  For example, leveraging apps like Twitter and GoFundMe, activists and citizens can readily organize, communicate, and fundraise to bring their concerns to powerful figures in business and government as never before.  Tens of millions of people can be reached, millions of dollars raised, and thousands gathered to heighten awareness or protest an issue in a matter of hours.

Contemporary corporate social activism at its best can benefit both activists and capitalists. By working thoughtfully with businesses, activists can gain wider reach, deeper impact, and improved operations for their causes.  At the same time, by working with activists, businesses can enhance their value, create new and better markets, and attract more investors and talent to their companies.

Of course, recognizing the significant good that capitalists can do should not blind us to the serious harms they can cause in matters relating to antitrust, competition, and income inequality.  Similarly, recognizing the transformative power of activists does not diminish the obstacles that they can present for policymaking, as when they oppose legislation that makes incremental progress rather than cement the grander solutions they seek. Ultimately, capitalist and activist enterprises reflect the contradictions, complexities, and richness of the human beings behind them.

To be sure, there can be risks and drawbacks if this partnership between capitalists and activists occurs without careful thought. Corporate social activism could further politicize an already fragmented marketplace, marginalize important social issues, corrode core democratic values, and whitewash corporate misdeeds.  For instance, in response to corporate social activism by asset managers like BlackRock, Florida and Texas have barred their state pension funds from investing in certain ESG funds. Similarly, a number of companies have faced heightened regulatory scrutiny and cutbacks of state subsidies and contracts because of their positions on certain social issues.

These risks could understandably prompt some businesses to completely avoid corporate social activism.  A better response, however, would be to acknowledge those risks and manage them thoughtfully, honestly, and critically so that society may realize some of the benefits of corporate social activism while mitigating its perils.  Moreover, corporate social activism is not likely to disappear from law, business, and society, so thoughtful engagement is preferable to no engagement at all.

In the end, contemporary corporate social activism is a story of how we can meet and master old, yet urgent social challenges with new perspectives and approaches to both corporate and democratic governance. It is one of the most consequential stories of business and society in recent history and will remain so for the foreseeable future.

This post comes to us from Professor Tom C.W. Lin at Temple University’s Beasley School of Law. It is based on his recent article, “Corporate Social Activism and the New Business of Change,” available here, and his new book, “The Capitalist and the Activist,” available here.