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Horizons: global trends in employment law
Edition 2: Corporate campaigns – the new collective action?

In the second edition of ‘Horizons’, Eversheds Sutherland partners, Marc Meryon and Thomas Player, review the increasing reputational threat to corporates posed by well-organised protests and sophisticated campaigns.

Corporate risk and collective action
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Protesters outside your CEO’s home, your corporate brand tarnished in the courts by a test case, and your supply chains subjected to criticism on social media – all signs of a business on the receiving end of a corporate campaign.

Increasing in number, campaigns are organised by workers, NGOs, pressure groups or civil society groups. They focus on a company’s relationship with its stakeholders, asserting their demands while applying adverse reputational pressure. Campaigns are typically human rights, employment or environment-related, and are capable of turning public opinion against a business with alarming speed. Yet businesses can be slow to spot the risks inherent in their operating models or the signs of a corporate campaign, and, therefore tend to be slow to respond appropriately.

The new collective action?

According to Greenpeace, its 2018 campaign successfully organised concerned consumers to contact big tuna companies demanding higher standards and delivered ‘people powered progress on tuna’. The US grassroots ‘Fight for $15’ campaign, which targets low-wage workers across scores of worksites and multiple employers, is now global, and resulted in coordinated workplace strikes across different countries in October 2018.

Meanwhile, international trade union alliances are publicly reporting companies to the OECD for alleged breaches of human rights as part of union cross-border organising campaigns. The rise of mass employee walk-outs illustrates how individuals nursing grievances can crystallise into a new form of collective action through their digital interactions.

image of Thomas Player

Thomas Player, Partner, Eversheds Sutherland

On first impressions, these campaigns are very different, but they share many of the same tactics.

‘Campaigns typically use the internet and social media to organise and to give them cheap, fast and easy access to a company’s stakeholders around the world,’ says Tom Player, employment partner specialising in global corporate campaigns at Eversheds Sutherland.

‘This may be supplemented by physical protests and strikes typically aimed at maximising reputational and financial pressure. Campaigns will also harness soft and hard law where available.’

For Marc Meryon, head of industrial relations at Eversheds Sutherland, corporate campaigns are growing in labour disputes, supplementing or replacing union-organised action.

‘The global rise in peripheral and casual workers presents challenges to traditional union organising,’ he says.

‘Now we are seeing worker networks and new unions using social media to forge a common cause across disparate workers, politicians, the media and civil society, and using protests directed at employers with increasing success.’

Corporates risks – not just about brand value

The risk of damage to brand value, and to corporate reputation more broadly, is significant given that many corporate campaigns are directed at the media to maximise adverse publicity for the business involved. As protests go viral, media reports proliferate and stakeholder trust begins to ebb, campaigners know that values-led businesses will respond. Publicity is, therefore, a key tenet in their strategy.

Reputational degradation affects relationships, trust, goodwill and earnings. A mishandled corporate campaign can deepen the damage. Excellent communications plus strong governance, risk management and corporate preparedness are essential defensive tools against campaigns. As a result, amongst our clients we increasingly see the involvement of GCs and their legal departments to mitigate campaign risks.

However, even small enterprises operating completely away from the public gaze, and those businesses, big and small, less exposed to the power of social pressure can still be detrimentally affected by corporate campaigns. For example:

  • Legal test cases brought by campaigners have changed the way the law applies more generally;
  • Public support for single campaigns has led to broader legislative and regulatory changes;
  • Brands concerned with protecting their supply chain reputation from human rights and environmental campaigns have demanded higher standards from their suppliers and business partners; and
  • Campaigns have been used to resist restructuring or workforce casualisation, or to concede demands for better pay and conditions, either complementing strikes or in substitution for them.

Practical implications

No company wants to be on the wrong end of a corporate campaign and avoiding one in the first place is preferable in terms of time, cost and reputation. Whether organised by trade unions, NGOs or others, some campaigns could have been avoided had the business taken a more pro-active approach to risk management.

A key risk is supply chain management, and public opinion is increasingly intolerant of organisations apparently unwilling to take steps to prevent harm to workers and the environment in their supply chains. In the UK, France, California, Hong Kong, Australia and elsewhere, new corporate supply chain transparency obligations have added some legal ‘teeth’ and this trend is set to continue.

image of Marc Meryon

Marc Meryon, Partner, Eversheds Sutherland

‘Recently, campaigners have sought, so far unsuccessfully, to use the California Transparency in Supply Chains Act to sue US firms for alleged labour abuses in overseas supply chains. Business must be prepared for litigation to be used as a campaigning tool in this way,’ says Scott McLaughlin, labour and employment litigator and partner at Eversheds Sutherland.

How should businesses prepare for a corporate campaign in the absence of an immediate threat? Prevention is better than a cure. As a minimum, assess and audit supply chain risks and the company’s approach to mitigating such risks; identify likely trigger points for campaigns; devise a mechanism to alert and to reassure stakeholders; ensure the availability of external resources – such as legal, security, public relations and IT – and have a plan for protecting the business’s reputation, premises and people.

Lessons learnt from previous corporate campaigns underline the need for one key senior executive to have responsibility for co-ordinating responses from across the company. Campaigns force companies to make key decisions under pressure; should they break ties with suppliers involved in alleged labour abuses; should they agree union recognition; should they defer restructuring and other change?

Such delicate decisions being taken under the spotlight of a campaign demonstrate the value of due diligence and planning now – in your own time and away from critical scrutiny.

Finally, the inevitable ethical risks and dilemmas involved highlight the importance of GCs and legal departments in helping to prepare for and respond to corporate campaigns, given their role as trusted advisers within a business.

Global corporate campaign tactics and trends

Eversheds Sutherland has identified four recent trends in the way corporate campaigners operate, with examples below.

Target corporate pressure points:

A critical response from clients, shareholders, regulators and other stakeholders to adverse corporate publicity is a key pressure point for brands and household names. Campaigners are adept at harnessing a company’s reputation and values to hold it to account and, in effect, make the stakeholder the campaigner’s agent for change.

Build leverage through cross-border collaboration:

Global trade union federations (GUFs) are increasingly skilled at coordinating national unions and NGOs to greater campaigning effect. There is also a growing tendency for GUFs to campaign against unfavourable differences in labour relations between the US and Europe, where companies operate on both continents. For example, where a business collectively bargains with unions in European operations but resists recognition in the US.

File test cases and class actions:

Campaigns aimed at improving the conditions of low-wage and casual workers have deployed strategic test cases in the UK and elsewhere to challenge pay and employment status and, in the UK, have achieved significant success to date. In the US, litigation alleging corporate failures in relation to foreign supply chain labour abuses have been supported by NGOs and legal advocacy campaigners.

Invoke soft law and complaints mechanisms:

The UN, ILO and OECD have led the field in creating labour and environmental standards and formulating business guidance with global application. While they are not ordinarily legally enforceable against employers, many businesses have agreed to respect their principles as part of CSR commitments. This has led some corporate campaigns to launch public complaints to the ILO and OECD alleging non-compliance with global standards by multinationals who are cast as bad global citizens in the process.

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