Companies that show the ‘courage of their convictions’ in times of societal change prompt investors to ask what other qualities those companies have, said Helena Foulkes, former CVS executive and Democratic governor candidate for Rhode Island, to the NIRI Conference audience.
Foulkes joined Jeffrey Solomon, chairman and chief executive at investment bank Cowen, and Yale’s Professor Jeffrey Sonnenfeld in a panel discussion at the NIRI 2022 Annual Conference last week. The trio drew on their own experiences to address the pressure many C-suites and boards experience from stakeholders to speak up on hot-button social issues in a rapidly changing and hyper-partisan era.
Foulkes told IR professionals how, in 2014, she helped drugstore chain CVS quit selling cigarettes and other tobacco products at a time when those goods were earning $2 bn in annual sales. She described how CVS had merged with Caremark in 2007 in its journey from being a retailer to becoming a healthcare company. At the time, around 480,000 Americans a year died from cigarette-related diseases and CVS was constantly questioned about its retail of tobacco products, she recalled.
Foulkes is also a former CEO of North American retail group Hudson’s Bay Company and board director at US educational technology company Skillsoft. She said CVS started its corporate purpose journey with the internal question of why it existed. The company was worried its shareholders would not support the divestment of cigarettes but investors actually responded to the policy change as part of its new direction as a healthcare company, she said. The culture change attracted a new generation of talent on staff. Foulkes said she was surprised CVS’ commercial rivals did not follow suit in their divestment decisions.
Corporate America and gun control
The panel turned to corporate America’s position on gun control in the wake of the Texas school shooting, just two weeks earlier, that left 21 people dead.
Solomon told delegates that ‘gun safety was an American issue, not a Democrat or Republican issue.’ He said he was not personally looking to use his perch for political activism. ‘We stick to the things that promote our culture and where we think we can have an impact,’ he said. ‘When you go to make decisions on what your organization stands for, start with yourself and find out what you stand for.’
Solomon described himself as an advocate for the Second Amendment to the Constitution of the United States, referred to as the right to bear arms, but he was not a gun owner himself. He added, however, that he chose not to permit Cowen to serve as an adviser to a manufacturer of semi-automatic firearms when the manufacturer requested such services ‘a couple of years ago’.
He told NIRI delegates the matter was personal to him, given his association with the Tree of Life synagogue in Pittsburgh, the scene of a terrorist attack in 2018. He and his wife are co-chairs of the synagogue’s Remember, Rebuild and Renew campaign against anti-Semitism. His position was understood by colleagues at Cowen, Solomon said.
‘Being dragged into every social cause becomes complicated so I would encourage you to think about where your business model gives you specific insight,’ he told the NIRI audience.
As a guide, Solomon offered Cowen’s ‘Vest’ core values from which everything at the company emanates: vision, empathy, sustainability and tenacious teamwork. ‘CSR reaffirms our core values,’ he said.