How modern activism mirrors ancient practices

Thanks for reading on this Saturday morning.

We’re going to talk about the Roman army, and then we’re going to talk about modern corporate governance. The relationship should become clear in a few paragraphs.

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When facing arrows or other projectiles in battle, Roman legions would adopt the testudo formation.

Plutarch, the Greek historian/writer/philosopher describes the formation: “Then the shield-bearers wheeled round and enclosed the light-armed troops within their ranks, dropped down to one knee, and held their shields out as a defensive barrier. The men behind them held their shields over the heads of the first rank, while the third rank did the same for the second rank. The resulting shape, which is a remarkable sight, looks very like a roof, and is the surest protection against arrows, which just glance off it.”

The legions would often advance on an enemy in testudo formation, which of course required mass coordination and discipline. If a small number of legionnaires broke ranks, it would jeopardize the entire cohort.

Legion commanders, then, considered discipline of singular importance – and they sometimes resorted to brutal measures to enforce it.

Particularly undisciplined cohorts faced “decimation.” A random drawing would identify one of every ten men, and then, according to Plutarch, “these men who are chosen by lot are bludgeoned mercilessly.”

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As a way to effect mass compliance, decimation is extraordinarily effective. The Roman army could not afford to slaughter all of its soldiers, but picking out a few and making an example of them caused all others to fear that they may meet the same fate. The practice keeps most everyone in line with a fraction of the actual force required to do so.

The basic principles underlying it – though of course not the brutality or violence – continue today.

Which brings us to a recent strategic tool used to press corporations into adopting policies that advance separate sociopolitical goals.

Organizations like the Human Rights Campaign use “equity scorecards” to rate companies on their embrace of social justice causes. The organizations isolate the few companies that score poorly or refuse to respond to their scorecards, hoping to inflict reputational damage and lost business.

In this way, equity scorecards seek to make an example of the “undisciplined” companies, which helps keep everyone else in line.

The Human Rights Campaign’s scorecard is called the Corporate Equality Index. It assigns to corporations scores of 0-100 based on criteria including integration of “intersectionality” (a critical theory concept) into professional development, gender transition-supportive dress codes, marketing to LGBTQ+ consumers, and support for select political initiatives.

The scorecard subtracts 25 points from any corporation with a “public anti-LGBTQ blemish,” which could include charitable support to organizations that don’t align with HRC’s values.

Decimation was effective because it resulted in actual consequences – severe ones. The Human Rights Campaign can and has caused reputational damage, but some successful companies score poorly and drive on while others refuse to respond at all.

Fourteen percent of Fortune 500 companies, for example, refused to participate in 2022. Berkshire Hathaway has scored “zero” for years. Warren Buffet said in 2014, “We get surveys all the time…on all kinds of things, and we basically don’t answer them.”

That’s why equity scorecards are one piece of a larger scheme. With an assist from government regulators and institutional investors, corporations that don’t embrace social justice causes can face much more severe consequences.

Institutional investors and shareholder activists have threatened corporate boards if they don’t adopt certain environmental, social, or governance policies.

Under President Joe Biden, federal agencies have issued thousands of pages of rules requiring corporate disclosures on social justice-related hiring practices, carbon emissions from each piece of a company’s supply chain, and more.

Rep. Bryan Steil (R-WI), who serves on the House Financial Services Committee, said earlier this month, “What we’ve seen is the Left try to weaponize the federal agencies, in particular federal agencies such as the Securities and Exchange Commission and others that oversee our financial services industry to drive forward their political agenda.”

That’s the topic of a series of hearings this month in the House Financial Services Committee, which North Carolina Rep. Patrick McHenry chairs.

“The federal government’s focus on costly non-material environmental, social, and political issues at the expense of sound financial regulation has troubling consequences,” McHenry’s staff wrote in a committee memo this month. “Ultimately, these non-core regulations impact retail investors who rely on solid financial returns for their retirement savings.”

“Regulators are using ESG to force businesses into different capital allocation choices at the expense of their fiduciary duties to shareholders, customers, and employees,” another memo stated.

Widely publicized Congressional hearings on this topic confirm that the political climate has shifted. Legislators see a harsh focus on corporate ESG and social justice adherence as a political benefit, and major companies have faced confused seas in recent months as backlash to Target and Anheuser-Busch mounted.

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The worst possible position for a company, theoretically of course, is the prospect of decimation-style backlash no matter which way they turn. Though not gone, that threat has lost much of its gusto. 

We’ve noticed, as you assuredly have too, that heightened public awareness has generated notable backlash towards ESG investing and corporate activism. Only 28% of adults publicly agree that CEOs should take stances on divisive issues (only 14% privately agree). Further, 87% of voters say they’ll drop a company that is on the opposite side of an issue, and a majority believe corporate activism hurts the country. 

Corporate leaders have not only tamped down ESG rhetoric, they “don’t want to talk about it” anymore. Notably, former ESG champion, Blackrock CEO Larry Fink announced he was moving past “weaponized” ESG language. 

That’s why we’ve been writing on this for years about the importance of staying true to core competencies – of not trying to read the political winds and go whichever way they’re blowing. 

We have no doubt that business leaders are not only up for the challenge, but these leaders can form their own testudo. It is worth repeating – Navigating the political minefield starts with having a firm understanding of the purpose of one’s business, and that comes from within – This is not just some lofty ideal, there are real and practical implications that lead to growth, not stagnation. Business leaders today must challenge themselves and each other – to look inside, not to others, for true purpose.