To Blacklist or Wield Influence

When confronted with business partners or providers engaged in unethical practices or poor conduct, the first instinct might be to consider blacklisting.

This approach has a lot of merit, holding people and companies accountable for their actions by creating consequences for bad behaviour and protecting our own integrity.

In the case of suppliers, if you have the option to move to a provider with better ethical standards, switching makes sense. This is voting with your dollars, and has lasting consequences.

But what about when it isn't that straightforward? What about when you hold a different kind of power, as an investor, a major client, or a board member, where walking away means surrendering your influence entirely?

And what happens when we choose to maintain our seat at the table specifically to challenge misconduct and drive substantial reform from within?

Consider Engine No. 1, the investment firm that shocked the corporate world in 2021. Rather than divesting from ExxonMobil over environmental misconduct and governance failures (the expected move), they leveraged their position to launch an activist campaign that successfully placed three climate-conscious directors on Exxon's board.

Engine No. 1 understood something profound about fiduciary duty: sometimes fulfilling one's obligation to stakeholders requires confronting problems directly rather than avoiding them. Despite owning just 0.02% of Exxon's shares, they created systemic change that divestment alone couldn't achieve, arguing that environmental irresponsibility represented a business risk that threatened shareholder value.

This approach isn't appropriate in every situation. Some instances of corporate malfeasance are indeed beyond redemption, and exiting is the only ethical choice. But before automatically walking away, we might ask: Where could our influence create more accountability and genuine reform by staying engaged?

The courage to remain present in ethically challenging spaces, articulating clear expectations for corrective action while refusing to accept misconduct, represents a more demanding form of fiduciary and moral leadership. It requires resilience, strategic thinking and the fortitude to withstand criticism from those who prefer clean breaks over messy engagement.

Thoughts?