September 4, 2020

The response of professional sports to the police shooting of Jacob Blake in Kenosha WI was – to use an overused word that actually applies – unprecedented. The incident inspired a player-led strike, not over wages, but in protest of the societal treatment of a specific group of people. That this happened in the NBA should surprise no one, given the majority of players in the NBA are Black and the issue was systemic anti-Black racism. But there’s more to this story, and lessons can be learned regarding the ESG risks companies face today.

Professional sports leagues have been notorious for the treatment of their players. It is only through the development of players’ associations (in effect, unions), that wages and working conditions have been improved and the value of the players’ contributions have been more equitably recognized. Now, of course, professional athletes in the big four leagues in North America (NBA, NFL, MLB, NHL) are all one-percenters, and the superstars’ net worth parallels that of their team owners.

Of the four leagues, the NBA has always been ahead of the curve. Maybe it’s because, compared to the NFL for example, the relative few have been able to exert tremendous influence over the sport. There is an independence among the NBA’s players that’s unmatched in other sports. Legendary NBA coach Chuck Daly famously commented that coaching the Detroit Pistons was like managing 15 different CEOs.

So when players on the Milwaukee Bucks made the decision to boycott a playoff game in the aftermath of Blake’s shooting, it was big news. The NBA and its players suddenly presented the most vocal and demonstrable support for Black Lives Matter of any league. To silence an arena so soon after all sports had been silenced by COVID-19 created a powerful and meaningful statement.

The other side of that coin was the NHL. This is not a progressive league and never has been. In the old original six days, three teams had the same owner. Not exactly an arrangement that favoured the players, and hockey remains a very conservative culture. So when the league and its players decided initially that the shooting of Jacob Blake was worthy of nothing more that a few pre-game platitudes, no one could have been surprised.

But for all its stubborn resistance to change, hockey is changing. It, too, is experiencing an employee-led revolution. A group of NHL players and former players calling themselves the Hockey Diversity Alliance, decided that playing on in their own bubble was wrong. Comprised of many of the players of colour in the NHL, they requested NHL Commissioner Gary Bettman suspend the playoffs. Mr. Bettman, who has always been good at following the lead of the NBA (his former employer), immediately complied.

So what’s the ESG story here?

The first is that employees (the players) demanding accountability from management (the league and its owners) is not isolated to the sports world. Facebook employees also recently took matters into their own hands and walked out to all protest inaction on a social issue – Facebook’s refusal to deal with the offensive posts of President Trump. Employee empowerment is real because employees know they have the tools today to impact a company’s reputation. Failure of company management to recognize that fact introduces a big and material risk.

Second, social unrest is reshaping significant swaths of western society. If you’re running a business and you fail to see the risks that are blowing in the wind, you are likely to find yourself taking a kick to your reputation. Not a good strategy for business viability.

Finally, if you had any trouble realizing that people, players, employees, consumers and investors are motivated by purpose, developments like we have seen in major league sports should put that to rest.

Companies need to respond in kind or risk long-term irrelevance, as organizations like the NHL and perhaps even Facebook must realize now. This is no time to be a follower, or to land on the wrong side of history.