This spring, North Carolina and Mississippi came under fire for passing laws that many felt were discriminatory against gay, lesbian and transgender residents.
In addition to being lambasted by LGBT advocates, the laws—North Carolina's House Bill 2 and Mississippi's House Bill 1523—have also been criticized by much of corporate America, with with hundreds of brands calling for their repeal and even scaling back operations in those states.
When brands pressure states to embrace progressive ideals, it often results in negative economic impact for those states, as evidenced already in the travel and tourism industries in North Carolina and Mississippi. Historically, such situations can have a long-lasting economic impact for states, with the current examples likely becoming iconic case studies in brand backlash to anti-progressive social policies.
The boycotts already are having an economic impact. According to Human Rights Campaign, North Carolina has lost more than half a billion dollars in economic activity from companies canceling—or reconsidering—plans to come to the state and in canceled conventions, concerts and lost tourism dollars.
The Mississippi Hospitality and Restaurant Association also is reporting hotel and convention cancellations as a result of House Bill 1523.
And although Target is currently facing consumer boycott threats on the heels of its declaration that transgender people could use the restroom of their choice, brands generally stand to benefit in terms of customer perception when they weigh in on these issues, experts say.
Background of the bills
In March, Mississippi signed into law the Religious Liberty Accommodations Act, which allows individuals or organizations to refuse service or support to gays, lesbians, same-sex couples or transgender residents "in a manner consistent with a sincerely held religious belief or moral conviction."
Mississippi's law specifically allows employers to fire or refuse to hire someone whose sexual orientation or transgender status is opposed by the company's religious beliefs. It also protects adoption groups, landlords and wedding-based businesses (such as photographers and disc jockeys) that refuse to work with LGBT clients.
Also in March, North Carolina passed its so-called "bathroom bill" that requires the state's residents to use public restrooms associated with their birth gender.
"I haven't read a national newspaper in more than a month that hasn't had a story about this, and it's making our state look terrible," said Brad Brinegar, CEO of Durham, N.C.-based agency McKinney, which launched two campaigns against the law including FlushHB2, in which it printed the "bathroom bill" on toilet paper and encouraged people to flush it—literally.
"The fundamentals beneath the surface are reprehensible," Brinegar continued. "We're hoping that taking a stand only attracts better people and better business relationships."
The brand backlash
More than 200 corporate CEOs agree with Brinegar's perspective, signing a letter in April with LGBT advocacy groups Human Rights Campaign and Equality NC calling for the repeal of House Bill 2. Seventy-five CEOs and business leaders also signed an open letter with Human Rights Campaign calling for Mississippi governor Phil Bryant to repeal House Bill 1523.
The North Carolina bill's proponents, meanwhile, argue that the law was designed to protect women and children from sexual predators in public restrooms. In April, 700 people rallied at North Carolina's state Capitol building in support of HB2, including members of the Christian Action League of North Carolina and the NC Family Policy Council. The two organizations launched Keep NC Safe, a campaign supporting HB2, which included a letter signed by 300 North Carolina-based small business leaders in support of it.
Tech brands led the charge
On the opposition front, Facebook and Google, which have data centers in North Carolina, and Amazon, which has a large distribution center there, were the first brands to approach Equality NC about the letter opposing HB2. The advocacy group first put together the letter on behalf of those companies, and then other brands signed on, according to Matt Hirschy, Equality NC's director of advancement.
"The tech companies started it, and it snowballed from there," Hirschy said. "This bill doesn't reflect their values, and it doesn't reflect the promise that they received when they moved to this state. It's totally natural for them to be invested in repealing the law."
Starwood Hotels, one of the brands that signed the letter, saw cancellations in North Carolina as a result of the legislation.
"Starwood has long been public in our commitment to the LBGT community, and we strive to be the industry benchmark for diversity and inclusion," said Ken Siegel, chief administrative officer and general counsel at Starwood Hotels. "For us, speaking out is a natural extension of who we are."
PayPal, which had planned to bring 400 jobs to Charlotte, N.C., cited House Bill 2 as its reason for canceling expansion plans there.
"The legislation violates the values and principles that are at the core of PayPal's mission and culture," said PayPal CEO Dan Schulman in a statement. "Fairness, inclusion and equality are at the heart of everything we seek to achieve and stand for as a company, and they compel us to take action to oppose discrimination."
Some experts say brands are wise to take such high-profile actions to reflect their values rather than simply supporting advocacy nonprofits over the long term.
"The immediacy value of brands speaking out against these laws versus a brand donating $1 million to a nonprofit is huge," said Max Lenderman, CEO of School, an agency that is part of the Project: Worldwide network. "It's basically a news cycle window, so you can earn a lot more media by taking a stand in these short blips rather than taking a stand over a multiyear time period."
Josh Feldmeth, CEO of Interbrand North America, says boycotts and other potentially polarizing moves by socially conscious brands can generate tremendous loyalty among like-minded customers.
"People like brands because they make them feel good about themselves or they share their values," he said. "Nothing could be more valuable to a brand than having clarity about what they stand for."
Conservatives hope to weather the storm
North Carolina Rep. Paul Stam, a Republican who supported HB2 in the state's general assembly, is confident that other businesses will still set up shop in North Carolina in the wake of the legislation. "Even with House Bill 2, Site Selection magazine ranks North Carolina in first place, tied with Texas, as the place to locate [a business]. We're gaining 100,000 people a year. North Carolina is the place where people want to be."
Nonetheless, the entertainment and sports worlds are speaking out against HB2. The NCAA announced that future Final Four host cities must have LGBT nondiscrimination laws. And several high-profile artists—including Bruce Springsteen, Pearl Jam and Cyndi Lauper in North Carolina, and Bryan Adams in Mississippi—have canceled concerts as a result of the laws.
U.S. Rep. Mark Walker, a Republican who represents North Carolina, called Bruce Springsteen's cancellation a "bully tactic."
"This bill … doesn't target the LGBTQ community; it targets impostors," Walker told The Hollywood Reporter. "It's a little crazy to think sexual predators wouldn't be devious enough to pull something off if they were free to go into any bathroom they want."
How brands shifted from collaborators to crusaders
It's certainly not new for governments—states or entire countries—to face pressure from companies and celebrities who want them to adopt more progressive politics.
Perhaps best known is the international effort against South Africa, which faced Olympic and cultural boycotts over apartheid, the country's official policy of racial segregation.
As early as 1959, a decade into the country's emerging apartheid policies, a global cosumer boycott was launched by anti-segregation advocates, who maintained and escalated the pressure for decades.
A protest song, Sun City, recorded in 1985 by Artists United Against Apartheid and helmed by guitarist Steven Van Zandt , featured some of the most popular musicians of the decade, including Van Zandt's E Street Band leader, Springsteen. The song's sales generated $1 million for anti-apartheid efforts, its video was screened at the UN.
One major contrast with today's brand boycotts, however, is the fact that it wasn't the brands pressuring the government of South Africa so much as the brands being pressured by their own employees and customers.
Two U.S.-based black employees of camera brand Polaroid, for example, formed the Polaroid Revolutionary Worker Movement in 1970 to demand the brand stop collaborating with the apartheid government efforts such as the passbook program that required residents to identify their race.
Polaroid attempted to appease its internal and external critics by offering to raise salaries of non-white employees in South Africa, and it ran a lengthy newspaper ad in 10 major U.S. markets to explain its "experiment in South Africa" and its hopes for encouraging better government policies. But seven years later, amid a global disinvestment campaign widely supported by college students, Polaroid ended its operations in South Africa.
In 1991, as apartheid was finally unraveling, a new form of boycott emerged in the battle for racial justice: brands fighting states rather than consumers fighting brands.
That year, the NFL decided to pull the Super Bowl from Tempe, Arizona, after state residents voted not to recognize Martin Luther King Day as an official holiday.
Although Arizonans eventually did vote to recognize the holiday in 1992, the state lost an estimated $200 million over the issue. And in 2010, Arizona introduced anti-immigration legislation, SB 1070, that led to the cancellation of conventions and cost the state $141 million in tourism dollars, according to the Center for American Progress.
Hoping an end is in sight
Meanwhile, tourism marketers in Mississippi and North Carolina are trying to stanch the bleeding. Because of House Bill 2, more than 20 conventions have pulled out of North Carolina, according to Gina Sheridan, CMO of the Charlotte Regional Visitors Authority.
The city's "Always Welcome" campaign, which includes signage for hotels and local businesses, a website, social media and out-of-home advertising, is attempting to stem the tide of lost tourism dollars. "The campaign reminds the world that we are a place that celebrates and welcomes all who visit and embraces diversity and inclusion," Sheridan said.
The Mississippi Hospitality and Restaurant Association has also launched a campaign called "Everyone's Welcome Here" that includes social media efforts and door decals for participating businesses.
"Everybody understands the black eye and the tarnished reputation the state got as a result of this bill," said Mike Cashion, executive director of the hospitality association. "We serve a diverse audience, and this campaign will show that our restaurants and hotels welcome all business, in spite of this law. Our tourist season starts at the end of May, so we wanted to get in front of it and provide a countermessage. It may not be until the fall before we can actually quantify it, but the financial impact will have a very long tail."
To gauge just how long a tail a struggle with anti-LGBT laws can have, you don't have to look any further than Indiana.
In March 2015, the state legislature signed the Religious Freedom Restoration Act (RFRA), which critics said discriminated against LGBT residents and visitors. Although the bill was amended to include LGBT protections five days later, the damage had been done, and its effects are still being felt more than a year later.
In October 2015, seven months after the RFRA issue, Indianapolis' tourism board, Visit Indy, surveyed meeting planners across the country and asked them the open-ended question, "Has Indianapolis been in the news recently?" Fifty-eight percent of respondents' answers included "RFRA" or "LGBT issues."
"Seven months after RFRA, nobody cared about the Final Four we hosted or the Indianapolis 500," said Chris Gahl, vp of marketing and communications at Visit Indy. "All they were recalling was the LGBT-RFRA issue."
From March 2015 to April 2015, there were 2,500 negative news stories and more than 1 billion negative social media impressions about Indiana, Indianapolis and RFRA resulting in 12 lost conventions and more than a $60 million economic impact, according to Gahl.
"When you have an abnormal amount of negative media impressions, people's desire to [visit your state] turns cold," Gahl said. "And in our case, seven months later, it stayed cold." He added that tourism marketers from North Carolina and Mississippi, finding themselves in similar situations, have reached out to Visit Indy for advice.
For now, the most pressing threat to North Carolina's House Bill 2, however, comes not from business pressure but from the federal government. On May 9, the U.S. Department of Justice sued North Carolina Gov. Pat McCrory and state organizations on the grounds that the bill violates the Civil Rights Act of 1964, Title IX and the Violence Against Women Act. A day later, Democratic legislators introduced the "Equality for All Act" bill, in hopes of replacing House Bill 2 with full nondiscrimination protections. The new bill is awaiting committee review.
Regardless of what happens from a legislative standpoint, brands have a critical role in pushing the discussion forward, according to Equality NC's Hirschy.
"The business narrative has been the key narrative in this discussion," he said, "and it's a powerful one."
Read more about how creativity and tech are fueling today's nonprofits in Adweek's Cause Marketing Report.