Boycott Battleground: Can Consumer Activism Shape a Marketplace? 

The ongoing Gaza conflict has prompted waves of boycotts of Western brands, such as Starbucks and McDonald’s, by consumer activists and ordinary citizens in an attempt to force these companies to rethink their business interests with Israel. While the direct financial impact of these boycotts is debatable, they have created significant corporate and public relations challenges for the involved companies. They also exemplify the complex relationship between global issues, consumer behaviour, and corporate policy.

Consumer activism is increasingly perceived as a potent force for social, economic, and political change. Motivations for participation in boycotts vary and have been extensively studied by marketing and consumer behaviour researchers. Their findings underscore the significance of perceived efficacy and impact as key motivations for boycott participation. Social factors such as message credibility, expected overall participation, and perceived effectiveness also play a key role in motivating consumers to boycott specific brands and products. Additionally, boycotts are viewed as a form of expression, where emotions such as outrage play a key role in increasing participation.

An array of successful boycotts throughout history demonstrate the significant impact of consumer motivations and behaviours on corporate decisions. The emergence of social media, demands for responsible consumption and investment, and other initiatives also highlight the evolution of the practice and principles of boycotting. Consumer activism related to human rights violations and illegal settlements in Palestine is a case in point. Prior to the current conflict, the boycotts, divestment, and sanctions (BDS) movement emerged as a contemporary response to Israel’s actions, particularly ‘Operation Cast Lead’. BDS has engaged in transnational campaigns, drawing parallels with South Africa’s anti-apartheid movement. Its organizers have also mobilized support from global business and civil society, echoing the international activities of anti-apartheid campaigners. The main difference in terms of campaigning is that the BDS movement has been able to leverage social media.

READ: One-third of consumers boycott brands due to Israel war on Gaza, global survey reveals

Despite the advent of social media, the overall impact of the BDS movement has nevertheless varied from country to country. In the United States, for example, the financial impact has been limited with the likes of Starbucks reporting a 4% drop in sales in the second financial quarter of 2024. Conversely, Kuwait’s AlShaya Group, which holds the Starbucks franchise for the Middle East, recently disclosed that it has laid off 2000 employees (approximately 4% of staff) because of the boycotts. Similarly, McDonald’s sales growth was estimated at 0.7% in the last quarter of 2023, far below the predicted 5.5%, mainly due to boycotts in countries such as Egypt, Jordan, and Saudi Arabia.

Closer to the Gaza conflict, the BDS movement was successful in its application of pressure on General Mills to shut down its Pillsbury factory in the illegal Atarot settlement and sell its stake in the Israeli-owned Bodan Holdings. More recent successes include influencing companies like G4S, Klook, and Puma to adjust their business activities and sponsorships concerning Israel. Additional targets include digital tourism platforms like Airbnb, which has been accused of offering services in illegal Israeli settlements. Taken together, these campaigns amply demonstrate the influence of persistent and well-supported boycott campaigns. At their most influential, boycotts illustrate the powerful role that consumers and activists can play in shaping corporate decision-making. They also underscore the complexities in consumer ethical behaviour in the context of conflicts and how it influences the strategic orientations of international companies.

From there, the above case studies confirm that consumer boycott campaigns tend to have three common features: ethical motivations that call for and inspire similarly ethical consumerism and investment; collective action capable of influencing companies’ policies; and sustained consumer pressure that shapes public perception and drives corporate change. It is up to companies to therefore understand the motivations behind ethical consumerism and its potential impact on financial performance.

READ: McDonald’s CEO acknowledges ‘meaningful business impact’ amid boycott calls

One important measure for assessing how companies support the “triple bottom line” of profit, people, and planet is Environmental, Social, and Governance (ESG) performance. Used properly, ESG can be a powerful tool to influence the strategic orientation and corporate social responsibility (CSR) policies of companies. With increasing awareness of ESG responsibility and many stakeholders considering the concept in general evaluations of organizational risks and business practices, demonstrating good ESG performance and disclosure has become an important reputational consideration for many institutions. Integrating ESG factors in business models can also strengthen stakeholder trust and perception while unlocking sustainable business and investment opportunities.

While exclusionary screening-based investment strategies exclude controversial industries such as weapons, sustainable investment that considers broader ESG factors should extend beyond sector screening to consider other activities that directly or indirectly support the economies of oppressive regimes. Thus, when assessing the ESG performance of companies, analysis should be extended to include investments, financing, and donations. Screening here should consider ethical factors such as human rights violations, supporting illegal settlements, discrimination against women and children, biodiversity degradation, water stress, food insecurity, to name but a few. Revisiting ESG frameworks to integrate the ethical orientation of companies can provide a practical input for consumers’ decision-making processes.

The concept of boycott can be directly related to the concept of stewardship, which embodies responsible investing and consumption. With mobilization for climate change mitigation and the broader Sustainable Development Goals, a growing investor base of impact investors is considering socially conscious consumption and investing. While perceptions of negative impact upon society may vary between consumers and investors, recent market trends demonstrate that morally objectionable businesses are increasingly being questioned and scrutinized. Thus, it is imperative that companies rethink their risk management and ESG strategies to include other ethical dimensions related to geopolitical conflicts and crises.

READ: Israel has nothing to do with Olympic spirit and must be banned: BDS Greece

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.