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Business leaders should take a stand on social issues such as curbing gun violence, says Yale management guru

Key Points
  • "You can set a higher standard as a business leader," says Yale management guru Jeffrey Sonnenfeld.
  • He points out the U.S. represents only 5 percent of the world's population but more than 30 percent of the public mass shootings.
  • "Something is wrong here," he says.
CEOs weigh social responsibility after Florida mass shooting

CEOs and business leaders have a responsibility to take a stand on social issues, said Jeffrey Sonnenfeld, senior associate dean at Yale School of Management.

"There is a role for the leader to act as more than a convener but to actually take a position of conscience," Sonnenfeld said Wednesday on CNBC's "Power Lunch."

He said "[business leaders] should get involved" to help prevent tragedies such as the mass shooting in Parkland, Florida, on Feb. 14 that killed 17 people.

Sonnenfeld was responding to a commentary in The New York Times written by CNBC co-anchor and Times columnist Andrew Ross Sorkin on Monday regarding the role of businesses in curbing gun violence. Sorkin argued that financial companies such as Visa and Mastercard should refuse to do business with gun retailers, such as Walmart. As a result, the stores would stop selling guns because they don't want to be cut off from the credit card system, Sorkin reasoned.

"There's a real opportunity for the business community to fill the void and prove that all that talk about moral responsibility isn't hollow," Sorkin wrote.

Sonnenfeld agreed and pointed out that the U.S. is only 5 percent of the world's population but represents a third of the world's public mass shootings.

"Something is wrong here," Sonnenfeld said. "Is there no limit to the artillery that we let someone have in their backyard?"

But Bill Simon, former U.S. Walmart CEO, said that approach is not realistic. While he called Sorkin's piece "thoughtful," he said it was wiser — while firearms remain legal in the U.S. — to have reputable stores that can keep records of gun sales and assist law enforcement.

"You want responsible retailers selling [guns] so they can be documented and videotaped and tracked," Simon told CNBC on "Power Lunch" on Tuesday.

The responsibility, instead, lies with state and federal legislators to improve the current gun laws, Simon said.

But Sonnenfeld called Simon's rationale the "when-in-Rome argument."

"You can set a higher standard as a business leader," he said. "We're not going to stop all murders. We're not going to stop all thefts. People will still run out of a restaurant without paying. Does it mean you don't try to enforce it? You try to enforce it to the best of your ability, starting somewhere."

Sonnenfeld said companies such as Apple and Starbucks have adopted firm positions on social issues without asking for a majority vote by shareholders, as have individual leaders, such as Merck CEO Kenneth Frazier after the white nationalists' rally in Charlottesville, Virginia, last summer.

"And they've survived just fine," Sonnenfeld said.

If it's a privately owned company, he pointed out, taking a side is easier. But for public companies, the situation gets tricky.

Businesses risk alienating customers if they take a side, said Steve Odland, CEO of the nonprofit Committee for Economic Development.

"Customers, employees, owners, communities are all split on these issues," Odland said on CNBC's "Closing Bell" on Tuesday.

Some companies do experience boycotts, Sonnenfeld said. "And they weather them fine." He pointed out that customers can choose to boycott a business for not taking a stand. He said taking a stance on an issue can help reinforce the company's corporate brand.

A representative for Visa said the company acts as a payment processor and does not have a direct relationship with its merchants.

In a statement, Mastercard said, "Our payments network is governed by standards that have been established over time. Chief among these is that we do not and will not permit merchants to engage in unlawful activity on our network. When we're made aware of any illegal activity or violations of our rules, we work with law enforcement and merchants' banks to shut down those efforts."

Walmart did not respond to a request for comment.