America Inc is turning wary of hot-button social issues

US businesses exercised caution in 2022 on the issue of abortion.
US businesses exercised caution in 2022 on the issue of abortion.

Summary

Companies and their CEOs have made public statements opposing restrictions on voting rights and in support of stricter gun control.

In the last five years, companies and their CEOs have made public statements opposing restrictions on voting rights and in support of stricter gun control. They’ve voiced their opposition to legislation that prohibits transgender people from using bathrooms that align with their gender identity and lobbied for same-sex marriage rights. They spoke out against Trump’s ban on immigration from Muslim-majority countries and condemned the storming of the US Capitol on 6 January 2021. They tweeted #BLM and #MeToo.

Companies taking a position on social and political issues has become so much the norm in the last half decade that it’s easy to forget how unusual this kind of rhetoric once was.

Businesses waded into these once-taboo topics to begin with because they claimed they aligned with their corporate values, and—let’s be real—because they viewed it as good PR. But amid today’s merciless culture wars, deciding what to say about the latest hot-button issue is no longer a question for the marketing or social media team. It has escalated into a potentially massive reputational and political risk that companies are often better served hashing out at the board level. So, as we get into 2023, it’s time to call a trend: The era of widespread corporate outspokenness is ending.

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Part of the calculus for corporations is that they may be realizing they overestimated the goodwill their public stances generate. Research from Vanessa Burbano, a professor at Columbia Business School, has found that there is a “significant demotivating effect" if an employer takes a stance an employee disagrees with, but no statistically motivating effect if the employee agrees. “The blowback you get is greater than the benefit," she told me. The reason, she says, is likely what’s called a “false consensus effect." People tend to assume that others share their values and are surprised and react more strongly when they find out that’s not the case.

The response from companies’ potential consumers is just as tepid. A report from Brunswick Group published in late 2021 found that 63% of executives think companies should speak out on social issues compared with just 36% of voters, with most saying companies are primarily doing it to look good. The two groups also disagree on which issues are most important in the US. Both identify healthcare as No. 1, but that’s where the consensus ends. Climate change, data privacy, racism and gun violence make up the remainder of the top five for executives, while voters point to homelessness, mental health, unemployment and crime prevention. And the blowback can come from both sides. Touting climate efforts risks accusations from the Left of green washing and virtue signalling, but also growing claims of overreach from the Right.

Kentucky legislators are part of a faction of the Republican Party, led by Florida Governor Ron DeSantis, that’s decided to make attacking “corporate wokeness" part of its political platform—perhaps the most significant factor tipping the scale in the direction of corporate silence.

No one wants to be the next Walt Disney, which DeSantis made his punching bag after its former CEO Bob Chapek spoke out relatively mildly against the state’s ‘Don’t Say Gay’ bill. (Chapek’s comments were in response to an outcry from employees, and his mishandling of the episode likely contributed to his ouster.) DeSantis has also targeted BlackRock and its CEO Larry Fink for their vocal commitment to environmental, social and governance (ESG) investing. Texas lawmakers have jumped on board, last month grilling the asset manager, along with State Street Corp, over their ESG investing practices. BlackRock is also on Kentucky’s blacklist.

It’s enough to give a company pause before hitting ‘send’ on that press release, tweet, or annual report letter. Enterprises that have made speaking out on social issues core to their brands will continue to do just that. But from the rest of corporate America, expect less talking even as companies continue to back social and political causes in meaningful ways.

We’re already seeing this shift in behaviour. When the Supreme Court ruled on Dobbs vs. Jackson Women’s Health Organization last year, overturning a decades-old constitutional right to abortion, Columbia Business School’s Burbano said she spotted a change in how companies chose to take a stance. Rather than publicly decry the decision, corporate statements were more internally facing, with many saying they would reimburse travel expenses for employees needing to seek an abortion out of state.

This might seem like a movement toward less transparency and leadership from corporate America. But if that means the start of less grandstanding and more substantive action, that would not be a terrible start to a new era.

Beth Kowitt is a Bloomberg Opinion columnist covering corporate America.

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