The era of businesses being able to operate as apolitical entities — and the days when customers and employees expected them to do so — have passed. Over the past couple of years, corporate chiefs have become more vocal, and more emboldened in their opinions. CEOs have announced racial equity and diversity initiatives, condemned the Capitol riot, recognized Juneteenth as a holiday, opposed state-level voting legislation and “bathroom bills” targeting transgender individuals.
So corporate governance experts don’t expect these same CEOs to remain silent in response to a new Texas law that puts a near-total ban on abortions.
“I’m confident that corporations and corporate leaders will eventually rise to the occasion on this outrageous infringement of the constitutional rights of millions of American women,” said Norm Eisen, a Brookings Institution senior fellow in governance studies who studies this intersection of business and politics.
Eisen said companies just need some time to digest the ruling and its potential ramifications. “I'm confident that corporations will act boldly in response, it just may not be swiftly,” he said. “But we do have to recognize that corporations don’t always move quickly.”
“For years, corporate executives kind of perfected the art of getting involved in the political sphere for a very narrow purpose,” generally advocating for or against regulations that would impact their business operations,” said Stephen Davis, associate director of the Harvard Law School Programs on Corporate Governance and Institutional Investors.
“Moving into broader political issues has been very slow going for companies and it involves a whole new skill set which they're only just in the early stages of mastering. Part of that challenge is weighing risks for the company when the issue is not a narrowly focused matter about the company,” he said.
Jennifer Mackin, author of the book Leaders Deserve Better: A Leadership Development Revolution, and an executive at two consulting firms, said that, despite the broad variety of social and cultural issues on which business leaders have become outspoken, there are some common antecedents.
“They either believe it's important to their customers or their employees, or the CEO in particular has a passion for the topic, whatever it is,” she said.
Davis said some feel compelled to use their visibility and financial clout to advance causes. “They use their organization as a forum and a mechanism,” she said.
While CEOs were quick out of the gate declaring opposition to state voting laws critics have said limit ballot access for minorities, Davis characterized a distinction between laws about elections and laws about abortion.
“I think the voting issue is seen as relevant to business because to have a thriving capital market, you need a thriving democracy… In the issue around choice and abortion, it’s going to be, I think, a calculus companies are likely to be thinking about it more in terms of the weight of opinion,” he said. “I think companies are going to have a harder path trying to decide if this is an issue they should weigh in on,” he said.
Some corporate governance experts suggested that CEOs are approaching such a lightning-rod topic carefully, aware that the optics are especially fraught on the subject of abortion.
“This is just representative of a growing weariness of CEOs,” said Jeffrey Sonnenfeld, associate dean at the Yale School of Management and CEO of the Yale Chief Executive Leadership Institute, an organization that has been at the forefront of corner-office political engagement.
Sonnenfeld said corporate leaders have come to feel that they are the ones carrying the torch, with little assistance from other institutions. “Universally, CEOs are now being worn out by the kaleidoscope of political issues coming at them,” he said.
Abortion, in particular, has been one of the most polarizing for decades of American politics, and has been a key motivator for candidates of both parties to turn out votes. Alienating a certain percentage of constituents is almost inevitable.
“My guess is, they're going to be taking some time to weigh where the weight of public, consumer, and shareholder opinion may be on this matter,” Davis said.
“There's always a PR or a marketing component to whatever they say,” Mackin said. “I think sometimes it's out of peer pressure, or they really believe that their customers and employees feel a certain way.”
The debate is one issue on which big companies would very much like to keep their heads down, but abortion is such an explosive topic that CEOs probably won’t be able to duck it forever. “I think companies are going to face this issue of political involvement more and more and the days of CEOs and boards making decisions just based on their own viewpoints is gone,” Davis said. “They have to be more accountable to a wide range of constituencies.”
Sonnenfeld suggested that corporate chiefs have come to believe that turning the corner office into a bully pulpit might have backfired, in the sense that rank-and-file workers aren’t as engaged.
“Some have suggested the more they speak out, the less their employees say anything. They’re seeing less civic engagement by their employees,” he said.
Sonnenfeld posited that the dynamic would change if companies felt pressure from key stakeholder groups like customers or institutional investors like big public pension funds. “These institutional investors are silent. It gives CEOs very good air cover,” he said. “If those public pension funds and the unions spoke up, that would change this enormously,” he said.