IE 11 is not supported. For an optimal experience visit our site on another browser.

Corporate America faces reckoning on cost of silence, pauses political donations

"Whatever good the president did for business now seems to have come at an unacceptable cost, and that cost is anarchy in the streets of Washington," said one reputation management expert.
Get more newsLiveon

Corporate America knows money talks — and after last week's Capitol Hill riot, business leaders are pledging to pay more attention to what it says.

Companies traditionally have sought to position themselves above the fray when it comes to divisive political and cultural conversations, but a widening chasm of polarization and an escalation of attacks not only on opposing political viewpoints but also on the functions of democracy itself have raised alarms in corner offices.

"Conventional wisdom historically has been for brands and companies to stay out of politics, at least as it relates to their public relations and marketing messaging, but over the past few years, we've really seen a shift," said Lee Newman, CEO of MullenLowe U.S., part of the public relations giant Interpublic Group of Companies. "Corporate America is starting to understand that silence is complicity," he said.

A growing segment of corporate America's biggest names have denounced last week's storming of the Capitol by devotees of President Donald Trump who sought to overturn Joe Biden's election as president, with many saying they will halt or suspend political donations.

The approaches vary, and experts in corporate reputation management said different motivations are likely to be at play.

"Our clients go across the political spectrum and vary in their willingness to engage in conversations that have the potential to be polarizing," Newman said. "Some of them are driven by the desire to show people their values and where they stand. ... Others are somewhat operating out of fear to ensure that they're saying the right thing and that they're on the right side of history here."

Dow Chemical, Marriott International, American Express, Blue Cross, Airbnb, Mastercard, Commerce Bank and other companies said they will not donate to lawmakers involved in the push to deny Biden the presidency.

"Dow is immediately suspending all corporate and employee political action committee (PAC) contributions to any member of Congress who voted to object to the certification of the presidential election," Dow said in a statement, adding that the company "is committed to the principles of democracy and the peaceful transfer of power."

Marriott said in a statement it "will be pausing political giving from our Political Action Committee to those who voted against certification of the election."

Commerce Bank said in its statement, "We have suspended all support for officials who have impeded the peaceful transfer of power."

Hallmark, which contributes to politicians via a PAC called HALLPAC, went a step further, saying in a statement: "The recent actions of Senators Josh Hawley and Roger Marshall do not reflect our company's values. As a result, HALLPAC requested Sens. Hawley and Marshall to return all HALLPAC campaign contributions."

A sense of urgency was on display throughout the day on Monday. “With the expectations the way they are, there are some issues that override any consideration,” said Paul Argenti, a professor of corporate communication at the Tuck School of Business at Dartmouth College. “Sometimes issues just transcend everything.”

Argenti also had a warning for companies, saying customers and employees alike are quick to pick up on messages that seem motivated by political expediency rather than principles. "If you decide suddenly to get involved in this fray, you better be in it to win it," he said, adding that "woke-washing" could backfire. "People are very, very attuned to these things right now."

Many of the country's biggest companies across industry sectors, from Ford Motor Co. to Airbnb to Boston Scientific, announced suspensions of all PAC donations. The list of companies pledging change, which grew throughout the day, included the financial services companies JPMorgan Chase, Goldman Sachs and Citigroup and the tech behemoths Microsoft, Facebook and Google. A host of other large companies, including Delta Air Lines, Wells Fargo, Walmart and Bank of America, said they would take the unprecedented events of last week into account when considering future political donations.

Comcast, the parent company of NBCUniversal, which owns NBC News, said Monday that it would be suspending contributions "to those elected officials who voted against certification of the electoral college votes."

"The peaceful transition of power is a foundation of America's democracy. This year, that transition will take place among some of the most challenging conditions in modern history and against the backdrop of the appalling violence we witnessed at the U.S. Capitol last week. At this crucial time, our focus needs to be on working together for the good of the entire nation," the company said in a statement.

The broader bans on donations to both parties angered Democratic lawmakers, some of whom argued that it created a sense of false equivalency.

"This is not a time to say both sides did it. What the hell did the Democrats do this week except stand up for the Constitution and the rule of law?" Rep. Sean Patrick Maloney, D-N.Y., who lambasted corporate leaders for "playing footsie" with the Trump administration, said in an MSNBC interview Monday.

Jeffrey Sonnenfeld, associate dean at the Yale School of Management and CEO of the Yale Chief Executive Leadership Institute, said: "I think most CEOs wish they could specifically target the bad players in the Republican party. ... However, some of them feel constrained because of their boards, shareholder reprisals or [want] to think through the issue more carefully. They want to act quickly but don't want to develop a permanent policy in a reactionary way."

"Many business leaders feel a civic duty and, in a lot of cases, a certain void in standards that have been set by the very top of our government."

Reputation management experts cited a leadership vacuum that has forced business leaders to defend behavioral and political norms that have been eroded or outright destroyed over the last four years. "Many really feel a civic duty and, in a lot of cases, they feel a certain void in standards that have been set by the very top of our government," Newman said. "That's where the greater sense of urgency comes in."

In recent years, more companies have been willing to be outspoken on topics such as LGBTQ rights and climate change, and last summer's widespread protests for racial justice prompted soul-searching among corporate leaders about their own contributions to combatting systemic racism and its legacy of inequality in everything from wealth-building to health care to educational and professional opportunity.

"Given that government has become weaker, corporations have to play a more important role, given both their financial influence and their influence in society," Argenti said.

Of course, corporate America is still looking out for itself, as well. There are always the optics of public relations to consider, and companies in highly competitive sectors like technology rely on their reputations to recruit and retain employees.

"Most of these companies are desperate to appear to be on the right side of the culture wars," said John Weber, president of Impromptu Strategies, a reputation management company. "I'm not sure it's an inflection point, per se, but I think it's going to accelerate their need and desire to position themselves as being in opposition to the Trump forces."

Outspoken pro-Trump CEOs have backed themselves into a corner, Weber said.

"I think it's a huge setback for those corporations and corporate leaders who openly aligned themselves with President Trump, because whatever good the president did for business now seems to have come at an unacceptable cost, and that cost is anarchy in the streets of Washington," he said.