Amid the outrage over Texas abortion law, CEOs are mostly silent, for now

Gone are the days when companies can function as apolitical entities and the days when customers and employees expected them to do so. In the last two years, business leaders have become more vocal and more lively in their opinions. CEOs have announced racial equity and diversity initiatives, condemned the Capitol riot, recognized Juneteenth as a public holiday, opposed statewide voting legislation and “bathroom bills” aimed at transgender people.

Thus, corporate governance experts do not expect these same CEOs to shut up in response to a new Texas law that almost completely prohibits abortions.

“I am confident that corporations and business leaders will eventually come to the occasion with this outrageous violation of the constitutional rights of millions of American women,” said Norm Eisen, a Brookings Institution researcher studying this intersection of business and politics.

Eisen said companies only need time to digest the ruling and its possible ramifications. “I’m sure companies will act bravely in response, maybe not quickly,” he said. “But we have to recognize that companies don’t always move fast.”

“For years, corporate executives perfected the art of participating in the political sphere with a very narrow purpose,” usually advocating for or against regulations that would affect their business operations, ”said Stephen Davis, associate director of Harvard Law School Corporate governance programs and institutional investors.

“Moving to broader policy issues has been very slow for companies and involves a whole new set of skills that are only in the early stages of the domain. Part of this challenge is to weigh the risks for the company when the issue is not a strictly business-focused issue, ”he said.

Jennifer Mackin, author of the book Leaders Deserve Better: A Leadership Development Revolution, and executive of two consulting firms, said that despite the wide variety of social and cultural issues on which business leaders have spoken, there are some common background.

“They think it’s important to their customers or their employees, or else the CEO in particular has a passion for the subject, whatever it is,” he said.

Davis said some feel compelled to use their visibility and financial influence to advance causes. “They use their organization as a forum and mechanism,” he said.

While CEOs quickly walked out the door stating that critics of opposition to state voting laws have said limiting access to voting for minorities, Davis characterized a distinction between election laws. and abortion laws.

“I think the issue of voting is considered relevant for companies because to have a thriving capital market, you need a thriving democracy … On the issue of election and abortion, I think it will be likely that companies will be thinking of a calculation on that more in terms of the weight of opinion, ”he said. “I think companies will have a harder time trying to decide if this is an issue they should consider,” he said.

Some corporate governance experts suggested that CEOs were approaching this issue of lightning rods consciously, aware that the optics are especially full on the issue of abortion.

“This is just one representative of a growing tiredness of CEOs,” said Jeffrey Sonnenfeld, associate dean of the Yale School of Management and CEO of the Yale Chief Executive Leadership Institute, an organization that has been at the forefront of engagement. office politician.

Sonnenfeld said corporate leaders have come to feel that they are the ones carrying the torch, with little help from other institutions. “Universally, general executives are now worn out by the kaleidoscope of political issues posed to them,” he said.

Abortion, in particular, has been one of the most polarizing for decades in American politics and has been one of the main motivators for candidates from both parties to get votes. Alienating a certain percentage of components is almost inevitable.

“My guess is that they will take some time to assess where the weight of public opinion, consumers and shareholders on this issue may lie,” Davis said.

“There’s always a PR or a marketing component in what they say,” Mackin said. “I think sometimes it’s because of peer pressure, or they really believe that their customers and employees feel a certain way.”

The debate is a topic that big companies would like to keep their heads down, but abortion is such an explosive topic that CEOs probably won’t be able to dodge it forever. “I think companies will increasingly face this issue of political involvement and the days of CEOs and decision-making boards based on their own views are long gone,” Davis said. “They need to be more accountable to a wide range of constituencies.”

Sonnenfeld suggested that corporate bosses have come to believe that turning the corner office into a pulpit may have failed backwards, in the sense that basic workers are not so committed.

“Some have suggested the more they talk, the less their employees say anything. They see less civic engagement from their employees, ”he said.

Sonnenfeld argued that the dynamic would change if firms felt pressure from key stakeholders such as customers or institutional investors such as large public pension funds. “These institutional investors are silent. It gives good air coverage to CEOs, ”he said. “If there was talk of these public pension funds and unions, that would change enormously,” he said.

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