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Nicklaus: Stay out of politics? Companies decide they can't afford to

Nicklaus: Stay out of politics? Companies decide they can't afford to

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Sorry, Mitch McConnell, but corporations can’t stay out of politics even if they want to.

For evidence, consider the pressure Coca-Cola and Delta Air Lines were getting from civil rights groups before they announced their opposition to Georgia’s new voting law. Republicans are calling for a boycott now, but the companies would have faced a boycott by the left if they had stayed silent.

They also might have faced an employee revolt.

“They are making these statements in part because their employees want them to,” said James Fisher, professor of marketing at St. Louis University. “One of the crucial requirements of leadership is to attract the next generation of talent, and young people in particular want to work for organizations they can identify with.”

This isn’t the first time major corporations have taken sides on a controversial issue. In 2016, more than 180 companies called for the repeal of North Carolina’s bathroom law, which was seen as discriminatory against transgender people.

The same year, 60 Missouri companies urged the Legislature not to pass a similar law. And if transgender rights was a hot issue in 2016, voting rights has hit the boiling point in 2021.

Corporations have always been political players, but decades ago they stuck to bottom-line issues like taxes and regulation.

“What’s different now is that they’re involved in the hot-button issues that politicians use to drive fear and voter response,” said Jackson Nickerson, professor of organization and strategy at Washington University’s Olin Business School. “The question is, should they be taking a stand on these wedge issues?”

Not every company can be Ben & Jerry’s, the ice cream brand known for its progressive politics. Companies as big as Coca-Cola need to sell across the political spectrum.

“It’s going to be a decision corporate leaders consider in terms of what the long-run implications are for their labor market and their product market,” Nickerson said. “In most cases, I have to believe those long-run implications are going to be costly.”

Paul Washington, who heads the environmental, social and governance center at New York-based nonprofit The Conference Board, has studied the reaction when companies take a stand on social issues. “Thus far our research has shown, on balance, that a principled stand is a net positive with employees and with customers,” he said.

CITY'S WINDFALL: Jim Gallagher says the $517 million in federal stimulus money coming to St. Louis could turn Mayor-elect Tishaura Jones into Santa Claus, with plenty of favors to hand out. Gallagher and David Nicklaus say the city should spend the money carefully, either for long-term investments or to help people and businesses hurt by the pandemic.

The dynamics in today’s hyperpartisan atmosphere might be different, though. “The risks may be increasing, and that’s why it’s important for companies to have clear rules of the road,” Washington said.

In the wake of the Jan. 6 attack on the U.S. Capitol, the nonpartisan Conference Board published a guide for corporations that were reassessing their political contributions. Among its suggestions: Have board oversight of political activity, and educate employees and the public about what you’re doing.

Washington said companies need to state clear principles and act consistently with them, while concentrating on issues that affect the business. Lately, executives have decided that voting rights is one of those issues.

That’s why a long list of companies including Citigroup, Merck and Microsoft, as well as Atlanta-based Coca-Cola and Delta, have spoken out against the Georgia law. Making it harder for Americans to vote, they argue, will undermine faith in democracy itself.

“A lack of trust and stability really isn’t good for capitalism,” Washington said.

McConnell, the Senate Republican leader, apparently pines for an era when executives wrote checks to politicians but kept their mouths shut. Unfortunately for him, most corporations realize they can’t afford to operate that way anymore.

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