As I blogged a few months ago, businesses are now the most trusted institution in society. Unfortunately, that also means that 86% of people now expect CEOs to speak out on social challenges. Last week, hundreds of executives, companies, law firms and non-profits did just that – by signing their names to the 2-page ad in the WaPo and NYT.
The statement at the top of the ad is only 8 lines long and speaks of the importance of democracy. The two lines that drew the most attention (and were reportedly the most difficult to agree upon) were:
We all should feel a responsibility to defend the right to vote and to oppose any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.
Voting is the lifeblood of our democracy and we call upon all Americans to join us in taking a nonpartisan stand for this most basic and fundamental right of all Americans.
Of course, the statement and the reporting on it was immediately criticized as partisan. People were looking to see whether or not their employers and local companies had signed, etc. I’ve been waiting for a statement from the Center for Political Accountability – haven’t seen one yet – about whether and how they’ll use companies’ endorsement/lack of endorsement in political spending proposals. (As the ICCR release notes, 81 institutional investors did send a statement on the risks of political spending to members of the Business Roundtable back in February.)
What’s clear is that this type of thing is very difficult for companies and their leaders to navigate. You’re bound to anger some people regardless of what you say. You’re bound to anger some people if you remain silent (contrary to some opinions that that’s typically the safer choice). And then, whatever choice you make is viewed through a lens of suspicion. Are you grandstanding? Who are you trying to appeal to? Have you said or done anything contradictory in the past?
A Perkins Coie memo outlines a framework for deciding when to speak out. It also lists a few factors that could trigger lobbying or ethics rules that you need to watch out for:
– Is the topic in which the company is engaging related to an election or ballot measure? If yes, the laws in many jurisdictions limit election-related activity but do not bar it entirely. For example, federal law provides corporations a number of opportunities to engage in voter registration, get out the vote, and other civic engagement activities as long as they do so on a nonpartisan basis. (Federal Election Commission regulations have specific requirements for what counts as nonpartisan in this context.)
– If the company is speaking out on legislation, is the bill still pending, or has the bill been passed and signed into law? Speaking out about a bill that has already been enacted will rarely be regulated (though companies will also have to weigh whether such after-the-fact statements are effective in addressing their strategic goals).
– If the legislation is still pending, does the communication or other activity include a call to action? A call to action is a statement urging employees, customers, or members of the public to contact their government official to support or oppose legislation or some other government action. Some jurisdictions do not regulate statements that don’t include a call to action.
– If the legislation is still pending, is the company paying to promote the communication in any way, such as by taking out a print or digital ad campaign or paying to boost social media posts? Some jurisdictions treat paid and unpaid content differently for ethics and compliance purposes.
At a bigger-picture level, a Korn Ferry memo makes the case that defining core values is now more important than ever. It sounds a little “woo-woo,” but clear values can give you something to lean on and return to when a novel issue arises. The devil’s in the details, though, because you have to make sure these values are consistently applied, and consistently articulated internally & externally. And while CEOs may have their own personal values that drive decisions, remember that CEO tenure averages about 7 years. Company values should be tied more to stakeholders than who is currently at the helm.
It’s also important to note that, at least for now, shareholders don’t appear to be making buy/sell decisions based on the statement or the ensuing commentary. An Economist article points out that after the ad was published, stocks performed almost identically for companies that did and didn’t sign.
-Liz Dunshee, TheCorporateCounsel.net April 19, 2021
