GeoLegal Weekly #22: Companies should talk less and smile more
As politics gets nastier, companies are wrestling with whether they should speak up or shut up. I’ll make the case below that silence is a viable strategy.
We’re midway through a monster election year around the globe and we’re just months away from the 2024 US elections. This election season comes on the heels of companies taking high-profile positions on social issues in recent years - and a political backlash in some parts to businesses being overly focused on social values. In this environment, companies are increasingly considering whether to keep quiet.
Is silence golden or is silence violence?
The reasons why values should be central to your business are well worn- and, as the below survey from MIT shows, most experts disagree with the idea that businesses should remain silent. Businesses have a unique ability to be a force for good across a number of stakeholder groups. It’s valuable to have a transformative vision - to believe how the world might be better if your business is successful. Articulating that vision can attract motivated talent and act as a differentiator from competitors in the market.
MIT Strategy Forum panelist survey
I believe strongly in cultivating diverse perspectives not just because it’s the right thing to do (which it is) but because it makes your organization smarter and more resilient. We have purposely built a unique team of largely pan-African talent from our engineering base in Rwanda for all these reasons and we like talking about it. Because there are smart people everywhere but not opportunities everywhere, and because we have an opportunity to change that. Because working with people who aren’t captured by oldthink of western corporate culture can produce novel solutions. And so on.
But today I’m going to really try to engage with the contention that it is increasingly ok to shut up on many issues. I find myself less inspired to engage with this by the anti-ESG movement - which is pretty much a political attack on leftwing values using the legal system, designed to chill commitments that companies have taken through active consideration on issues like the environment or diversity over the last 20 years. I’m engaging with this amid corporate silence on Donald Trump’s 34 felony convictions and (perhaps now also President Biden’s son being convicted on 3 felony counts.)
Why is everyone quiet?
Simply put, the case for silence is under-appreciated. While I’m not advocating that businesses should be silent, I’m engaging with the logic of rationalizing doing so, such that businesses can consider it as a legitimate strategy.
Stop Oversharing
First, one could argue that businesses have overshared of late and found themselves trapped. Silence would be one remedy to that dilemma.
When the #metoo movement was building steam across Hollywood and then corporate America, companies felt compelled to make sweeping statements standing with victims and pledging to reflect on how they could do better in their own actions. When George Floyd was brutally murdered by police in 2020, companies generally came out to acknowledge that black lives matter and that they should reflect on their own diversity efforts. In both cases, this was as much a deflective defense mechanism on their own practices as it was a political statement. It was also driven by fear of being the only one silent.
When Russia invaded Ukraine, it wasn’t hard for most Western businesses to decide which side they stood on. Nor was it hard for businesses on 7 October 2023 to stand with the victims of the brutal terrorist attack on Israel.
In these two cases, neither Russia nor Israel was central to the success of the corporations commenting on the issues. As a result, many companies saw a public relations opportunity or need to stand with populations being attacked. This was somewhere between an ethical imperative with little perceived downside and the corporate equivalent of becoming armchair activists clicking a like button on social media.
The problem with oversharing, as the case with Israel demonstrates, is that businesses woke up on 8 October 2023 and were expected to update their views as Israel’s retaliatory attack on Gaza played out. Had they really signed up to effectively narrate global affairs from their perspective? Similarly if they are commenting on Russia, why not comment to stand with Taiwan amid China’s war game simulation a few weeks ago? How about standing with oppressed minorities in every geography the business operates?
As the world becomes more complex, it’s increasingly unlikely you can pick and choose engagement with politics on your terms - doing so creates an expectation you will keep doing so.
One of the big reasons the public can come to expect businesses that comment to keep commenting is because businesses are fundamentally political creatures. They lobby to get tax incentives or change regulations in their favor. They donate to candidates who can help them secure narrow policy victories, even if they don’t agree fully with their politics. And they rightly feel responsible to try to shift politics on issues core to their own business - for instance, a chocolate maker drawing attention to human slavery in the cocoa supply chain.
The problem is that social media doesn’t distinguish between political activity to further the business and more generalized political commentary. Once you start talking you’re not expected to stop.
Political Commentary can Hurt Diversity
Second, political commentary can actually reduce the ability to attract diverse talent.
We often think of values-based commentary as a magnet for younger talent which wears its politics on its sleeve (or, rather, its social media feed). Employees want to believe they are working for more than money - that they are working to change the world. That the widget they are building will help hundreds of millions of people save three minutes a day such that their lives are improved (or something much more impactful than that!). That the legal services your law firm provides are in the name of justice and fairness. That the soap and soup you manufacture is done so in a way that makes the world better or at least does no harm.
However, by taking a position on controversial issues businesses risk creating echo-chamber silos of people all with the same values and perspectives. This is obvious with some of the more complex issues of late. After the Supreme Court Dobbs decision, a number of companies took a strong position to make news about offering travel money for employees to seek out-of-state abortions in the US. The population of their employees that celebrated the Dobbs decision would not only feel themselves silenced but they would feel like working at the company was counter to their values. Maybe in an immediate shock or at least over time, the company’s staff would self-select in or out based on the company’s political stance, not necessarily its vision. Over time, it’s not hard to see how this could reduce intellectual diversity.
There is a similar risk that there might be a fracture between the views of executive leadership and staff. Recent research from Harvard found that nearly 70% of executive teams in corporate America identify as Republicans, while the general population is much more evenly split. Taking positions repeatedly almost certainly risks pulling the company in the direction of leadership who overwhelmingly lean one way, which again risks the ability of attracting a diversity of views.
Thus, a simple statement that “Trump’s prosecution was political” or “The US should not elect a felon” would alienate a large chunk of employees in one fell swoop.
Authenticity Matters
Third, authenticity matters. Many companies take their ESG, sustainability and political positions seriously and seek to implement their vision of change. But many don’t and have ascribed to such views publicly for performative purposes - or perhaps because they felt nervous about not commenting on breaking news when their competitors were. Employees and customers can detect inauthenticity and will increasingly hold this against its perpetrators.
One could argue that it is liberating and intellectually consistent to just tell the public something along the lines of “as a business, we are here to serve our clients and customers, and to make our shareholders lots of money - and that’s it.” In such a case, political silence is a defense mechanism against anything that distracts the business from its core purpose for being. Indeed, our own analysis of law firm vision statements found that most firms now only define their core vision in commercial terms, even if they do have programs that look to make social impacts.
Authenticity mattes in a world where politics is increasingly anti-elite. As the data from Edelman’s 2024 Trust Barometer shows, nearly 2/3s of the population worries that government leaders, business leaders and journalists purposely try to “to mislead people by saying things they know are false or gross exaggerations.” Why shouldn’t they? After all, as Alison Taylor wrote in Harvard Business Review, “Making a public statement is often a way to compensate for, or distract from, a lack of meaningful action, and it is increasingly the norm. For instance, the Carbon Disclosure Project recently reviewed 4,100 corporate commitments on climate change and found that fewer than 100 were credible..”
From Edelman Trust Barometer 2024
Businesses have gotten smarter about the need for a “social license to operate” but can often miss that performative gestures undermine this rather than support it. The public isn’t stupid and has access to lots of data. If it doubts your authenticity, it is unlikely to support you when crisis strikes. That crises could be amid economic turmoil when a costly government intervention is needed. Or it could be when a jury is considering a claim against you and you need jurors to see you as sympathetic.
Being Too Vocal Presents GeoLegal Risk
And then of course there is the geolegal angle. Speaking out in one jurisdiction can create challenges in another.
Standing with democracy or human rights might seem like a simple position to take in a Western context, but if you do a heavy business in China, for instance, you might increase the target on your back. While we often think about the target as a political one (you’ll fall out of favor) it can actually ignite some serious legal consequences in markets where political speech is illegal or severely restrained.
Moreover, as your unpopularity in a jurisdiction increases, the ability of competitors to use the courts against you increases, as does the chance regulatory authorities scrutinize you further. This can present serious problems when your public relations positions ends up contradicting your operational decision.
For instance, lets say you take a PR position to stand with Israel and then subsequently decide it is too operationally challenging to keep your Israeli footprint in the current environment. That’s tough enough from a business perspective but when politicians and businesses feel abandoned, they can make your life even harder as you recalibrate.
Should we ALL shut up?
One of the more interesting policy proposals I came across in researching this was the idea that businesses should voluntarily disarm through collective action. Professors Jill E. Fisch and Jeff Schwarz suggest in a recent paper that companies should all simply take a pledge, perhaps facilitated by an industry group, that they won’t politically posture any more. Such a pledge could read:
“We believe that our role as leaders of corporate America is to serve our stakeholders by providing quality goods and services in an ethical and sustainable manner. Because we do not believe that taking stands on political issues furthers these goals, neither the corporation nor its executives will do so, nor will we engage in politically explicit marketing and promotional activities.”
This is an interesting thought experiment but one that goes too far in the opposite direction. Refusing to comment on breaking news unrelated to your core business is very different from refusing to be political more broadly. Businesses are a critical stakeholder group in society and are a force for good. They provide employment, economic growth and consumer choice. They have a right to be represented and to make their views known. They simply need to consider when doing so actually supports their goals and when doing so might create expectations that undercut those goals.
Talk less, smile more
Stepping back, it makes sense to me that businesses become increasingly selective in picking and choosing where to comment. While many businesses leaders may want Trump to win (per the data above), they probably don’t want to be in a position where they have to support the legitimacy of a convicted felon running for president. Nor do they want to have to comment on human rights challenges that have nothing to do with their supply chain.
Arguably, it is better for the business if they "talk less, smile more,” selecting to comment on only those issues central to their vision.
-SW