Should Your Company Take a Stand on Political and Social Issues?

Skadden partners Ann Beth Stebbins and Ki Hong, Joele Frank partner Jamie Moser and the chief people officer of Duck Creek Technologies, Courtney Townsend, discuss the demands companies face to take positions on political and social issues and growing scrutiny of corporate political contributions.

Corporate culture is important to today’s work force, and employees often expect their employers to speak out on political and social issues that are important to them. Employees are also increasingly aware of a company’s political contributions.

Understanding employee perspectives on issues that are important to them is vital, says Townsend. Management can stay in touch with the employee base through surveys, round tables or on-to-one conversations, for example. What is important to employees has become important to the business. 

It is increasingly difficult for a company to avoid weighing in on political and social issues, even if  those issues do not directly affect its operations. But a company needs to have a policy to guide decisions about which issues it will address.

Four factors are driving the pressure from employees, says Joele Frank partner Jamie Moser. First, a new generation of workers wants to produce and consume products and work in an environment aligned with their values. Second, social media has increased the visibility of political and social issues and made the need to respond seem more urgent. Third, political polarization has intensified the emotions around issues. Finally, the rise in importance of ESG factors across society has heightened employee interest in such matters. 

When it comes to political donations, scrutiny has increased dramatically since 2015, Hong says. Companies therefore need to balance the views of stakeholders with the consequences of making contributions and taking positions on controversial issues. He notes that taking  positions on social and political issues, if not carefully thought through, could cause the company to lose business. 

Moser and Hong emphasize that businesses need to anticipate the types of issues on which they may be asked to take a position and decide which issues warrant a public position and which do not. Advance planning is essential. You do not want to be formulating your strategy in the middle of a media storm, they stress.

Sometimes responding to a political issue requires a company to first research logistical questions, Moser points out. That was true when the U.S. Supreme Court delivered its decision in the Dobbs case regarding abortion rights. Companies had to sort out insurance and various legal questions before responding to employees’ concerns about the decision’s impact on them. In such circumstances, to maintain credibility, leadership should communicate that the company is addressing the issue and, if possible, how the company is approaching the matter even if it cannot immediately provide answers, Moser advises.

Companies can face very different business consequences for their positions on political and social issues depending on the jurisdiction, Hong notes. For example, Texas passed a law barring the state from doing business with companies that take positions in opposition to fossil fuels, and Cook County, Illinois may require its vendors to offer abortion coverage to their employees. 

On any given issue, satisfying all stakeholders may not be possible, Hong warns. 

Related to these issues, directors who come up for election soon could find more attention being paid to them as individuals — not just as members of a slate — because of the introduction this proxy season of the “universal proxy card” , making it easier for shareholders to choose individual directors, Moser explains. That could lead activists and others to conduct research on the statements and political contributions of directors, in an effort to challenge their board...