If one considers the extraordinary backlash that has hit Anheuser-Busch and its Bud Light beer brand over a marketing campaign featuring a transgender influencer, imagine the dangers if a corporation rears its head over the parapet to express important views. geopolitics. How business leaders should get involved in politics is a controversial question, especially in these feverish times.
Do you quietly try to influence the government through your public affairs experts and lobbyists? Or do you cause a sensation by going public with your political views?
Democracy and capitalism are supposed to go hand in hand. In theory, both have to do with the freedom to choose and develop our personal and mutual social interests. The rise of populism is testing this relationship.
Martin Wolf, the leading economics commentator for the Financial Times, argues in his recent book “The Crisis of Democratic Capitalism” that the two work best for business when each complements and limits the other. “Democracy’s strengths are representation and legitimacy, while its weaknesses are ignorance and irresponsibility,” he writes. “The strengths of capitalism are dynamism and flexibility, while its weaknesses are insecurity and inequality.”
Businesses require eyes and ears to inform the mouth. (And let him know when to open). Lobbyists traditionally fill this role. But while the ESG movement (short for prioritizing environmental and social factors) is spurring (and reflecting) a more enlightened approach, acknowledging many responsibilities beyond the bottom line and shareholder return, the politics have become more edgy. As the discussion of “capitalism awakening” rages, how are business leaders approaching politics and government?
‘No company should be trapped by events’
Gabriel Wildau is a New York-based China political risk specialist at Teneo, the advisory and communications firm. He advises caution when it comes to policy issues, especially with China at a time of heightened tensions between Washington and Beijing. “You have to do everything you can to not offend either party.”
That leaves the companies in a particular bind because many have strong business interests in both China and the United States.
ray dalio, the founder of Bridgewater Associates, the hedge fund, has spent decades successfully navigating between the two countries. But after two recent trips to China, he concluded: “The United States and China are on the brink of war and cannot talk.”
Anyone who has seen the bipartisan questioning of Shou ChewTikTok’s chief executive, by a congressional committee last month, could see that there was little room for nuance for anyone trying to keep a foot in either market.
Beijing, for its part, has intensified a crackdown on foreign companies that it veers into areas it views as a potential threat to national security despite telling the world it’s open for business. And concerns persist over China’s threat to invade Taiwan, which Beijing claims as its territory.
But while Wildau acknowledges that sentiment in Washington is anti-China, corporate America plays such a role in the globalized business game that business leaders are uncomfortable calling attention to political issues. “It could scare the hell out of customers, and attract more business, with dire predictions about Taiwan,” he says. “No.”
The reputational consequences of getting it wrong in China can be very embarrassing. For example, the country is Volkswagen’s largest market and it has 100,000 employees there. In 2019, when Herbert Diess, Volkswagen’s chief executive at the time, told a BBC reporter he did not know about the re-education camps where millions of Uyghurs have been interned in Xinjiang, the video went viral. At the company’s annual meeting on Wednesday, activists and some shareholders continued to criticize Volkswagen’s continued presence in the region and called for an independent audit of its operations there.
“My advice would be: Be prepared,” says Wildau. “Having worked properly through codes of conduct and principles. No company should be caught up in events.”
Britain has experienced severe ups and downs that were obviously bad for global business, including a referendum on Scottish independence in 2014 and Brexit two years later. It’s a useful case study of the tightrope executives are trying to walk.
“It’s easy for businesses to get fed up with politics,” said Toby Pellew, head of public affairs at Headland, a London-based consultancy. “But if you’re operating in a highly regulated environment, there are a lot of touchpoints you need. And I can’t think of a time when it’s been more important for companies to have visibility and insight into government policy. ”
How (and when) to speak
Howard Davies is the chairman of NatWest, one of Britain’s largest banks, and was previously a director of Morgan Stanley and a deputy governor of the Bank of England. He advises business leaders to exercise caution and ensure that any public intervention is closely aligned with their company’s business interests. “My advice is to be very careful,” he warns. “Choose and publish your battles only if they are strictly relevant to your business interest. It may seem appealing to be a political trailblazer with his name in lights, but politicians are more cynical than rational and will use it if given the chance. Similarly, becoming a hostage to a lobbyist is a bad place to be.”
The temptation to jump in can be strong, especially for business leaders who feel they know how to run things. The Edelman confidence barometer suggests that companies are given more consideration than politicians.
Ian Cheshire is the former boss of Kingfisher, a multinational retailer, and member of the board that oversees the Cabinet Office, a government department that supports the British prime minister.
When David Cameron, the former Prime Minister, called on businessmen to publicly demonstrate against Scottish independence, Mr Cheshire complied. He also spoke out against Brexit.
“There’s no point in participating in a debate where you don’t have a genuine idea,” Cheshire said. “But business can lead and they have the ability to move faster than governments sometimes can. You have to be practical and know what is good”.
Mr Cheshire spoke out against Brexit because it directly threatened the interests of his company, whose largest operations were in Britain and France.
“On Brexit, I felt very strongly that it was bad for my business and my country,” he said. “This was a weighty enough issue and my opinion was completely genuine in its concern.”
“But if you express political opinions, don’t expect to be popular,” he added. “You will be hit.”
Anheuser-Busch has been hit well and truly. Even before the influencer incident, US Bud Light sales volume had fallen 6.4 percent in the year to March 24, according to Nielsen data. One of the marketing executives placed on a leave of absence after the backlash said earlier this year that her tenure meant “changing the tone, it means having a campaign that is truly inclusive.”
The episode shows just how complicated, and potentially commercially destructive, well-intentioned efforts can be. Brendan Whitworth, the company’s North American chief executive, finally made an attempt to keep both parties happy. In a statement titled “Our Responsibility to America,” he said: “We never intended to be part of a discussion that divides people. We’re in the business of getting people together for a beer.”
From now on, Mr. Whitworth can choose to share his opinions only among close friends at the bar.
Matthew Gwyther is a London-based business journalist and former editor of Management Today magazine.
