Politics is suddenly front and center when it comes to companies’ ESG policies, especially in the US. In several US states, laws have been proposed – or passed – that target companies that “discriminate” against fossil fuels, that use or promote ESG ratings when deciding where to invest, or that have diversity initiatives.
Elsewhere, others have threatened political action against companies based on their advertising or content decisions – such as one heavy hitter in the Republican party saying that companies that stopped advertising on Twitter could be called before Congress about participating in “leftist corporate extortion”[1] while another warned AT&T to work things out with the Newsmax cable channel “or else.”[2]
People used to think that questions like investments and advertising spend were outside politics and would be left up to the businesses themselves – but that is far less true than it used to be. Even these decisions are being pulled into the legislative orbit by relentless political gravity.
Image by Casey Horner / Unsplash
Is this new? Yes and no. It’s certainly new, and bad, in a lot of ways. But there have always been places where political and business issues intersect.
In the early 1950s, when IBM was exploring building factories in North Carolina and Kentucky, segregation was still legal in the United States. In 1953, company President Thomas Watson wrote Policy Letter #4 and circulated it to his managers, stating the company’s position plainly: “It is the policy of this organization to hire people who have the personality, talent and background necessary to fill a given job, regardless of race, color or creed.”[3]
IBM, Research Triangle Park, North Carolina. Photo by IBM
As the official history of IBM continues:
Policy letter #4 conveyed without qualification that IBM would not comply with “separate but equal,” an entrenched euphemism for sanctioned segregation in the U.S.
In effect, Watson was publicly stating not only the ethical but the business case for diversity, forcing the governors in North Carolina and Kentucky to decide between racial segregation and an influx of job opportunities along with their associated tax revenue.
Three years later, black and white IBMers worked and ate together in the company’s new plants in Raleigh, North Carolina, and Lexington, Kentucky.[4]
It took courage for IBM to stand up to state governments in the 1950s, and it will take courage for business leaders to stand up for their beliefs now. But there is no alternative – as politics swallows more issues, businesses will either push back or see many of their decisions made for them.
References:
[1] https://twitter.com/HolmesJosh/status/1588626474327760904?cxt=HHwWkICzsZHX94ssAAAA
[2] https://twitter.com/atrupar/status/1629171470881390592
[3] IBM. “IBM100 – Building an Equal Opportunity Workforce.” CTB14, March 7, 2012. http://www-03.ibm.com/ibm/history/ibm100/us/en/icons/equalworkforce/.
[4]“IBM100 – Building an Equal Opportunity Workforce.” CTB14, March 7, 2012. http://www-03.ibm.com/ibm/history/ibm100/us/en/icons/equalworkforce/.