Ding! My text alert buzzed for the 20th time today. I didn’t need to look at my phone to know it was likely another text from a political action committee extolling the virtues of a candidate they support (or, more likely, alerting me to the dystopia that will be created if their candidate loses). Like most Americans, I have been bombarded with ads from both parties, although, since I live in Pennsylvania, a state with both competitive presidential and senatorial races, I may get more texts than those living in other states.
With our nation deeply divided and the likelihood of yet another close presidential election, it is tough to avoid hearing about politics everywhere you go. And this is true in the boardroom, too. As we have noted in this magazine, many of the best boards are composed of directors with diverse viewpoints, who thus may support different candidates and political parties. But how do you maintain collegiality, something we’ve also noted is important, in the face of passionate political views?
Many chairs and directors have followed the old adage of keeping politics out of the boardroom. But is that possible today? After being outspoken on political and social issues over the last few years, more recently, many CEOs and companies have significantly narrowed the topics on which the company will hold a position after a pushback on ESG and the challenges in navigating when and on what topics to comment. However, many consumers and employees still look to companies to advocate for social issues. The 2024 Edelman Trust Barometer found that 61% of Gen Z and 57% of Millennials “choose, avoid or leave their employer” based on the organization’s alignment with their personal political views and values (versus only 34% of Boomers). Deciding whether a company will take a position on a political or social issue is incredibly challenging, even when the decision is to never take a position, and requires directors to discuss politics.
Decisions touching on political and social issues transcend the minefield of stakeholder desires and shareholders’ personal positions. Even if philosophically one believes that companies should refrain from supporting any political or social issue that does not directly impact the business, political conversations cannot be ignored. In recent years, both parties have expanded the government’s role in our economy. With subsidies, incentives and investments such as the Inflation Reduction Act and the CHIPS and Science Act, our government is putting its thumb on the scale. When the government is a large client or provider of incentives, maintaining a relationship with federal, state and local government officials is imperative, and keeping track of which way the political winds blow is necessary.
Even if one believes the government should impose minimal regulations and favor neither certain industries nor specific companies, the current operating reality requires boards to understand our government’s increasing impact on our economy. To create long-term value, directors need to identify the opportunities presented by that impact as well as the changing regulations that could lead to pitfalls.
In a divided nation, with directors passionately supporting both parties, a younger generation seeking an expansion of the purpose of a company, and the government becoming an increasingly important patron for businesses, political discussions in the boardroom cannot be swept under the rug. But it is up to the chair to ensure these discussions happen in respectful and productive ways. Directors who can see how the government’s role beneficially impacts the business — and can discuss the opportunities dispassionately — are valuable now and will be even more so in the future.