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Video: The Role of Business in the Democracy Reform Movement
Corporations don't vote in elections, but they have a big impact on our democracy and society, for better or worse. Four business leaders from American Promise's National Business Network discuss how free enterprise and the open exchange of ideas are too often replaced by "pay-to-play" and "crony capitalism", where firms and special interests compete for favors based on political spending. In this video discussion, The Role of Business in the Democracy Reform Movement, they also discuss the controversial question of the proper role, if any, of American corporations in politics, and how business leaders can best serve their country and their business in this challenging time.
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"When you do the right thing for people it's not only right for them but it's good for business," Virginia Gov. Ralph Northam sad on CNBC.
The intersection of politics and business expands
Nevins is co-publisher of The Fulcrum and co-founder and board chairman of the Bridge Alliance Education Fund.
On July 13, CNBC announced its annual "America's Top States for Business" awards given annually since 2007.
The competition among states to entice businesses is more competitive than ever as more and more states offer tax incentives and other perks to encourage corporate relocation.
A new category, "Life, Health and Inclusion," replaced "Quality of Life" as a metric this year, to respond to corporate America's desire for inclusiveness. This is a significant recognition that when deciding on new business locations, consideration of diversity and equity in a state is an important factor in determining which state is most attractive.
Not surprisingly, this new metric has inserted politics into a non-political award.
CNBC intentionally wants the Top States for Business award to be devoid of political connotations, but one can't help but wonder, given the polarized society we live in, whether including diversity and equity in the weighting adjustments for 2021 will not politicize this award. CNBC clearly states that the award uses empirical data based on changes in American society and culture that impact corporations' perceptions of what is important. But the attention paid to a politicized topic is sure to be seen by some as political intrusion or catering to the populist whim of our time.
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One example is the increased weighting of infrastructure. CNBC has determined infrastructure is more important than ever in determining a state's competitiveness to attract corporations, yet it is one of the most hotly debated legislative matters before Congress today.
The new "Life, Health and Inclusion" category is getting the most reaction. As this year's winner, Virginia earned points for its voting rights and anti-discrimination laws, two areas that have seen significant change since Democrats took complete control of state government in 2019.
And of course, while the award is supposed to be devoid of politics, Gov. Ralph Northam was quick to take credit for Virginia's No. 1 ranking.
"When you do the right thing for people it's not only right for them but it's good for business, and we've proven it," Northam told CNBC on Tuesday. "Yes, Virginia went through some tough times and Virginians stuck with me. I committed to dealing with equity, to addressing numerous inequities we have in Virginia," Northam said.
Northam went on to say, "Virginia is promoting making it easier to vote while other states are not." Given that voting rights is one of the most contentious political issues today, the insertion of politics into a non-political award is not surprising given the fact that two of Virginia's top competitors for business are Texas and Georgia, which have been accused by many of increasing voter restrictions.
Northam has vowed to use the remainder of his term to work toward equity in the state.
"There are a number of inequities in our society, to include access to health care, access to education, access to the business environment, access to the voting booth," Northam told CNBC in 2019. "So, we are really focusing on those inequities."
Additionally, this year Virginia has enacted legislation requiring all agencies to develop plans for diversity, equity and inclusion in their ranks — again creating a differentiator when up against states like Texas and Georgia.
While states across America are reacting in different ways to issues of diversity, equity and inclusion (DEI), it is clear that 2020 and 2021 have sparked a wave of DEI initiatives throughout corporate America at an unprecedented rate in reaction to their heightened concern about systemic racial injustice. Whether this shift in emphasis will ultimately impact the political process at the state and federal level remains to be seen. In April, corporate America inserted itself in the voting rights debate as Amazon, BlackRock, Good and hundreds of other companies and executives signed on to a statement opposing "any discriminatory legislation" that would make it more difficult for people to vote. Whether this is a one-time statement or a long-term dedication to voting rights issues remains to be seen.
CNBC makes available the categories and weightings for each metric, offering some transparency of the process. A review will perhaps offer further insights into the inevitable intersection of economics and politics.
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Video: DIVIDED WE FALL 3: Are Corporate PACs Driving Polarization & Dysfunction?
Business engagement in politics is nothing new, but following the January 6 riot, scrutiny has grown on how corporate political spending may be incentivizing bad behavior among politicians. How can businesses be sure their government affairs and corporate PACs aren't wreaking havoc on our democracy?
Business for America, a coalition of businesses promoting a stronger democracy, and the Niskanen Center collaborated to create a four-part series, Divided We Fall. The third part discusses a model for "corporate political responsibility" and why business has "an enlightened self-interest" in supporting political moderation, trans-partisanship, and an actionable "middle way."
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America’s CEOs: Will the Sleeping Giant Wake Up?
The nation's CEOs have possibly never had so much power to influence elections and how they are run, or so much pressure exerted on them over how to use it.
Americans now trust the business sector more than their own government, and corporate leaders have landed squarely in the middle of a high-stakes fight over voters' access to the polls. That struggle is playing out both in states and on Capitol Hill, where CEOs have faced increasingly urgent calls from the White House to back Democrats' election reform bills.
Until now, business leaders have struggled mightily to stay out of the fray. It was one thing to contribute masks and gloves to poll workers, give employees time off to vote, and donate ballot drop boxes and stadium space during the pandemic. It's quite another to invite verbal assaults from GOP leaders by siding with Democrats over legislation, and field high-dollar attack ads from the right.
But it's getting increasingly difficult for corporate executives to remain neutral in this particular fight. For one thing, many are deeply alarmed that the election wars have moved well beyond the mechanics of voting and now threaten core principles like adherence to the truth, vote tallies based on math not politics, and the peaceful transfer of power.
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After the Jan. 6 attack on the Capitol, even longtime Donald Trump allies like Ken Langone, the co-founder of Home Depot, and Atlanta Falcons owner Nelson Peltz, publicly broke ranks with the former president.
Following a flood of GOP-authored state bills this year to restrict ballot access, hundreds of prominent CEOs, corporate leaders and companies, from Amazon to BlackRock, Inc., CitiGroup, and Netflix, signed onto public statements defending Americans' right to vote.
In Florida, Georgia and a dozen other states, new laws not only enact limits like ID requirements or curbs on early voting, but make it easier to intimidate or remove election workers, directly threatening a key guardrail of democracy.
The number of business groups actively promoting voter participation and ballot access now totals more than two dozen, says Jeffrey A. Sonnenfeld, a leadership expert and professor at the Yale School of Management. Sonnenfeld helped organize a call with more than 100 corporate executives in April in part to help them sort through the proliferation of voting rights petitions coming their way.
Among the leading groups helping rally corporations behind voting is the Civic Alliance, a nonpartisan coalition that has grown from some 40 member companies since its launch in 2020 to more than 1,200 today, with some 5.5 million employees between them. Members range from behemoths like Amazon, BP and Dow Chemical Co. to smaller players like Gaia Herbs and Rad Power Bikes.
"We were really founded on a belief that an active democracy is good for business, and an engaged business community is good for democracy," says Steven Levine, who directs the Civic Alliance and who co-founded Meteorite, an agency that creates coalitions across sectors to drive social impact and community benefit.
Other prominent, pro-voting business groups include the Leadership Now Project, which describes itself as a membership group of "business and thought leaders taking action to fix democracy," and Time to Vote, a nonpartisan coalition of companies committed to making sure that employees' work schedules don't hamper their access to the polls.
Some business-led efforts, such as Fair Elections Texas, which includes such major corporations as HP, Microsoft and Sodexo, have waded directly into state voting disputes. A Fair Elections Texas letter last month stopped short of rejecting a Texas proposal to curtail voting, but objected to "any changes that would restrict eligible voters' access to the ballot."
Some voting rights advocates are underwhelmed. Democratic election lawyer Marc Elias, who has helped lead the legal challenge to GOP-authored voting restrictions, lashed out at CEOs earlier this month. Any Fortune 500 company that "stands up for voting rights in public" but donates to GOP lawmakers who back voting limits or Trump's "Big Lie" is "complicit in the very real and dangerous effort to weaken the very democratic principles upon which our democracy relies," Elias wrote.
Corporate executives who flirted earlier this year with halting political donations, both as a way to send a message about January 6 and about restrictions on voting, appear to be quietly reopening their wallets. As Roll Call reported, political contributions from business PACs are flowing again, including to the 147 Republicans who voted against certifying the presidential election results.
Still, some companies, including JPMorgan Chase & Co., will continue to withhold contributions from lawmakers who voted against certifying President Joe Biden's win, even as they resume donating to others. And if CEOs fear losing access to GOP leaders, they also fear a backlash from consumers and shareholders, who have stepped up their activism in favor of campaign finance transparency, motivated in part by concerns over climate change and voting rights.
At the Civic Alliance, Levine makes no bones about the coalition's failure to advocate for or against legislation. "We are profoundly nonpartisan," says Levine, whose previous posts include White House Associate Director of Communications under President George W. Bush. "We do not have goals or interests that support or oppose any specific political party, or candidate, or legislation."
The group's focus instead, says Levine, is civic engagement. Arguably, encouraging voters to turn out is the best way to protect democracy's guardrails in the long run. In the meantime, though, the threats to voting will continue to escalate–and so will the pressure on CEOs to step in.
Eliza Newlin Carney
Carney is a contributing writer.
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