The growing threat of government retaliation against businesses

Ballou-Aares is the founder and CEO of theLeadership Now Project, a membership organization of business and thought leaders committed to protecting and renewing American democracy.

Recently, we’ve observed an unsettling trend in the United States — political retribution against companies for their speech, especially when that speech involves disagreement with political leaders. The ongoing conflict between the state of Florida and the Walt Disney Co. serves as a visible and disturbing example. In an effort to address the issue, the Leadership Now Project working with pro bono counsel Covington & Burling, on August 2, 2023, filed an amicus brief in Walt Disney Parks v. DeSantis.

Leadership Now’s brief underscores what is at stake when political leaders use their power to punish companies who express alternative views. Political retaliation creates a chilling effect throughout the market, hampers economic growth and deters investment by undermining fundamentals of business and democracy.

Regrettably, the actions of Florida and Gov. DeSantis outlined in the Disney v. DeSantis case are not isolated incidents of government retaliation against businesses. Companies from Delta Airlines to Walgreens have faced the threat or reality of government retaliation after responding to customer opinion, or taking actions in response to state or federal laws. The outcome of the Disney v. DeSantis case will have profound and broad-reaching effects that could significantly undermine the ability of companies to be responsive to the evolving needs and interests of customers, employees and shareholders.

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Beyond affecting the targeted company, the threat of political retribution engenders what historian Timothy Snyder terms “anticipatory obedience.” Businesses more broadly may choose not to take certain actions out of fear, thereby reining in their own rights. This self-imposed restraint can limit a company's ability to make decisions about how to manage itself in the best interests of its stakeholders, including choosing when to take action or voice opinions.

Today, firms are under heightened pressure from customers, regulators, employees and shareholders to engage on an ever-expanding range of issues. Companies, whether supporting or opposing a particular policy, or aiming for neutrality, find themselves navigating the treacherous waters of a politically charged environment, fearing both government punitive measures and running afoul of public opinion.

But stepping back from the arena in fear of retaliation inadvertently helps create an environment where companies become ever more susceptible to the whims of political actors and agendas. In the face of corporate retreat from the public sphere, political leaders become ever more emboldened to behave like autocrats, rewarding allies and punishing perceived adversaries. Businesses working to ensure political retribution does not take hold in the U.S. as it has in other countries is in the best interest of firms and of democracy.

Furthermore, as trust in government and media dwindles globally, business leaders have emerged as rare credible figures in a distrustful landscape. According to the 2022 Edelman Trust Barometer, businesses were perceived as the most trusted institutions, and by 2023, they were uniquely viewed as institutions of both competence and ethics. As a trusted group in society, business leaders can navigate these tricky waters by focusing on protecting the fundamentals of democracy without addressing every individual issue that arises from political processes misaligned with citizen interests.

For instance, in August 2023 in Ohio, business leaders — from former Chairman and CEO of Procter & Gamble, John Pepper, to Jeni Britton, Founder of Jeni’s Splendid Ice Creams, firmly defended democracy against an effort to alter the state's century-long rule. The effort aimed to make it more difficult for citizens to approve or win ballot initiatives. The trusted leadership of these business figures played a critical role in the campaign's success in preserving a stable democratic process.

Leadership Now recommends utilizing our Corporate Civic Action Plan or the University of Michigan's Erb Institute Principles for Corporate Political Responsibility, as guidance. Both offer business leaders actionable, non-partisan templates to help determine whether and how to engage in civic and political affairs responsibly.

It is in the collective interest of democracy and a strong economy for businesses to push back on political retribution and use its influence to help restore the fundamental tenets of democracy.