Launch of the Business and Democracy Initiative

Leadership Now Project, in partnership with the Black Economic Alliance and Public Private Strategies, today announced the Business & Democracy Initiative to empower business leaders to collectively stand up for American democracy, rebuild trust in democratic institutions, and secure the next generation of stable and inclusive American prosperity.

Business leaders across the country are concerned about the health of our democracy. New research by Morning Consult on behalf of the Business & Democracy Initiative shows the business community wants to be active in protecting American democracy, and their customers will support them. The results show:

• 96% of business leaders say the existence of a well-functioning democracy is “important” to a strong economy.

• 80%+ of business leaders think that businesses should act to protect democracy and act to ensure safe and fair elections.

• 51%+ of business leaders say their business is more likely than they were five years ago to encourage employees to take a stance or speak out in support of democracy, or to take a public stance as a business.

• 64%+ of consumers say that a business with a public commitment to democracy shows the business cares about its customers, their employees, and has the right values.Tomorrow, the House Select Committee’s first public hearing will surface findings from the more than 1,000 interviews conducted in its months-long investigation of the January 6th attack on the U.S. Capitol.

“The Business & Democracy Initiative will provide business leaders with the knowledge and platform to lead on the issues — from preventing election crises to expanding civic engagement — and secure a strong economy for the next generation,” said Daniella Ballou-Aares, CEO of the Leadership Now Project.

We encourage you to read and share the full announcement with your networks, and please let us know if you’re interested in getting involved. Thank you for your continued commitment to our democracy.

Beyond the Buzz: Business Leader's Guide to Democracy

From dark money to stakeholder capitalism, business leaders today are expected to know the terms and concepts being used in the civic space. Yet, when is the last time you learned about the difference between representative democracy and inclusive democracy? Probably a high school civics class, if you were lucky.

At Leadership Now, we worked with our nationwide network of business and thought leaders to create a guide to go beyond the buzz and help you understand the fundamentals of democratic systems, the basics of campaign finance, and common democracy threats like gerrymandering. We also provide insights on how businesses engage in politics and examples of innovations in democracy.

Have a question or proposed topic? Let us know! We update this guide frequently with feedback from leaders like you.

How to Bring Transparency to Corporate Political Spending

In April, Kevin Brennan, co-head of the Investment Engine and Director of Investment Systems at Bridgewater Associates, and Paige Warren, a longtime finance executive and current senior fellow at the Advanced Leadership Initiative at Harvard University, co-authored a memo outlining how ESG—a field that has traditionally focused on issues such as environmental degradation, diversity and racial equity, human rights, board structure, and executive compensation—intersects with corporate political spending. 

Our findings? Corporate political influence is a critical but overlooked driver of ESG impact.

The Leadership Now Project ESG Task Force has championed this work, spending the past several months interviewing investors and corporate executives and gathering data from resources such as OpenSecrets, InfluenceMap, and the Center for Political Accountability. This research has helped inform our thesis:

• Corporate political influence matters to ESG.

• Political spending is often an overlooked arena when it comes to ESG.

• CEOs are more likely to align corporate political spending and ESG priorities when they experience pressure from key influencers: investors, board members, and executives and employees, supported by media awareness.

At Leadership Now, we recommend leaders of U.S. public companies take a few critical actions to ensure corporate political spending is transparent, aligned with their ESG goals, and contributes to a stable political and economic environment. 

Read more in our new memo “ESG and Corporate Political Spending: Practical Actions For Business Leaders to Reduce Risk, Ensure Alignment, & Support A Stable Economic Environment” 

Since publishing the memo, Kevin and Paige are looking ahead to what comes next. After a year exploring the potential for the ESG investing wave to help strengthen US democracy, they identified an opportunity to focus on corporate political influence. They are now working on launching a new initiative called OpenBook that aims to create the norm for corporations to provide transparency and accountability for their political spending and influence activities. Look out for their interviews on our blog in the coming weeks. 

For more insights on ESG and Corporate Political Influence, visit our ESG learning center.

ESG & Political Risk: A New Leadership Imperative

Nearly every week seems to bring a new crisis for business leaders to navigate -- from Russia’s invasion of Ukraine to the Supreme Court’s leaked Roe v. Wade decision to Florida’s ‘Don’t Say Gay’ legislation to the acquisition of Twitter. With business remaining the most trusted voice in society, it’s more clear than ever that leaders need to be proactive about what their values are -- and what those values mean in the policy and political sphere.  

How does this relate to democracy and ESG? Increasingly investors and employees seek to understand how political spending aligns with a company’s ESG priorities and if that spending is creating unintended risks. For instance, companies like Airbnb and Microsoft decided that politicians who supported the Jan 6th insurrection were creating too great a political risk to America’s economy and democracy. They promptly pulled their political contributions, and a majority of companies continue to refrain from funding those political leaders. Similarly, companies en masse halted business activities in Russia in response to the invasion of Ukraine.

As state legislators introduce bills impacting the LGBT community and abortion rights, the question of how a company responds will become more local. Executives will need to decide if this type of state legislation threatens their commitment to inclusion and equity as Yelp CEO Jeremy Stoppelman argued this week, and if they will stop supporting state legislators advancing those bills, many of whom receive substantial campaign funding from companies.

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Leadership Now launches new ESG memo

ESG and Corporate Political Spending: Practical Actions For Business Leaders to Reduce Risk, Ensure Alignment, & Support A Stable Economic Environment 

The memo, written by Kevin Brennan, co-head of the Investment Engine at Bridgewater Associates, and Paige Warren, a senior fellow at the Advanced Leadership Initiative at Harvard, highlights how political spending impacts ESG priorities and offers a roadmap for company leaders to proactively manage risks through greater transparency.  

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Companies can take several steps to proactively manage risk. The first is to make sure political spending is transparent. This is measurable -- it is currently tracked by the CPA-Zicklin Index -- and is a factor ESG investors can consider. Second, decision-makers need to be clear on what their corporate values and risks are -- whether it is climate change, election risks, or inclusion -- and understand if those priorities are reflected in the candidates and political organizations their company funds. In order to accomplish this, the authors provide practical guidance for company leaders on the integration of political spending data into ESG frameworks.

These are tricky times for all leaders to navigate. As the Disney case study illustrates, political risk requires proactive management, not reactive steps taken in the midst of a crisis.

At Leadership Now, we are excited to build upon this first memo and grow our ESG initiative. If you’re interested in getting involved or learning more, please reach out to Suraj Patel.

Democracy News: May 2022

Here is the latest news from Leadership Now and our members.

• Academic Advisor and Harvard Kennedy School Prof. David Gergen in an article by CBS News doesn't hold back when asked to describe the state of democracy in 2022: "We can't continue on the path we're on; it's unsustainable," he said. "It has the sense that we're, like, in a car, at midnight, on the edge of a cliff, with rain falling, and no headlights." 

• Academic Advisor and Stanford Business School Prof. Anat Admati mentioned in a Financial Times opinion piece on how ESG investing is missing the realities of market power in an age of corporate concentration and rising profits.

• Academic Advisor and HBS Prof. Rawi Abdelal published an opinion piece in the Boston Globe sharing what the West could do to further support Ukraine and ensure the country comes to the negotiating table with the strongest possible position.

• In her Washington Post review of E.J. Dionne Jr. and Miles Rapoport’s new book, 100% Democracy, Policy Member Didi Kuo, senior research scholar and associate director at the Center on Democracy, Development, and the Rule of Law at Stanford University, unpacks how mandatory universal voting may have the potential to fix our democracy.

Article: When Should Business Take A Stand?

Not engaging in political, social and moral issues is no longer an option for companies. Leadership Now recently spoke with the Financial Times about the increasing pressure for business leaders to speak out on a range of issues from voting rights to climate change.