If you’ve got Georgia on your mind, it just might be because you are a fortune 500 CEO trying to find a path through the political quagmire engendered by a combination of newly passed Jim Crow-like voter restrictions and tough gubernatorial talk from sympathetic governors measured against potential boycotts of your company’s goods and services. If you have made measurable political contributions in support of what are increasingly populist/racist/conspiracy theory-touting politicians, and these political payments are now highlighted in mass and social media, or if your corporate headquarters just happens to be in a state that is finding way to exclude minority voters that skew left of center… who just happen to constitute a significant segment of both your workforce and your customer base… and national boycotts are threatened… and the governors of sympathetic states are equally threatening to punish your company if you succumb to pressures to try and reverse restrictive legislation… what do you do?
This is the conundrum faced by an increasing number of very big companies. The MLB move of the baseball All-Star game away from Atlanta to Denver, the Hollywood production companies that have availed themselves of the generous film production incentives in Georgia (where legislators are hinting that if productions stay away, those incentives are easily repealed) and the pressures mounting on Atlanta HQ’d companies, including Coca Cola and Delta, to use their political might to reverse Georgia’s just-past voter exclusion law, are in the national focus. With 43 states have such limiting initiatives on the agenda, companies are being forced to pick sides, with consequences for any choice. Or???
US Senate GOP Minority Leader, Mitch McConnell, who has shaken down corporate donors for decades, miraculously advised corporations to “stay out of politics” when it came to reversing new voting restrictions aimed at decimating Democratic voters. Maybe companies should regurgitate his admonition the next time a Republican candidate asks for money.
But with major lobbying networks in Washington and every major state capital, corporate America is addicted to currying political favors to limit government regulation, reduce taxes, create loopholes for them. Yet today, those efforts can lose customers and antagonize the party being slammed by these corporate efforts… and backfire. And there are other social issues, like Arkansas’ (home to Wal-Mart) passing a law restricting transgender children from playing sports in their biological comfort zone, that tug at corporate support for the offending politicians.
Internationally, this geopolitical push me/pull you is putting companies into an irreconcilable litany of choices. Manufacturing in repressive countries where labor costs create a competitive advantage. Where child labor is secretly part of the manufacturing chain. Trying to enforce Western values on nations that resist external pressures. Reacting to punitive US-imposed tariffs, boycotts and trade restrictions. We have issued arrest warrants, and requested extradition, of corporate officers of companies for violating US policies.
For example, in 2018, the United States indicted Chinese telephone manufacturer, Huawei Technologies Company’s chief financial officer, Meng Wanzhou on charges of bank fraud for allegedly misleading HSBC about her company’s business dealings in Iran. When she showed up in Canada, the US immediately issued an extradition order which is now pending before the Canadian courts. But ultimately, some companies are simply going to have to make harsh choices, particularly companies that manufacture in countries with questionable labor practices.
Writing for the April 7th FastCompany.com, Elizabeth Segran provides these examples: “H&M has spent 15 years setting up shop in China, trying to woo the country’s fast-growing middle class. But this year, it has discovered just how tricky it is to navigate human rights issues in the Chinese supply chain, while also making money from Chinese consumers.
“Many Western companies, from H&M to Nike to Burberry, have said they will no longer source materials and manufacturing resources from Xinjiang, a region in China’s northwest that produces a fifth of the world’s cotton, because of reports that China is forcing hundreds of thousands of [Muslim Uighur] minorities into manual labor in cotton fields. China has responded with fury: Government spokespeople called these allegations of forced labor ‘malicious lies,’ Chinese brand ambassadors cut ties with these brands, and some local consumers have reportedly vowed to boycott them.
“H&M has been hit particularly hard. In late March, the company’s 400 stores were wiped from Chinese maps and ride-hailing apps, and the brand’s online store no longer showed up on web searches. China is H&M’s third-biggest market by sales and accounts for 6% of the company’s overall revenue, so this ban could result in significant losses.
“For the past decade, fashion labels—including H&M—have been trying to be more values-driven, catering to millennial consumers who care about sustainability and the ethical treatment of workers. The question is: What happens when this rosy image is challenged by one of the world’s biggest markets? The struggles are not entirely new. The situation in Xinjiang is just the latest chapter in a longer story of Western companies wrestling with human rights issues in China. Understanding this broader context and history helps us make sense of the current crisis and offers insight into how the situation might play out in the years to come.” In the end, political choice may just be a balancing act as to which choice is a. necessary and b. will inflict the least damage on the company. Oh, and if it matters, the moral relevancy of that choice. And none of this even begins to address the cross-border regulatory process, a rats nest of international treaties, local statutes and regulations and governmental wink-wink practices.
I’m Peter Dekom, and the perceived necessity of corporate lobbying for business advantage, the pressure from social media and the complexity of government policies applied against private business all combine to make 21st century business a political quagmire.
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