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Faculty Viewpoints

Can Business Leaders be a Force for Democracy?

In the wake of the presidential election, Yale SOM leadership expert Jeffrey Sonnenfeld hosted three urgent discussions with top CEOs, where they discussed their concern about attempts to overturn the results and made a much-reported pledge to freeze donations to legislators who voted to reject election results. We talked to Sonnenfeld about how the business leaders found a political voice and what it means for the future.

An American flag surrounded by office towers

You met on short notice with a group of business leaders three times in the wake of the presidential election. What prompted that first meeting? 

As you know, we had pioneered this space of CEO conferences, but we always thought we needed physical space to do it, to build that degree of trust and candor—noncommercial, off the record. I wasn’t sure that it would translate to Zoom. 

When we did a regular CEO Summit in June, and then one in September, where we warned them they’re on the record, they were extraordinarily candid, even so much so that with Vice President Biden, now President Biden, there, we got them to pivot from the topic we planned to talk about, which was the impact of the pandemic on their businesses, to talk about racial injustice issues in response to the George Floyd murder immediately preceding the meeting.

And I thought, gosh, if we could do that with these CEOs at such a candid remote format, I wonder if we could do it if we told them it was off the record on something as sensitive as the election issues. And then we had a test of that. The election itself was Tuesday, November 3. On Thursday night, November 5, former president Trump came out, blocking out the news hour, with his presumptive announcement declaring he’d won the election that he had lost and asserting powers he didn’t have.

After Trump declared himself the winner of the election, Prof. Jeffrey Sonnenfeld remembers, “I heard from several CEOs within five minutes. They said, ‘We want to talk.’ ‘OK, next week.’ And they said, ‘No, that’s too late.’”

And as that happened, I heard from several CEOs within five minutes. They said, “We just want to talk.” “OK, next week.” And they said, “No, that’s too late.” And so I got ahold of our tiny team of Joe DeLillo, Cassidy Rhodes, and Steven Tian and with 12 hours’ notice, we had assembled a group of about 40 CEOs by the next morning at 7:00. We called it Business Leaders for National Unity, to keep it nonpartisan. 

We opened up with Rick Pildes, who teaches at Yale but is primarily based at NYU, as a constitutional law expert, and Tim Snyder, the political historian. They used some language such as “coup d’état” that many of the CEOs, even though they rallied out of alarm and concern, thought may have been a little bit overblown. In the subsequent two calls, of course, nobody thought it was inappropriate to consider the language of coup d’état.

But these are CEOs that had a strong patriotic concern. They had a good deal of pride that they felt that we had just enjoyed the largest fairest, freest, most secure election in our history. Many of these CEOs had encouraged their employees with paid time off for the first time in history to go and vote. I had personally gone after two dozen prominent CEOs and the board of the Business Roundtable to help spark this civic engagement in the almost-200-year-old spirit of Alexis Tocqueville’s “social capital.” Many of the nation’s polling places were reliant upon octogenarian and septuagenarian volunteers, who faced elevated risks of COVID, the threat of excessively emotional partisans, and a historic surge of ballots.  The business community responded impressively going into these historic elections. 

After the election, Tim Snyder’s lesson, which the CEOs rallied behind, was that it was critical for business leaders as one of several sets of institutional leaders to quickly celebrate these elections as legitimate and to confirm the elections. The data shows that business leaders are not only among the trusted but are now the number one most trusted source of authority in society—more than journalists, sadly more than academics, more than the clergy, and, of course, more than elected officials.

So we drew on that platform of legitimacy and the group came out with statements that they were able to share with the leaders of the major trade groups—the CEO leaders, not the professional staff—of the Business Roundtable, the National Association of Manufacturers, and the U.S. Chamber of Commerce—so when the Pennsylvania election was called the next day, the Business Roundtable had released a statement, which we think we helped make the best statement of a trade association ever. It was so sharp and clear and that’s because it was the voice of business people and not just a voice of professional staffers that are conflict averse. 

It said five things that we talked about in our meeting. Number one, that the Pennsylvania election then threw them over the threshold for the electoral college vote decisively and congratulated President-Elect Biden and Vice President-Elect Harris. Number two, it was the largest fair and free and secure election in American history and they were proud of their contribution to it. Number three, that if then President Trump had any grievances, he should appeal them to the proper judicial channels only. And number four, if he does so, he should bring the evidence of systemic fraud—and we see none. And fifth and last that we expect a speedy, transparent transfer of power. 

The timing of it was because of what we had catalyzed, that the business leaders were ready to go. There wasn’t a moment’s hesitation, which is an important lesson from Tim Snyder, that you shouldn’t wait to see how others respond. You should lead, as they did.

So there was a huge contribution out of meeting one, and we never thought there would be a meeting two.

You met again on January 5, the day before Congress met to ratify the electoral vote. 

I thought it was extremely unlikely that we would be meeting again. But there was, again, a tremendous spontaneous groundswell of desire from the CEOs to be able to meet and talk, that they needed to do something and say something, to take a stand, as they saw, to their horror, that 50% of the Republican leaders in the house and initially 25% of the Republican leaders in the Senate were voting to reject the election results—they retreated somewhat in the Senate, and I think the CEOs had a good deal to do with that. Because these CEOs made a pledge that they would speak to Republican obstructionists to get them on board, that they were horrified that the politicians were speaking a fiction that there was evidence of systematic election fraud.

“We asked in our CEO poll if the president was trying to undermine and overturn a free and fair election; 100 percent said, ‘Yes.’ That was astounding. We’ve been doing these CEO surveys for 33 years but we had never had a unanimous vote.”

We have the whole political spectrum in our events, and these CEOs, without exception, were saying that it’s not a partisan issue, that among patriots, you can differ dramatically on all policy matters, but as to whether or not we’re going to live by our system of governance and respect a free and fair public election as well as all the state and federal judiciary decisions—that was unanimous. We asked in our CEO poll if the president, in his effort to intervene in Georgia, was trying to undermine and overturn a free and fair election; they overwhelmingly, 100%, said, “Yes.” That was astounding. We’ve been doing these CEO surveys for 33 years at 110 CEO forums around the world, from NYC and D.C. to Beijing, Delhi, Mumbai, Shanghai, Atlanta, San Francisco, Phoenix, Mexico City, and New Haven—but we had never had a unanimous vote. It was unanimous that they would defund the obstructionists who weren’t abiding by the rule of law.

Then we asked them, “Should he be impeached?” And overwhelmingly, on January 5, they said, “No, it wasn’t worth it.” 

That’s what they came out with at the second meeting. And we thought, fine, we’re done. Nobody anticipated the magnitude of the violence then that necessitated a third call, a week later. And at that one, it was reversed: it was 100% in favor of impeachment.

At that third meeting, you’ve written, there was a sense that it was no longer just about this particular transition but about a long-term danger to democracy that they needed to respond to.

There was an appreciation for just how fragile democracy is and how much in danger we were of a mobocracy, of an authoritarian rule setting in, unless they were to do their part. 

The idea of cutting off donations to lawmakers who voted against certifying the election has gotten a lot of attention, and a lot of companies have said that they will do that. How do you see that reverberating in the future? Is this something that we’re going to be thinking about two years from now, or is this a brief moment that we’ll forget about?

It’s a good question, because there’s some cynicism out there where people are suggesting that companies are doing this because they saw who won the election. There’s a fiction of a Faustian deal where the business community was enthusiastic about the Trump administration to secure regulatory rollbacks and for preferable trade deals and for favorable tax reductions. And that’s not quite true. There were many who were willing to bite their lips for a tax rollback that did repatriate trapped overseas profits, which unfortunately didn’t result in all the promised capital expenditure jumps that the general population was sold on. 

But on the regulatory front, you can’t point to many major CEOs who were asking for the EPA to be curtailed. The Trump administration was using this as an excuse to reverse Obama. In fact it was the auto industry that was and is insisting that the EPA continue with the Clean Air Act exemptions for California, to allow them to have more exalted standards, because they were working with them and meeting those standards. The same on the energy front, whether it was the oil or gas companies and their ability to capture methane, or the utilities, which to the shock of many were working with environmentalists. They have put in the investments in pollution abatement, equipment for carbon monoxide capture; they don’t want the rollback. On guns, there were 300 companies that were working hard on that front, breaking post Parkland with the NRA and taking assault weapons out of the stores, from Walmart to Dick’s Sporting Goods. On immigration issues, the business community was more effective than even the universities or the immigration lawyers this summer in lobbying on the H-1B visa issues. 

“On so many fronts, the business community found their political voice, and they realized they don’t want to be funding societal disfunction and divisiveness.”

On so many fronts, the business community found their political voice, and they realized they don’t want to be funding societal disfunction and divisiveness, by trying to spread the money between Democrats and Republicans, divisive legislation that was actually leading to xenophobic or racist or isolationist policies that weren’t in the interests of the American society or business. 

So they’re going to be far more circumspect going forward, and taking a look at how corporate dollars are spent. Companies are being held accountable by name as to where those dollars are going and which legislators they are funding. A lot of congressional leaders will have permanently lost support.

Do you think other votes or other actions will cross that line? Or is the sedition vote unique?

Well, it really stands out. But we saw it earlier in the bathroom bills, what was euphemistically called “religious freedom acts” in Indiana, North Carolina, Arkansas, Texas, when the business community rose up. And, by the way, not led, initially, by the Starbucks, Nikes, and Apples that are often on the leading edge of progressive thought. In fact, it was mainstream traditional companies that spoke out—AT&T and UPS and Walmart. It was speaking from the heartland of the country, these traditional industrial pillars. And that was similar post-Charlottesville, when President Trump, to the horror of so many in the nation, the day after the murder, drew an equivalence, saying that the Nazis and the peaceful protestors all had good people on both sides. Ken Frazier, CEO of Merck, said, “I can’t be a part of these [presidential] business advisory councils.” And that led to the disillusion of all three of them with a spontaneous mass exodus. 

And that’s the same spirit that we’ve captured. And we see that continuing going forward. 

I wrote a book a long time ago called Corporate Views of the Public Interest. At that time, in 1980, only a few firms such as DuPont and GE, and then Weyerhaeuser, had opened up government affairs offices in Washington. They were largely relying on myriad trade associations to represent their voices.

It was a nascent movement at that time. Now, business leaders don’t consider it ancillary; they understand that it is absolutely core to understand the societal context—understanding that, like their voice in financial markets and labor markets and product markets, they have to be engaged in this space. They can’t just rely on bothsidesism or “a plague on all their houses.” They have to have a political voice. 

As our distinguished alumna Indra Nooyi has modeled for us all through her “Performance with Purpose” initiative while leading PepsiCo, doing good is not antithetical to doing well. At a professional school we have the opportunity to help leaders find an alignment between business and society.

Interview conducted and edited by Ben Mattison.
Department: Faculty Viewpoints