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Hot air, cold climate: why CEO activism at Davos may have peaked

Whatever you think of World Economic Forum annual meetings, there are still few better settings than Davos for a chief executive wanting to look statesmanlike. You get the same alpine backdrop as Christine Lagarde or John Kerry, and the same sweeping subjects on which to opine. (Reskilling! Reforestation! Responsible AI!)

Klaus Schwab’s creation may not have the sway that conspiracy theorists suspect, but it has been influential in promoting the idea that unelected business leaders should have as much of a voice as elected officials in our greatest global debates.

Lately, though, the message from some politicians to the business world’s would-be statesmen has been “get off my alp”. 

Executives who come to Davos to advertise their emissions-cutting targets now find themselves lambasted by conservatives who call the net zero agenda a threat to energy security. Liberals carp that stakeholder capitalists’ idea of leading on social issues seems not to involve paying much tax.

This week’s meeting saw BlackRock chief Larry Fink lamenting partisan critics who “demonise” the asset manager’s sustainable investment policies. Republican states pulling their mandates had cost it about $4bn in 2022, he estimated — an irritation for a business that added $230bn of US investments last year but a figure that may grow.

Other corporate leaders fear a “wokelash” from rightwing activists who accuse them of supporting liberal social causes. As regulators pursue “greenwashing” by companies that hyped their climate claims, executives wonder whether “greenhushing” — staying quiet about their environmental efforts — is the wiser approach.

Away from the noisy campaigns, though, debate is shifting to whether chief executives have taken on too many polarising issues on which they lack legitimacy. Academics, lawyers and consultants are pitching roadmaps for how to navigate an increasingly split political environment with less risk of pushback.

The risks of “corporate entanglement” in politics are such that business leaders should “default to non-involvement” on most political issues, said one recent paper from the BCG Henderson Institute think-tank.

If they cannot avoid taking sides, they should explain the principles guiding their decisions and let employees or regulators vet their actions, it said.

Leo Strine, the former chief justice of the Delaware Supreme Court, said that voters on the left and the right ask: “Who are CEOs to use other people’s money to advance their own idiosyncratic views of the good?” 

He has urged companies to concentrate on policies supported by both left and right, such as paying a living wage, non-discriminatory hiring and avoiding harm to the environment. If a company must take a position on external public policy, he wrote, it should result from board deliberation, not the chief executive’s whim.

But the CEO activism Davos once celebrated may have peaked: in its place a more calculated approach to political engagement is taking shape, focused on the areas of most relevance to companies’ core constituents, not least investors.

That will not stop the CEO-statesmen from seeking the Davos stage. But next year they are likely to come armed with a much clearer explanation of the business case for straying into territory the politicians once claimed as their own.

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