Repressive State Policies Present New Risks: How Business Can Address Them

The motivation behind the corporate ESG (environmental, social and governance) movement is simple. This is the 21st century. Businesses are responding to climate change and other contemporary risks. They also respond to the buying power and employable talent of a diverse population. When government officials diverge from these foundational bottom-line considerations, business leaders need to step up and help restore compatibility between public sentiment and public policy. 

Repressive state policies are creating new risks…

Attracting and retaining top talent has become more challenging as some U.S. states enact new laws that restrict civil liberties such as LGBTQ rights and abortion access. Those repressive laws place individuals in harm’s way, even to the extent of putting their lives in jeopardy.

Brands with operations in repressive states are at risk of losing top talent, as workers increasingly take state-level policies into consideration when deciding where to make a home. For example, 73 percent of U.S. workers agree that “state-level social policies are an important factor when they consider relocating to another state," according to recent polling by the organization BSR (formerly Businesses for Social Responsibility). 

“This dynamic is creating opportunities and risks for companies seeking to retain and recruit workers as they navigate a range of issues on which they’re increasingly expected to respond,” BSR noted.

A brain drain is also taking shape: Another recent poll from the education consulting firm Art and Science Group shows that repressive state policies are looming large in college choice. A “substantial fraction” of high-school seniors bound for four-year colleges said they rejected schools they initially considered due to repressive state policies. 

Levels remained relatively the same among those identifying as liberal and conservative, at 31 percent and 28 percent, respectively. Twenty-two percent of moderates also said that state policies influenced their college choice.

…but businesses can create new alliances with youth voters to address them

The business-as-usual practice of providing equal financial support to both Republican and Democratic candidates has clearly backfired in states where Republican office holders are turning the clock backward on social issues, exposing their populations to physical harm as well as verbal threats and harassment.

Business leaders seeking to protect their brand reputation can begin to repair the damage by withdrawing support from candidates who support repressive policies, as some did after the failed insurrection of Jan. 6, 2021. Instead, businesses can focus their attention on candidates with policies that reflect public sentiment, regardless of their party affiliation. Such an approach is poised to resonate especially among the up-and-coming cohort of Gen Z voters, defined as those born after 1997.

The opportunity to focus on an inclusive, party-neutral approach to reach young voters is illustrated by the Art and Science poll, as well as a new survey on decarbonization from the Pew Research Center.

“Nearly 7 in 10 Americans (69 percent) favor the U.S. taking steps to become carbon neutral by 2050," Pew noted. As may be expected, opinions diverged sharply along party lines, with 90 percent of Democrats and only 44 percent of Republicans supporting decarbonization. But that disparity masks a key finding: The majority of younger Republicans supported decarbonization by a wide margin.

“There are important differences by age within the GOP: Two-thirds of Republicans under age 30 (67 percent) favor the U.S. taking steps to become carbon neutral,” Pew noted.

Young people are voting in high numbers

Further evidence for the political strength of progressive Gen Z voters emerged in the 2022 midterm elections. A post-election study from Tufts University, for example, found that young people “gave Democratic candidates a winning advantage in close races,” including elections in Arizona, Nevada, Georgia, Wisconsin and Pennsylvania. Abortion access was the leading factor driving the youth vote in these swing states, the report found.

Similarly, the Human Rights Campaign credits young people with tipping the balance toward Democratic candidates who support LGBTQ rights. “Equality Voters are a group of voters modeled to support LGBTQ+ equality, numbering 62 million nationwide. They represented 39 percent of the 2022 electorate — a number that reflects the growing political strength of this voting bloc — and tend to be younger and more racially diverse than the electorate as a whole,” HRC wrote in a post-election announcement last November. “Equality Voters delivered huge margins to pro-equality Democrats up and down the ballot, pushing back against extremism and defying pre-election predictions of a massive ‘red wave.'"

Taking the high road is complicated

Against the backdrop of progressive Gen Z voting power, Gov. Ron DeSantis’s decision to wage a legal and legislative war against one of Florida's top employers, Disney, looms large in the media spotlight.

Fortune magazine senior editor Ellen McGirt described the confrontation as a pitched battle between DeSantis and longtime Disney CEO Bob Iger. At stake is the right of Disney to express support for DEI (diversity, equity and inclusion) principles, which form a cornerstone of ESG guidelines.

“DeSantis has now turned Disney into a 'woke' leadership talking point and punching bag,” McGirt wrote on May 16. She also cited Yale management professor Jeffrey Sonnenfeld, who told the Washington Post: “Iger never loses. He won’t miss his moment when it comes up.”

The high-stakes fight between the two men came to a head when Iger canceled plans for a new $1 billion campus in Orlando. Though other bottom-line considerations were in play, the move served to dramatize the risk of expanding a corporate footprint in states where officials have run far to the right on public policy.

Like workers and college-bound students, business leaders can and should take state-level policies into consideration when deciding where to throw down stakes. However, fleeing from state to state will do nothing to tamp down the threat that extremism poses to the normal course of business decision-making. Only forceful public policies that protect human and civil rights can do that.

With the all-important 2024 presidential election cycle already swinging into action, businesses have an opportunity to amplify the voices of young voters and turn down the dial on extremism — and they should do so now, before it’s too late.