Corporate Politics

Years ago, companies practically tripped over each other to show support for Pride Month, Black Lives Matter and other political causes.

Now, businesses increasingly want nothing to do with politics. Elon Musk left the government after his companies’ fortunes plummeted. Target, Meta and others reversed D.E.I. policies. Nearly 40 percent of companies have scaled back support for Pride Month, Axios reported.

Today, I’ll look at what’s changed — and why.

Political activism

Why do companies get involved in politics to begin with? In most cases, the people who run them believe it’s better for their bottom lines. Only rarely do they do it solely because they believe in a cause.

Three forces shape the decision to take a political stance, experts told me:

• First, companies often follow other institutions. In 2015, the Supreme Court legalized same-sex marriage nationwide, and the president at the time backed the ruling. These events signaled to businesses that gay rights causes had become mainstream, and many responded by supporting Pride Month.

• Second, companies face internal pressure. In 2022, workers at Disney walked out over legislation in Florida that restricted discussion of gender and sexuality in schools. Disney subsequently fought for months with the state government, particularly Gov. Ron DeSantis, over L.G.B.T.Q. rights.

• Third and last, businesses chase consumer sentiment. Most Americans opposed the Supreme Court’s decision to overturn Roe v. Wade, and many companies, including Apple and Starbucks, responded by voicing their support for abortion rights.

This is a balancing act. Every political stance alienates some people and pleases others. The risk of alienation is usually bigger than the potential benefit, studies have found, which is why companies typically choose silence over activism. But sometimes, there’s a clear upside.

If all of that sounds cold and calculating, that’s because it is. Businesses look at activism almost in the same way they set a price, said Nooshin Warren, a marketing expert at the University of Arizona: They want to find an equilibrium that will gain them the most profits and lose them the least.