It took the global business community almost two decades to take a stand on apartheid in South Africa after the notion of disinvestment was first tabled in the 1960s. When Russia invaded Ukraine in early March, CEOs around the world — including many here in Canada — had days, if not mere hours, to declare their position. In many cases, they had to make significant changes to their businesses almost overnight, particularly if they had operations in Russia or direct ties to that country.
This has given rise to a new archetype of business leader — the geopolitical CEO — that must now accept the responsibility of taking swift action on global issues on the scale of Russia’s invasion of Ukraine.
This added layer of CEO responsibility sits atop the already-weighty task of managing their businesses’ financial and operational performance in a challenging economic environment. Chief executive officers are also now expected to take a firm stand on a growing number of social issues, including racial and gender inequities, climate change, and the lingering impact of COVID-19.
Sympathy for overburdened CEOs will be hard to find. We can save the Atlas analogies: our business leaders are well compensated. But there is a growing body of research that makes it clear that society’s expectations of CEOs are rapidly changing, adding the imperative that business leaders now weigh in on geopolitical issues.
In late May, Edelman released a special edition of his Trust Barometer that spotlights what is at stake if a Canadian business falls short on its response to Russia’s invasion. Employees will be less loyal and less likely to advocate for their employer if the company doesn’t meet their expectations in response to this conflict. For customers, the survey noted that 44 per cent of Canadians have bought or boycotted brands or companies based on their response to the attack on Ukraine.
Of the 13 countries included in the latest Trust Barometer, Canadians expected the most from their companies with respect to Ukraine. If a Canadian company permanently ceased operations in and cut all business ties to Russia in response to the war, Canadians gave it the largest bump in trust. Easier said than done, given the complex web of investments, business interests and Russian capital tied into our economy.
On the other side of that coin, Canadians were the second most punishing toward companies (in terms of declining trust, behind only Japan) that carried on doing business in Russia as they had previously, according to the Edelman survey.
CEOs are at the center of this additional layer of pressure. We now expect the leaders of business to inform and shape conversations and policy debates around geopolitical issues, and we — as employees and customers — will punish those who don’t meet the new bar we’ve set for them.
A lot of this is tied to the rise of stakeholder capitalism. BlackRock’s Larry Fink underlines this point in his annual letter to shareholders in late March: “Stakeholder capitalism is not about politics. It is not about a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your company relies on to prosper.”
At the core of Fink’s message is this: a company needs to create value for all its stakeholders if it hopes to create lasting value for its shareholders. And CEOs need to accept — better yet, embrace — this.
So, if CEOs are now expected to be front-line communicators on a long list of issues, one that now includes geopolitics, how do they triage this demand for their time and influence?
While there is no perfect formula for deciding when to engage on an issue, there are lessons to be learned from business leaders who consistently show up well, and those that don’t. At the top of that list is the need for leaders to communicate with intent and act with purpose, ensuring they have done work internally to authentically earn a place in this conversation.
Maple Leaf Foods CEO Michael McCain is a gifted communicator who offers a blueprint for how this should be done, most recently with his strong words on Canada’s food-security challenges. McCain’s candour over the years, even in the face of tragedy, has helped him preserve trust, influence policy and effect the changes he wants to see. His success stems from not just his power of persuasion, but from the fact his argument is explicitly tied to his business and aligns with its well-established values.
Not every CEO is a natural-born communicator, and many are struggling with these mounting expectations. But the pressure on CEOs to lead from the front on geopolitics is not going away, particularly as the potential for conflict between the US and China looms. Those who hold our trust will be decisive, true to their values, and clear in their message. From Ukraine, Volodymyr Zelenskyy has shown us just how effective that formula can be.