Good morning. The Senate is preparing to vote on Trump’s policy bill. Canada said it would scrap a tax that angered Trump. Much of Europe is enduring extreme heat. More news is below. But first, we take a look at why businesses are pulling away from politics.
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 activismWhy 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:
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. Changing timesSituations can suddenly change, too. In 2020, all three forces pushed companies to take racial justice issues seriously, with genuine bipartisan agreement in America that the killing of George Floyd was wrong. Many businesses embraced Black Lives Matter and D.E.I. initiatives. Over the past few years, the situation has become more complicated. President Trump opposes D.E.I. Surveys also show that such initiatives aren’t broadly popular and that half or even most Americans don’t want companies involved in politics. Now businesses have to rebalance the costs and benefits of pleasing Trump versus their divided customers versus their split employees. In this complex situation, more companies have opted out — to avoid linking themselves too closely to any particular cause.
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