Not long after Russia’s invasion of Ukraine the gravity of the situation became clear. Images of burning buildings and fleeing Ukrainians were flashed around the world, which meant leaders were pressed almost immediately to respond to the crisis. For most government leaders the decision was easy. They had to say something – it was their job to make statements on American foreign policy. For most business leaders the decision was less easy. For their traditional, typical posture was publicly to maintain not only their personal neutrality, but their professional one. Maintaining the neutrality of the companies they led was more than a norm, it was a mantra.
Recently, however, sitting on the fence has become more difficult. American CEO’s, especially those who head large public companies with widespread name recognition, have been pushed, slowly but certainly, on some issues, to take a public stand. This has not pertained on motherhood and apple pie; it has pertained on hot button issues such as LGBTQ rights or Black Lives Matter. But, of course, when chief executive officers speak out, they voice not just their own views but those of the companies they represent. Moreover, when they do more than say their piece – when they act – they and those to whom they are responsible can be at risk.
Given that CEOs inevitably represent many different stakeholders, what should we assume? That the CEO is speaking only for him or herself? That the CEO is speaking for the board? That the CEO is speaking for employees? That the CEO is speaking for shareholders? Or customers, or providers, or communities? Where does it end – or begin? Not only is there on almost every important policy issue a difference of opinion, but the divisiveness can get fractious, downright nasty. Additionally, it can get costly. If CEOs say or do something that I don’t like, I, and legions of others, can take our business elsewhere.
The crisis in Ukraine has proven an exception to the general rule. CEOs of American companies were expected to, and they did, take a stand quickly, decisively, in ways that were unprecedented.
It’s not yet clear whether we’re in new territory here, whether this is a template for the future, or whether after Ukraine, CEOs will revert to their usual caution, their usual silence on topics that are politically fraught. What does seem certain is that stony silence will increasingly be a less viable option.
Which raises the question of why this crisis was a watershed. Why has Russia’s invasion of Ukraine done more to push CEOs to take a stand and, additionally, to put their money where their mouths are, than any other global crisis? Why have CEOs with astonishing speed halted their sales in Russia, shuttered their stores in Russia, suspended their transactions in Russia, withdrawn their businesses from Russia, stopped investing in Russia?
- Moral clarity. A large, ostensibly powerful country invaded a much smaller, less powerful one, without apparent reason and with devastating consequences.
- Personal clarity. Evil is personified in Russian president Vladimir Putin. Good is personified in Ukrainian President Volodymyr Zelensky.
- Political past. Russia is the bad guy here – a bad guy with whom Americans are familiar. The Cold War was long ago, but not that long ago. President Joe Biden is among those of a certain age who remembers when the world was bipolar, the United States and capitalism on one side; the Soviet Union and communism on the other.
- Political present. In recent years Republicans and Democrats have been far more divided than united. Ukraine is different. On Ukraine Republicans and Democrats have managed to present a generally united front.
- Nuclear Weapons. Putin has bandied about their use. Such talk tends to focus the mind.
- NATO. The North Atlantic Treaty Organization is America’s most important and powerful alliance. But for decades Europe’s member states, especially Germany, were largely passive participants. Ukraine changed all that. The invasion has shaken Europeans to the core, gotten the West to work in tandem.
- Public opinion. American public opinion is remarkably clear in its preference. Americans are even willing to sacrifice for Ukraine. Last week three out of five said they would pay more at the pump to help Ukraine’s cause. Their sympathy toward Ukraine is not just an abstraction. CEOs know full well it is mirrored in their boards, workers, shareholders, and other stakeholders.
- Triumph – for now – of stakeholder capitalism over shareholder capitalism. This movement has been percolating for years, companies increasingly pressed to ditch the profit-is-all model for one in which other values, for example, protection of the environment, become as important or, more accurately, more important than they used to be.
- Shock. Difficult to exaggerate how much of a blow has been Russia’s invasion of Ukraine. It has upended our sense of the world order. It has upended our sense of what – in the 21st century – is politically and militarily possible. It has upended our sense of what should constitute a global economy. And it has upended our sense of what one man can do to one million – and then some.
What is the short answer to why corporate leaders responded to Russia’s war against Ukraine with unprecedented clarity and alacrity? Because the situation seemed, but was not, surreal.