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Fri, Oct 14, 2022 1:53 PM

Do Business and Politics Mix?

The trouble had started several weeks earlier, when the StarTribune ran a story about the donation that Natural Foods, a midsize chain of organic grocery stores based in Minneapolis, had made to a super PAC called Minnesota Business First. The company had chosen to support the group because of its plan to fund ads promoting political candidates who had strong pro-business platforms in the upcoming elections. However, in a last-minute push to court conservative voters in a tight race, one of those candidates, Pat Erikson, a rising star in the Minnesota Republican Party, had taken a strong stance against gay marriage, saying that he’d vote against any bill to legalize it. Much to Harold’s dismay, Natural Foods was now equated with that position.

“I’m not happy about it either,” Harold told Ken. “You know more than anyone how much I don’t want the word ‘antigay’ associated with Natural Foods.” The two men had discovered early on in their 10-year working relationship that each of them had a gay son.

When Harold had approved the super-PAC donation a few months before, he hadn’t thought to question how Minnesota Business First vetted candidates on social issues. And even when Erikson shifted to his hard-line stance on gay marriage, Harold hadn’t anticipated how big the ramifications would be for Natural Foods.

Customers had staged protests at several of the company’s larger stores in San Francisco, Los Angeles, and Minneapolis, and many of its 10,000 employees had signed a letter to Harold asking that Natural Foods explain its support of Erikson. Several senior executives privately expressed concern that their gay and lesbian team members were feeling alienated. With the help of Betty Martin, Natural Foods’ head of government relations, Harold had issued an internal statement saying that the chain’s donation did not mean that Natural Foods endorsed all the views of the candidates Minnesota Business First supported and that the executive committee and the board would be reviewing its policy on campaign donations.

“I saw your letter to the employees, and that was the right message,” Ken said. “Make it clear that Erikson’s position is not what Natural Foods stands for; we’re a socially progressive organization.” The company was known for being a generous donor to nonprofits, both in Minnesota and in other states where it had stores; it gave 5% of its pretax operating profits to charity each year.

“But we need to take it a step further,” Ken continued. “As someone who gets paid to think about risks that you and your team don’t see, this is where I need to advise you to avoid making the same mistake again. Natural Foods should get out of politics.”

“Do you think I would have gotten a meeting with the governor on 24-hour notice if we hadn’t been a donor?”

Harold had known that this would be Ken’s take on the situation. Ken had always argued that the world of campaign donations and lobbying was a minefield that sooner or later would result in a crisis, just like this one. But he was outnumbered by fellow directors who thought that ignoring politics was even riskier. There were many policy issues, from taxes to food regulations, in which the company needed a say if it was to remain a successful, profitable business and realize its mission of getting healthful food into the hands of more people.

“Everyone likes to say it’s im­possible,” Ken said now. “But look at Starbucks, Costco. They don’t make federal campaign donations. They don’t lobby Congress. And the Supreme Court’s decision in Citizens United hasn’t changed their position on that.”

“Come on, Ken. That’s all true, but those companies are in politics. They’re just involved in ways that don’t leave obvious ‘receipts’ lying around for the national media to find. We’ve built our reputation on doing the right thing for people—our customers, our employees, the environment—and most of the issues we get involved in put those stakeholders first. Think about how we support the expansion of federal food education and safety programs. We need political clout to make those things happen. And it doesn’t cost us much; it’s a tiny percentage of our revenue.” Harold looked out his car window and saw several employees wave at him on their way into the office. He was usually one of the first to enter the building, but this call was holding him up.

“We can maintain that reputation by giving to charities and nonprofits, but politics is getting too dangerous,” Ken retorted. “I’m not even sure we’re getting the results we want from these donations.”

“We’ve gone over this before,” Harold said. “Betty has made it clear that supporting these PACs isn’t about buying legislation or votes, but it does give us a voice. Do you think I would have gotten a meeting with the governor on 24-hour notice if we hadn’t been a donor?” The year before, the Minnesota legislature had taken up a GMO-labeling bill that, if passed as written, would have imposed requirements inconsistent with those in other states, forcing the company to change its labeling system and costing it millions of dollars. Harold had secured the governor’s word that he would veto it and encourage state lawmakers to focus on rules more consistent with those in place elsewhere.

“Please. We’re one of the biggest employers in Minnesota. We’d have that access even if we didn’t make donations.”

“That’s not what Betty says,” Harold replied. “Let’s talk to her about this at the board meeting.”

“You know what her position is going to be,” Ken said. “She doesn’t want to jeopardize her job.”

https://hbr.org/2014/11/do-business-and-politics-mix

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