A version of this article was first published in Forbes.

In today’s divisive climate, even the most revered companies can quickly become political punching bags.  

Earlier this year, one well known company in Florida famously twisted in the wind as it weighed whether and how to respond to a bill that sought to restrict teaching about sexual orientation and gender identity. After facing employee outcries, it wound up opposing the bill just in time to serve as a foil for Florida Governor Ron DeSantis, who signed the bill into law and publicly chided the company as “woke.” Reluctant to offend anyone, the company had satisfied no one.

The Florida experience offers a cautionary example: Fairly or not, your company will be held accountable for what you say or don’t say and what you do or don’t do. In this new era of accountability, leaders need to understand key stakeholders’ expectations, be ready to stake out positions on social issues relevant to their company’s purpose and values, identify when taking a stand is worth the risk—and, when it is, speak out and act with the courage of their convictions.  

The Era of Accountability

It has always been hard to lead a major corporation. The job has become harder.

Companies are facing a relentless stream of difficult social issues, including Covid, racial justice, climate change, labor-market upheaval, Russia’s invasion of Ukraine and actions taken by state legislatures and the Supreme Court on LGBTQ+ rights, voting rights and abortion access. At the same time, they are contending with countervailing headwinds like the recent pushback against “woke capitalism” and ESG more broadly. Navigating these issues can be overwhelming for many leaders. More than 70% of CEOs are worried about their job security, according to new research from consulting firm Alix Partners.

Their anxiety partly reflects uncertainty about the role of business in society. Decades ago, companies generally considered social engagement a soft issue that could be handled by a peripheral agent, such as a company foundation. Social engagement gained importance over time, but until recently it was not considered material to business results, so some companies put forth commitments and goals that were largely performative.

Now social engagement has become material and unavoidable, and the days when companies could opt out or pay lip service are gone. The power held by employees, investors and other stakeholders has grown, as have these groups’ expectations. According to the 2022 Edelman Trust Barometer, nearly two-thirds of the members within all major stakeholder groups are motivated by beliefs and values – convictions that influence how they choose where to work, invest capital and buy products. Corporate leaders who don’t lead face consequences quickly: employees walking off the job, customers boycotting, regulators investigating, activist investors agitating, partners deciding not to do business with them.

Attacked On Both Sides

Meanwhile, leadership on social issues has become more likely to spark attacks from both sides of the political spectrum. Consider the case of BlackRock.

In August, 19 Republican state attorneys general publicly objected to BlackRock’s emphasis on investing in support of the climate transition, and officials in Texas and Florida threatened to ban their states’ pension funds from investing with the company. Defending itself, BlackRock noted that it continues to invest billions with fossil fuel companies and insisted it doesn’t pressure companies to reduce emissions. That response drew fire from New York City Comptroller Brad Lander, a progressive Democrat, who accused the firm of violating previous climate commitments.

Corporate leaders expect criticism from the left, but traditionally they’ve been able to rely on the GOP to take a laissez-faire stance toward businesses. As companies have taken action on social issues, though, they are now confronting criticism from both sides. Many Republican lawmakers find themselves, for the first time, taking postures that are anti-corporation as they push back on corporate social stances.

These lawmakers are finding increased support from some activist investors as well. Take entrepreneur and investor Vivek Ramaswamy: Backed by high-profile Republican financiers, he founded an asset management firm to fight what he characterizes as liberal corporate agendas, then sent letters to the Apple and Disney CEOs urging them not to make political statements on their companies’ behalf.

Navigating the New Era

For CEOs, both acting and not acting are risky. How can they navigate such treacherous terrain?

To thrive in the new era of accountability, companies need leaders who:

  1. Honestly assess their company’s credibility on emerging issues.
  2. Define the company’s purpose and values and act in accordance with them.
  3. Understand the expectations of all key stakeholders.
  4. When appropriate, embrace the mantle of leadership on matters of social importance.

A CEO’s job is to do what’s best for their business. Their company’s success hinges on the trust of stakeholders, from employees to regulators to investors to communities to customers. Corporate leaders who simply react to societal issues risk missteps that can shake stakeholders’ faith.

Instead, CEOs should articulate why their companies exist, the good they provide to the world and the key touchstones that guide their actions. This work must be genuine and substantive, and companies must adhere to it assiduously. The self-knowledge it provides will prepare CEOs to act in ways that are consistent, authentic and rooted in well-articulated values.

Take McDonald’s announcement after the Ukraine invasion that the company would close all 850 of its restaurants in Russia while continuing to pay its workers there. The decision was costly; the country provided 9% of the company’s annual revenues. McDonald’s explained: “Our values mean we cannot ignore the needless human suffering unfolding in Ukraine." The stance was clear, direct and authentic.

A company with clearly delineated purpose and values will tend to attract employees, investors and customers who appreciate its convictions (or, at the very least, are not opposed to them). When the CEO faces a difficult, potentially controversial decision on a social matter, stakeholders will know where the company stands, be prepared for its actions and understand its leader’s choices—making the company less vulnerable to political demagoguery.

CEOs also should honestly and thoroughly assess whether their enterprise’s internal actions and policies align with its purpose and values. This exercise can reduce risk and provide a clear roadmap for action. And before weighing in publicly on an issue, company leaders need to honestly assess their organization’s credibility on it and ensure company policies address it adequately.

Be Judicious About Speaking Out

Societal engagement remains just one aspect of running a business, albeit an increasingly important one. Companies and CEOs don’t need to speak out on every issue, and in some cases, the right move is not to take a stand. Leaders should decide carefully which issues to weigh in on and which not to, based on the company’s purpose, values and stakeholder expectations. They also should try to gain a clear understanding of the risks involved with various courses of action, including inaction.

Accenture CEO Julie Sweet recently was asked about her take on the anti-ESG backlash and whether she was a “woke” CEO. Describing herself as “a CEO who brings value,” she responded: “Sustainability matters to our employees from a recruiting standpoint, it matters to our clients, it’s part of our regulatory landscape, it matters to consumers. That’s not changing because of what politicians want to call it.”

Leaders may be tempted to stay on the sidelines given the recent pushback against “woke capitalism” and ESG. But we continue to believe that resilient companies must be prepared to navigate social issues.

By Jim O’Leary - Edelman U.S. Chief Operating Officer, Corporate Affairs Practice Chair, and Global Chair of Impact & ESG.