In last night’s State of the Union (SOTU) address, President Biden outlined his administration’s priorities and made his case for a second term. Tens of millions of Americans tuned in to the address, which was broadly viewed—in part because of repeated references to his “predecessor”—as a kickoff to the 2024 presidential election season.
The SOTU is somewhat unique among presidential addresses, as by its very nature it needs to cover a veritable laundry list of topics. Last night’s speech was no different, and for business leaders, identifying the signal within the noise to understand the implications for their organizations can be challenging amidst so many headline moments.
Here are the top five takeaways the Kekst CNC team identified for senior leaders to keep top-of-mind:
1. Staying positioned on the side of key stakeholders
With prominent references to “shrinkflation,” student loans, reducing housing costs, and his recently announced rule capping credit card late fees, President Biden continued his campaign for an agenda he framed as “building an economy from the middle out.”
His focus on these issues reflects an increased scrutiny of what some policymakers perceive to be predatory practices that stifle competition and harm the American consumer, as well as President Biden’s efforts to win over voters concerned about pocketbook issues. As part of his competition agenda, the President has targeted airlines, cable companies, hotels, and other industries for tacking on fees, frequently positioning companies as dishonest and anticompetitive.
The promotion of his administration’s initiatives in these areas was part of a broader effort by the President to frame his policies through the lens of how they benefit individual voters—his key stakeholder group—with a focus on the kitchen table issues that impact them the most. Regardless of whether a business is part of one of the industries that received special attention in the address, leaders should reexamine whether and how they are positioning themselves on the side of their own stakeholders, both in terms of messaging and in terms of action.
2. Navigating sociopolitical issues
Biden discussed social issues ranging from abortion, IVF, border security, voting rights, and social security, and shared his perspectives on threats to democracy both at home and abroad.
Recent surveys have found mixed attitudes towards businesses engaging around social issues, with notable differences among age, political affiliation, race, and other demographic lines. But even with these mixed and evolving perspectives, business leaders should establish a clear and transparent process for deciding whether and how their organization should address politicized or otherwise divisive topics (if such a process doesn’t exist already).
The absence of a predefined framework can invite criticism of ad hoc decision-making when such debates arise—and can rob communicators of their ability to focus on a thoughtful process, instead of the outcome, particularly when the end result may not satisfy every stakeholder. Even worse, it could lead a business to make an ill-advised decision that creates significant reputational or operational harm. These frameworks must be created through a deliberative process, a topic worthy of a far broader discussion than possible here.
3. Seizing the moment around policies with outsized significance to individual sectors and businesses
As expected, President Biden weighed in on a host of policy areas that are of significant—if not existential—interest to particular industries. From fresh attacks on prescription drug pricing and a lack of transparency in fees charged by online ticket marketplaces, to proposing new tax credits for paying mortgages and promoting policies to incentivize domestic semiconductor manufacturing, Biden addressed specific industries and individual companies in ways both good and bad (from their own points of view).
Corporate leaders operating in these sectors are likely already well-attuned to specific policy proposals. But to the extent the SOTU elevated those initiatives, leaders should be acting quickly to either capitalize on the potential momentum of favorable policy proposals, or challenge those that would have detrimental effects. While such efforts will often involve direct advocacy by government relations teams, they should generally also emphasize a robust public affairs component, including engaging with media, working with third-party allies, enlisting grassroots support, creating compelling collateral materials, promoting content through targeted paid amplification, and more.
At the same time, it can be important not to overcorrect, as previous addresses by presidents from both parties are littered with proposals that were quickly relegated to the dustbin of history. For example, while the President touted a new plan to reduce the deficit by hiking taxes on corporations and the wealthy, those ideas are all but certain to be dead on arrival in a Republican-led House of Representatives.
4. Using personal storytelling to make a connection
Biden called out several invited guests who were present during the speech, harnessing the power of their personal experiences to highlight proposed federal legislation on IVF, student loan forgiveness, gun violence, and advancing civil rights, among others.
According to The American Presidency Project, the practice of acknowledging guests in the State of the Union address dates back to the president who earned the moniker of the Great Communicator, Ronald Reagan. For President Biden, these moments were some of the highlights of last night’s speech, with several drawing extended periods of applause.
This should serve as a timely reminder that business leaders should seek out opportunities to put a human face on the work of their own organization. While sharing macro-level figures on business performance, community engagement, or other stakeholder metrics is also important, it is easy to get caught in the trap of defaulting to a focus on aggregated data simply because it is often more easily available. Making the investment of time and resources, first to identify powerful stories of individual impact, and then to share them through compelling formats and channels, is usually worth its weight in gold.
5. Preparing for increasing expectations around climate disclosures
The President called out the climate crisis, asserting his administration has taken action to attract $650 billion in private sector clean energy investments and create tens of thousands of jobs in the industry.
At the same time, there was no mention of “ESG,” as some companies reduce their emphasis on promoting initiatives under an “ESG” banner in the face of an evolving landscape on climate-related disclosures. On Wednesday, the SEC adopted its final climate rule that will require many large public companies to disclose certain material information about the impacts of climate change and their actions to address them. The rules are expected to face legal challenges and congressional scrutiny in the coming months, even as the rule language was pared back during a lengthy two-year review period.
This development is part of a large global push towards standardized climate-related financial disclosures globally. Of course, many companies already report climate data and have been considering how the new requirements will integrate within their existing disclosure framework. While implementation will vary as organizations consider their specific circumstances, business leaders will need to ensure they have robust systems and processes in place for assessing, managing, and effectively communicating relevant climate-related information with stakeholders, particularly in compliance with the SEC rules if/as they take effect.
The State of the Union highlighted many of the complexities that define the current moment in a pivotal year for policy and politics in the U.S. and around the globe. For business leaders, it is a time to carefully consider opportunities to take a stance and build trust with stakeholders, while planning for changing rules, expectations, and issues that arise as a result of the upcoming elections.