This seventh and final post addresses issues for corporate boards, in light of issues raised at the November 20 NACD–New England program discussing the impact of the election on business. Fo
Are you a winner or a loser? The panel suggested that certain companies will do well, and others not so well, in the new economy. Clearly AI is destined to be of intense interest and AI-related companies should be able to have an easier time raising capital (something I observe in my own practice). Bitcoin’s hour has arrived, for good or ill. Independent media has come into its own (outside press coverage separately have noted that during the election the non-mainstream digital press was the active venue for effective communication). Tech and banks should do well absent intense regulation. If interest rates do get lower, and if immigration does not create labor gaps, retail big box and companies which provide what is purchased in CapX expenditures should thrive.
Losers: mainstream media, with a special vulnerability for META. Perhaps some climate-related enterprises although look to see if they are active in Red States; and note that during Trump-1 there was a spurt of interest in clean energy tech.; if China and its big lead in solar and that impact on AI gets in the Trump cross-hairs, it is possible that solar will become a hot area in spite of the benefit no doubt to be enjoyed for the fossil fuel sectors.
Boards will be faced with volatility risk due to what is likely to be a different and much less regulated economy; how that falls out is unclear in general, and if the new economy gets too far afield that may bespeak a need for caution.
As for ESG, the phrase itself is past its shelf life. The environmental part has been previously covered, and the progress made in corporate governance responsibility is likely to be untouched. The “social” part covers very many topics and social trends in business are not likely to be altered, although stripped of elements of “woke-ness.” My observation is that young workforces in corporate America are not going to change their focus on social justice factors.
The panel had consensus on one thing: it will be very difficult to manage a “global” company, based on the economic and political uncertainty that the new administration will bring. And even wholly on-shore companies will need to look at supply chains given tariff and geopolitical risks (in this regard, the panel characterized future relationships with Mexico as complex but not likely to incur major alteration). Planning also is compounded by our prior discussion of China, its real agenda and its approach to Taiwan. “America first will be tested from day one” as to China, the Middle East and Ukraine; businesses touching those areas, as so many are, will need to keep close watch. My personal takeaway: big bold bets may not be the wisest business move. Finally, it was noted that Apple would be at greatest risk given the international lack of clarity–perhaps due to its present significant presence in China.
The panel also addressed the practice of companies to take public positions on social, political and international issues. Given the new administration the obvious comment was made that boards are best advised to look closely before a company or its CEO takes a public position on any matter; it was suggested that saying nothing about any issue is wisest, although pressure from younger staff in certain types of companies will likely remain constant. This entire part of the program reminded me of a line from the movie Casablanca about the fact that now “the winds are blowing from Vichy.”
And to carry the movie reference forward as I conclude: “Th–th–that’s all, folks!”