Alison Taylor on reputation risk in the age of Trump

Welcome back to Sustainable Views, the podcast looking at sustainability policy and regulation in depth. I'm Elizabeth Nieger, Acting Deputy Editor, and I'm joined today by Alison Taylor. Alison is an author and clinical professor at the New York University Stern School of Business. Alison, thank you for joining us.

Thank you so much for having me, Elizabeth. It's lovely to be here.

And today we are talking about reputation risk. Is it real? How can you measure it? And how do you balance it against the other types of risks facing businesses today? So Alison, I wanted to talk to you about this because I always learn so much from your LinkedIn posts, particularly around the immigration crackdown in the US over the past year. And you've really focused on how the current political environment in the US has prompted business leaders to go very quiet. And there's been plenty of examples in the US of big companies that had spoken up against the government in the past perhaps during President Trump's first term, but have had very little or nothing to say publicly this time around. In your view, is this just fear, or do you think there's something else going on?

Uh, well, it's a very good question. Um, I would say there's certainly fear, but that fear is not abstract or groundless. I think we have had in the U.S. for several years now, um, an extremely polarized environment. And even in Trump's first term, and certainly under Biden, many businesses, I think, really being— feeling caught between the right and the left and struggling to position themselves. Now we have this extra layer of complexity, uh, which is a government that is very willing to retaliate against brands and companies that go against it in various ways. And of course, it's the US government, so the US government has a lot of levers by which it can retaliate. It can cancel large government contracts. I think a key aspect of tariff policy means that you can favor one company and disfavor another. You've got a lot of opportunities for public shaming and reputational risk and litigation. So the way I've been putting this is that if you are running a company right now, you have a legal team which is going to be telling you about all these risks. These risks are concrete. These risks affect shareholder value. This is not some kind of abstract reputational fear. There are very, very concrete actions that the government can and is taking. And we just need to look at the current dispute between Anthropic and the Pentagon. To see exactly how that is unfolding in one specific example.

Your point about kind of legal teams, I was reading your Substack earlier today and there was this great quote, a friend who leads sustainability at a financial services firm told me the corporate legal team has more than tripled in the past 18 months. There's a lawyer for diversity, a lawyer for climate, a lawyer for the Middle East, and all the lawyers have the same advice: shut the hell up and don't expose us to any risk. But I wondered, like, you know, you talked about legal risk, political risk, reputational risk. Are businesses kind of, do you think, do you get the sense that they're balancing those risks correctly? And how do you get that balance right? Are they kind of overcorrecting against legal risk at the expense of reputation?

I would say that they are. I mean, we can unpack what we mean by reputation maybe a little bit later on, but I think one challenge here, right, is just measurement. So you've got something that is real and concrete and measurable, and there are experts in it advising you not to do something. Against that, you need to balance longer-term credibility, longer-term trust, positioning, looking consistent. Um, these things are much harder to measure, um, and may not play out in a particularly predictable way. And I think the other key aspect here is that in any corporation, no one wants to be on the hook for making a bad decision. And so If all decisions are bad and all decisions are high risk, then it makes sense that the head of sustainability or the head of corporate affairs would not want to be pushing for something that looks really, really risky and maybe goes against what the legal team is advising. So I think all these forces lead to a sort of paralysis and a sort of caution. That said, I think if you look at who the administration is retaliating against and who it isn't, there are actually quite interesting findings there. It is not the case that the risk is linear and predictable. Some companies seem to be getting away with a lot more than others.

Tell me a bit more about that.

Well, the example that everybody loves is Costco. And so Costco has famously stood up on its DEI program, where a lot of other companies, including companies that were very vocal about this topic, have folded. Now, we could say that Costco's DEI program was never that ambitious in the first place, but they have really— the company has Israel stuck to its guns. I think maybe even more interesting, Costco was one of the first companies and certainly the most prominent to sue the administration over tariffs. So it was willing to, to put itself on the line there and to be the lead company and to suffer that kind of, uh, potential reputational, uh, fallback. And actually seems to have got away with it. And I think that is a function of strength and brand value. It's got broad bipartisan appeal. All American consumers, whether rich or poor, left or right, love Costco. We all love Costco. It's also very well known for treating its employees very well, has very low turnover, has a lot of loyalty. Another example I might give you is Apple. Now, Apple has had retaliation over its supply chain and tariffs. But when we think about how sustainability-forward Apple has been historically, there was a 2023 advert, for example, making the point that Mother Earth was on the board of Apple. And so given how front-facing Apple's been on those topics, you might expect more retaliation from the administration. And that hasn't really played out. So I actually think the Trump administration knows when a company is weak and knows when a company doesn't have the broad bipartisan trust in society. And if a company does have that bipartisan trust, does have that financial capacity, does have that reputation, it's kind of interesting that those brands are being not completely left alone, but are getting away with more than you might imagine.

And who is actually kind of like owning these decisions now? Because we've talked about like kind of legal teams, corporate affairs, sustainability. Like in your experience working with business, does it vary company to company? Like who gets the final say?

It does vary. My sense is that corporate affairs and public affairs are really on the front line here. That is very much about kind of strategic communication and the narrative and so on. But ultimately, and we can see this back with Anthropic, I think these decisions need to be owned by the CEO. I don't think any CEO is going to be taking the advice of public affairs just for their own sake. So there may be a few calculated risk-takers. I mean, they're quite thin on the ground at the moment. It will be interesting to see when and if and how that shifts during 2026.

And as you kind of alluded to before, like, you know, to get into exactly what reputation risk is, like, what, how would you kind of define it? And perhaps that should have been my first question here.

I mean, I'm not totally clear that reputation risk is something that can be measured up front. I think it is the consequence of other decisions that you make. So you can measure social media exposure, you can measure campaigns, you can measure consumer perceptions. I think one of the big problems with reputation risk is it tends to be reactive. So, you know, things aren't a reputational problem until they are. The public is more idiosyncratic than we might think. So I think one of the big myths that we've had historically about reputation is that you can measure it the same way you can measure regulatory risk or financial risk. And there has been a view, and I think this has been a real problem for the sustainability community, that if you just do the right thing and make various claims and publish your reports, there will be measurable reputational upside. That is demonstrably not true. If you look at the activist community, what you will see very clearly, and there is a lot of evidence about this, is that a lot of sustainability, ethics, human rights activists will target leading companies. Because if you can get a leader like Starbucks or Patagonia or Unilever to move on an issue, then that will set a precedent for the rest of the sector. So that's a very, very effective theory of change. But because the wider view is that the bad companies get punished and the good companies get rewarded, I think we're in a very confused position about what reputation risk looks like. And then you've got to layer on top of that polarization. So I think another really interesting characteristic of the US in the last year and a half is Progressives and people that care deeply about ethics and sustainability are paying far more attention, for example, to Target's rollbacks on diversity than they are, for example, what Palantir is up to. We pay far more attention to Bezos' takeover of the Washington Post and what that meant for journalists rather than attacking brands that never made progressive claims in the first place. So we've also got, which I think is very interesting, more infighting and retaliation within the polarities on the right, for example, a lot of upset about the Cracker Barrel logo. And so I don't think the reputational risk is unreal. I'm just not sure how easy it is to measure. I'm not sure how useful it is. And it's certainly not a linear accountability mechanism. It acts more like a funhouse mirror. It distorts and amplifies some things. It doesn't pay attention to others. And so thinking of it as some kind of reliable mechanism, I think, is the challenge.

Yeah, absolutely. And like, I think with all of these kind of stories that I've done, particularly around diversity initiatives, like, this thing always ringing in my head, like, correlation does not imply causation. And, you know, unless maybe it's a direct lawsuit that is challenging a company over specific issue, maybe it's a wrongful dismissal suit or something like that, or maybe it's a very public boycott campaign, it can be very difficult to kind of, I don't know, make a judgment on whether that incident has actually had an impact. And you know, you've mentioned Target here. Target always comes up when I'm trying to find examples of companies here, and you know, its share price has not done well over the past couple of years. But you know, how can we can that really be linked to these changes to DEI? Can you ever really prove that reputation does actually drive financial outcomes?

Yeah, I mean, I think it's very, very mixed. I think Target made decisions that looked like good decisions at the time. The world was moving in a certain way, but because it differentiated itself, it has suffered a lot of retaliation. If we look at recent events in Minneapolis, I would make the case, for example, that Hilton has handled the situation worse than Target did, and yet the overwhelming focus, um, has been Target.

So, and what did Hilton do again?

So one of the Hilton franchises refused, um, to let ICE officials stay in the hotel. There was then a lot of attention, uh, from, uh, government accounts on Twitter. Hilton did not go to Minneapolis to kind of figure out what was going on but said the problem had been corrected. Then a right-wing blogger turned up and filled filmed again, um, an ICE agent being refused, um, you know, refused, uh, uh, the ability to stay in this hotel. And then Hilton— and unfortunately, uh, for Hilton, was the same day that, uh, Renny Good was killed— um, Hilton then, um, kicked this hotel out of the franchise. So, um, I think that was an overcorrection. Um, I think there were better ways to have handled this situation. But that story just kind of faded from view, whereas we're still paying a lot of attention to Target. And Target and Hilton are both in a very, very difficult position on the ground. But I think it's just interesting what we pay attention to over time and what we don't.

Yeah, I would love to better understand what makes things like that stick. Okay. And comparing kind of very different things here, but of all the kind of corporate incidents that are kind of tangential related to reputation. So whether it's kind of the risk of litigation or political backlash or employee pressure, public boycotts, what's the sense that you get from executives? Like, what are they most worried about?

I mean, I think they're most worried about negative publicity and boycott campaigns, but I think that fades from view compared to the very specific legal retaliation, being sued, very kind of concrete cost-shield lawsuits, that kind of thing. I think they're also worried about evidence of ethical violations. More and more, it's kind of very interesting because we don't seem to be in a high watermark period for ethics, but actually more and more CEOs are being removed on ethical grounds. So a lot of this relates to things like cheating and conflicts of interest and so on. So I think there's a There's an exposure on kind of personal ethical violations. I think American executives as well are very, very, very worried about personal security right now. I'm hearing of real ramp-ups in executive protection, worries about the exposure of executives and their families and so on. And so if you are the subject of a social media campaign, that can involve people coming to your house and targeting your children and that kind of thing. So I think there's a mix of kind of personal exposure on ethics and reputational grounds. And clearly the government retaliation is a key aspect of that. And then it's legal shareholder lawsuits, things that are very measurable and very concrete. So in that context, we can kind of see, I think, that the concept of reputation starts to become a bit fuzzy and unhelpful.

I think It's also quite difficult, I mean, so maybe focusing specifically on the boycott part, because, um, you know, when I first reached out to you, I was thinking about this in the context of businesses that are so kind of ingrained in what we do that boycott almost isn't an option. So I'm thinking about like, uh, tech companies that have been linked to warfare and all sorts of terrible things going on in the world, and when, when you don't have a choice because your, your company uses a particular email system or you are already set up with a particular email system, you know, I'm, I have a phone and I'm not going to buy a different phone. Like, how much is the kind of consolidation of industries? Does that, does that reduce some of the reputation risk?

Yeah. I mean, I think this is a really important point, right? And so in some cases, consumers can switch much more easily. So, uh, this is a few years old now, but there was an incident with Bud Light. Very, very easy to start drinking a different cheap beer. There was at the same time, um, a whole drama regarding Disney and Disney going up against Ron DeSantis in Florida. Well, try telling your kids you're not taking them to Disney. So I think in some cases, and this would certainly apply to Apple or Microsoft or Google or Amazon. The switching costs are quite high. That said, Scott Galloway right now is running a Resist and Unsubscribe campaign trying to get consumers to unsubscribe from some of these platforms. And we can see with Anthropic and OpenAI, it sort of looked like— and there was a lot of coverage saying that Anthropic had caused itself a lot of problems and was going to put itself out of business because it was going to lose all these government contracts. With consumers, it absolutely won. Download spike, lots and lots of people boycotting GPT, still relatively easy to do because these tools are relatively new. So yeah, I think switching costs and the amount of dominance that the company has in the economy is also really key. We can see that also with Target, you know, Target and Costco. People can go and shop at Walmart, um, but there isn't a direct equivalent to Costco. So this is so interesting because, uh, I'm historically an anti-corruption person, and what you say when you are talking about a corporation's ability to resist extortion and bribe requests is that you need a really awesome product and you need dominant market power. So the same, uh, considerations are applying, uh, in the US right now.

God, that's, um, strong. Um, yeah, and so I wanted to talk a bit about, um, the Anthropic story, and you've been a lot closer to this than I have. Um, so it's kind of decided that it was not going to let the US military kind of have unfettered access to its AI tools for kind of— was it any lawful purpose? Um, the, the— yeah, so I've been wondering about this, like, is this Could this turn out to be a kind of sustainability story? I mean, it seems to be an ethics story, maybe, but it's certainly in the kind of medium term, as you say, with consumers, it's really working in Anthropics' favor. Is this a sustainability angle?

Kind of, I suppose, depends how you define sustainability. I mean, do we think sustainability has anything to do with ethics? I kind of argue it does. So I think Anthropic's making a very calculated and smart bet about differentiating itself, being seen as the more trustworthy AI company. Silicon Valley is not having a good year on ethics in general. So that's a smart differentiation. I think it's an extremely high-risk strategy. You can see the lawsuits kind of unfolding right now on the supply chain designation. But I think it's a clever and sustainable position that I would predict is going to play out in the long term. I cannot tell you how many people have said to me in the last week, well, Anthropic are the good guys. This is the one good firm. This has played really well with the public. I would argue, however, that this dispute reveals less than it hides. I think there are many, many questions about the use and deployment of AI. What effect it will have on the job market, you know, the way that labor fuels AI tools, and then most of all, the environmental impact, that Anthropic doesn't have any better answers than anybody else. So it's a reputational triumph that's maybe lacking substance on a lot of the key sustainability points.

Right. Yeah. Okay. And as I was saying before, you know, when you don't have much choice, maybe the reputation risk is slightly kind of less clear. And with the AI tools, that doesn't seem to be, you know, it's much easier to switch. And a conversation that I'm hearing increasingly often in Europe is about kind of the unpredictable behavior of the US, and largely of the US government, but also increasingly of US companies, and Europe's kind of dependence on those companies, whether it's for energy or for tech or for payment systems, and how we how Europeans kind of, I don't know, wean themselves off some of that reliance. And but is this, is this kind of switch up, is it a uniquely American issue, or are you seeing similar patterns elsewhere?

Um, I don't think it's any of this is a uniquely American issue. I mean, one of the— I've written about this recently. I mean, I think one of the disturbing things, uh, that I'm seeing right now is American companies are engaged in the kind of behavior that you more usually see in populist authoritarian contexts. So a lot of targeting of the language to appeal to the government, a lot of putting people on the board that may have access to the administration, a lot of very kind of personalist decision-making, a lot of donations for favors. This is exactly how you would behave if you wanted to keep alive in authoritarian context. We're just not used to thinking about America as being one of those markets. And as your question suggests, you know, a lot of American businesses are globally dominant. So I think that kind of lapse in trust is going to last. I think how this plays out globally will depend a lot on many of the forces we've discussed already, the degree of market power, the switching costs, the degree to which European businesses can create an alternative. Something that might be very interesting to watch in the long term is whether Europeans would rather rely on a Chinese business or an American business.

And for those, those businesses that, as you say, kind of getting someone on the board that can be very close to the White House and the companies that have very much just kind of rolled with this or kept their heads down. Can you see a time where there are kind of, I don't know, negative consequences for doing that? Because it's another thing that I keep seeing people talk about, you know, like, oh, we'll remember the companies that didn't speak up. And but when it's kind of most companies and in lots of sectors where there isn't much choice, like, are there consequences? Will there be consequences?

It's a very good question. There's a quote, I don't know who it's from. One day everyone will have always been against this. So I think the thing will be the shift in public opinion. So I think we will see memories and retaliation for the more consumer-facing brands. I would be very, very worried if I were a consumer-facing business trying to operate in the US right now. For B2B firms and firms that are less visible in the public domain, I'm not really sure. And then I think, you know, again, I don't think we can expect this to necessarily be a fair and linear reckoning. We will see this play out in a pretty messy way, but I certainly think it will be consumer brands in the front line on this in the coming year. The polls are going in a certain direction. The Iran war doesn't seem to be particularly popular. So we may also see, I think, corporations starting to make calculations in a different way. There was quite a lot actually of effort. I mean, one thing I think, the question that's obvious to ask from the outside is why not more collective action? If retaliation is such an issue, maybe you should get together and do something on these issues. That was tried early on with tariffs. It didn't really work, partly because the government used tariff policy to pick off off certain companies and kind of break the coalition. But in, you know, 4 law firms, for example, did get together and resist pressure from the Trump administration. So you might start to see, I think, maybe not on tariffs, but on some of these other issues, you might start to see the calculation shift on collective action. I think in the coming year, I think it's very unlikely that brands, unless they've really got that market power and strength and financial backing, will go out on their own on this.

Yeah, okay. And I know that you're kind of actively advising businesses a lot of the time on some of this stuff, like, and I can imagine the answer is, well, it depends, um, on specifics to each business. But like, what, what is the right way of getting through this time?

I mean, I think, uh, I think it is a very difficult question. I think what you need to do is pay quite a lot of attention to your core customers. I think you need to pay a lot of attention to your employees. I would personally, if I were running a business right now, be really doubling down on kind of good jobs, living wages, dignity and respect, giving, making sure that your employees have the ability to care for their families. I think something we haven't touched on much yet, but it's going to be really interesting is that I predict AI is going to become more and more unpopular. We're already seeing a lot of community action against data centers, lots of people complaining about their energy bills. It seems pretty undeniable we're heading into an era of quite significant white-collar layoffs. So I think it is not impossible that we start to see a lot of bipartisan resistance against AI. So to me, one of the firm places you could go is to say we're offering good jobs, we're standing by our people, we're going to be sensible and skeptical about this AI rollout. And I think that would give you a grounding by which you can move forward. It might be foolhardy of me to say go up directly against the government, but I would be pretty careful about my donations. I'd be pretty careful about my long-term exposure on kind of lobbying and campaign finance. I wouldn't be funding the Ballroom, for example. So I think the two places to anchor are kind of employee rights and dignity and then political physical spending. And you can do sensible things about both those things without putting yourself in the reputational front line.

And how much do you expect the kind of the way the midterms go to change any of this?

I think it will be extremely significant. And if we start to see efforts to restrict voting in the midterms and so on, then I think that will be another huge pressure point for corporations.

Yeah, okay, thank you so much, Alison Taylor. Um, super interesting. And if you want to listen to more podcasts or to read any of our journalism, please go to sustainableviews.com. Thank you for listening.