Board Impact: A Conversation With Yale’s Jeffrey Sonnenfeld

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Consummate corporate influencer Jeffrey Sonnenfeld has been mobilizing the private sector around critical issues for more than four decades. But it was the Yale professor’s efforts to lead the corporate pullout from Russia in the wake of their Ukraine invasion that led our selection committee to honor him with this year’s Greatest Impact on Corporate Boards award.

An unapologetic proponent of corporate social responsibility, Jeffrey Sonnenfeld regularly rallies the U.S. business community around pivotal issues impacting the world. Immigration policy, healthcare reform, racial justice, voting rights, gun control, the dangers of AI—whenever and wherever a controversial topic arises, Sonnenfeld is invariably front and center, pulling together a consortium of business leaders to share insights and weigh in on corporate America’s role in addressing it. 

The effort isn’t always applauded. As Sonnenfeld readily acknowledges, his position that business leaders not only have the right to take a public stance on societal issues but an obligation to lead the way forward is hardly universal. “Some people say CEOs should stay in their lane, but this is their lane,” he says. “What do they think their lane is? The breakdown lane? Managing the marketplace, financial markets, labor markets, product markets—these are all critical responsibilities of business, as is this larger strategic context of looking at the regulatory frameworks, the rules of engagement, the rules of fair play. CEOs have to be involved in that. You want social harmony in order for capitalism to function effectively.”

While far from his first foray into calling on the private sector to address an emerging societal issue, Sonnenfeld’s decision to keep a running public list of companies’ efforts to sever ties with Russia after its invasion of Ukraine may well have had the greatest impact. The number of companies highlighted as having withdrawn from Russia has mushroomed from a dozen to more than 1,100 as businesses eager for recognition joined the exodus. That ongoing effort, along with his track record as a constructive force in governance, led to Sonnenfeld’s being honored with this year’s Greatest Impact on Corporate Boards award. 

Excerpts of a recent interview with Sonnenfeld—who, we should note, is also a longtime columnist for CBM and sister publication Chief Executive—follow

You’ve been an influencer in executive and board leadership for a long time now, but your rallying of businesses to respond when Russia invaded Ukraine was remarkable. Can you share a bit about how it all came about?

I was caught by surprise on March 24, 2020, when Russia truly invaded, and instantly, more than a dozen companies pulled out. I wish I could tell you that I had something to do with that, but I didn’t foresee it…and the companies were a completely unexpected mix. The first big movers were Big Oil: BP, which wrote down $9 billion of hard money right away; Exxon, around $7 billion; and Shell, at more than $4 billion. It was remarkable. Then Big Tech—Microsoft, IBM, the social media companies, Dell. It was staggering.

With all the ways that Big Tech has been under scrutiny because of concerns over the promotion of hate speech, privacy issues or antitrust issues, who would have thought they would have looked to be in the spotlight of public controversy? And professional service firms are a group that never wants to be caught in public controversy, especially on geopolitical matters. Yet, amazingly, the law firms, the accounting firms, the consulting firms were also on the front lines—Bain, BCG, McKinsey, EY, Deloitte, PwC. Grant Thornton was the very first of them to move, which took away the excuse any others had about the SEC difficulties of pulling out of an audit in progress. When Grant Thornton did it, everybody else realized they had no excuse.

So I went to talk to them to catch up—not to lead or advise. I said, “What worries you the most?” They said, “What we’re concerned about is the media giving too much recognition to fraudsters, to people who said, ‘Oh, our hearts and minds are with the Ukrainian people. Here’s $1.50 to go off and buy yourself a quarter of a cup of coffee,’ and then continued plundering on in Russia.”  

I approached editor and producer friends of ours and said, “How can you give these guys equal credit?” And they said, “Tell your CEO friends not to be so territorial, it’s all in the right direction, this is a good vector.” I said, “No, it’s not; they’ve made hard, expensive, difficult decisions, and you’re giving equal credit to companies that haven’t, and that’s clouding the issues.” 

Since they weren’t responding, Steven Tian, [director of research at the Yale Chief Executive Leadership Institute], and I decided that he and I would go off on our own and start to calibrate the truth: What have companies really done?

We quickly got in over our heads and had to enlist 50 students who worked as volunteers, all with incredible expertise. We had multiple people with native-level fluency in languages, people from Russia, Uzbekistan, Kazakhstan and of course Poland, Germany, France. And of course we had Mandarin and Japanese. We had expertise in financial analysis and industry analysis. They had passion, and they didn’t mind stripping down some emperors for being naked because they had no conflicts. So we tore apart who was real and who wasn’t.

We didn’t realize that putting the spotlight on 1,400 firms that were still operating in Russia would catalyze a stampede. The exit from South Africa, which had been the high watermark of global values and international business movement, was 200 companies. The Russia exit is now 1,100 companies. It’s incredible. And they’re huge companies that pulled out comprehensively. There are another 200 that have semi-pulled out. And then there are a few hundred that are still there. 

Over time, we had to create an A, B, C, D, F calibration because artful public relations [executives] and attorneys were creating nuances like, “We’re going to forestall any future investment,” that we had to acknowledge. So that’s a D instead of an F. An F, they don’t give a damn. Cs were pulling out but were leaving some major lines of business. The Bs were pulling out but would like to get back in. The As said, “We’ve had it with Russia. There’s no money to be made anyway.” That’s how we got into it.

Did you experience any setbacks along the way?

There were days we had as many as 22 legal threats at once. The smaller the European firm, the more litigious it seemed they were. There were only two or three U.S. firms that came after us. We prevailed in because we researched so thoroughly. And we posted it free of charge for everybody to see. 

There were also ciphers that came along, people trying to hijack the cause with similar-sounding names. I had experienced that before working on voting rights. In 2020. There were about 15 organizations dedicated to voting rights. And by spring of 2021, it had blossomed to over 300, of which maybe 50 were legitimate. The others were profiteers, careerists. Every noble cause attracts a lot of scammers, and that happened here too. We had people trying to shake us down and threaten that they were going to commercialize our proprietary data. Steven actually got trademark protection. 


I understand there were also some entities challenging your research?

I’ve run into that a lot, particularly when I’ve taken on activist investors or different controversial causes where truth was being lost in the din of manufactured smokescreens. Sometimes people try to threaten you or put out a misinformation campaign.

It happened in defending Ellen Kullman at Dupont. I had no commercial or personal relationship with her, but Nelson Peltz began a personal campaign, a venom marketing of false information that he got into the New York Post and other places, that I run a pay-to-play scheme and only speak out for CEOs that give us donations or have hired me as a consultant. She’s never offered us a dollar, so no conflict there. But that wound up in publication, and we had to force an SEC withdrawal of false information by the end of the day from Peltz.

We’ve had that with other activists. And, yes, we also had one with some opportunistic academics who said that our 1,400 firms were false. A reporter from The Financial Times called in October of this past year and said, “What’s your response to that?”  I said, “I’d like to see their data that challenges ours. What do you have?” He said, “Actually, I don’t have any.” Ten days later, he gets a data dump of 34,000 data cases, and they said, “It’s in there somewhere.” He said he wasn’t going through it all, so I said, “Pick any page. Let’s see what’s there.” Sure enough, it was pages of hundreds and hundreds of names of Russian companies, not Western multinationals, and Russian individuals, including, apparently, a dead cosmonaut. It was absurd. So we got the schools involved to take that website down. That was the end of it.

Then, on the slopes of Davos, Politico EU got the press release again from the same fraudsters. And they ran with it, never seeing the data. That made it into the current version of wire services. So we had to get that corrected, which we did. But it took everything from going to Ben Smith at Semafor to Josh Zumbrun at The Wall Street Journal, to the Swiss National Radio, to Fortune, to massively go after it.

You can’t let it go. There’s no such thing as take your hit, no such thing as a one-day story. Things are cached forever, so a lesson for academics is a lesson for CEOs: If there’s something false, you’ve got to scream it from the mountaintop to prove it wrong and get the exoneration. But so many times, they get bad PR advice to take your lumps, tomorrow’s another day.

It probably feels impossible because it’s in so many different channels now, that the world has exploded with everybody having their own personal media outlet.

The advantage of that, though, is you no longer just have a controlled media at a certain city with a plantation press that’s conflicted, with a power establishment that freezes you out. I’ve seen that happen too. Now there are so many alternative outlets that if you find somebody credible who has legitimacy who’s willing to explore the facts, and they run with it, then somebody else gets curious, and you can build momentum around the truth because of that proliferation of outlets. You have a lot of outlets that aren’t legitimate, too. But if you can get the legitimate outlets that will do the homework to go after it with intensity, it makes a difference.

Getting back to social issues, would you agree that we have seen a bit of a shift toward companies getting into sort of moral leadership and involvement in social issues?

I love the way you phrased that question. Because The Wall Street Journal ran a piece recently with a headline about companies retreating from their ESG positions because of anti-woke backlash. Every piece of the story said just the opposite. These were companies that had a big matrix of issues and were deciding which ones they wanted to engage in. That’s what they have been doing—no company does every issue. They’re not elected officials. They’re not put there as public servants. They have to decide which are of greatest relevance to their core constituents, shareholders and other stakeholders and go through that process of evaluation.

Michael Dell has 100 issues he’s tracking at any one time, and voting rights happens to be one of them. The same is true of American Airlines, with Doug Parker and Robert Isom willing to take courageous positions depending on what they see is important to their constituents and the company’s mission, like Bob Iger at Disney and John Donahoe at Nike, deciding what speaks to their core brand as well as their constituents. They take a strong position. I don’t see any retreat from doing that whatsoever.

Companies that were targeted by the anti-woke, anti-ESG crowd, like Apple, Microsoft and Salesforce, are up since they’ve been under attack. They’re not retreating. They’re not feeling chided. Sometimes the campaigns were imperfectly conceived, but it isn’t that their value system has been diminished. Sure, some retailers and consumer-goods companies are suffering, but others aren’t. Nobody’s going to say that Nike, Patagonia, Apple, Microsoft and Salesforce have diminished their commitment.

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