Policy

A Leadership Moment Of Truth Comes With Rulings, Reactiveness

Industry and business community leaders must see beyond polarized agendas and transient business trends. Lasting profitability goes with an essential ride-along – brave and steadfast purpose.

Policy

A Leadership Moment Of Truth Comes With Rulings, Reactiveness

Industry and business community leaders must see beyond polarized agendas and transient business trends. Lasting profitability goes with an essential ride-along – brave and steadfast purpose.

July 1st, 2024
A Leadership Moment Of Truth Comes With Rulings, Reactiveness
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July 1, the first day of the back half of a tumultuous year in a turbulent decade in a speed-demon 21st century, has been a big date in history for millennia.

This one's no slouch either, rife as today is with matters – economic, social, judicial, political, and cultural – that can each dial up the worry meter about menaces of all sorts closing in.

My brother – amidst a hand-wringing seven-sibling text loop this past weekend – recalled Winston Churchill's quip about us denizens about to celebrate Independence Day here in the U.S.

The Americans will always do the right thing ... after they have exhausted all of the alternatives."

My guess is that among the more hopeful, sensible, and far-sighted of our siblings, that phrase has recently come up often in households, families, and extended families around the nation.

And here, in the ever-evolving landscape of homebuilding and residential development, we stand shoulder to shoulder with business leaders facing new uncertainties among the usual challenges. Our goal here at The Builder's Daily is to uncover solutions and strategies that drive success as you work to enhance the quality of life for individuals and families in their homes and communities. We understand the immense challenges you face and the crucial role you play in shaping the future of our neighborhoods and cities.

With this shared commitment, we approach the recent U.S. Supreme Court rulings and a simultaneous trend toward stripping away recent strategic and operational initiatives to make workplaces and job sites more respectful, healthier, and more alluring, which have profound implications for our industry.

These rulings, which curtail federal agencies' regulatory power, come at the same time the pressure to abandon Environment, Social, and Governance (ESG) initiatives, including Diversity, Equity, and Inclusion (DEI) practices, has intensified. Some argue that these measures stray from merit-based hiring, promotion, and leadership opportunities, constitute reverse discrimination, or distract from the primary duty of companies to prioritize shareholder interests.

The National Association of Home Builders (NAHB) celebrates last week's overruling of the 40-plus-year-old Chevron v. Natural Resources Defense Council as a victory for the housing community. The NAHB contends that the Supreme Court's decision to reform the regulatory rulemaking process ensures that federal courts, rather than federal agencies, interpret statutes.

NAHB Chairman Carl Harris emphasizes that this change prevents agencies from continuously altering the law based on their interpretations, which were often deemed 'reasonable' but lacked clear Congressional authorization.

Today’s Supreme Court ruling is an important step forward to advance meaningful regulatory reform because it means that federal agencies can no longer continuously change the law — and the intent of Congress — by implementing their own interpretation of statutes as long as those interpretations are viewed as being ‘reasonable,’” said Harris.

The NAHB believes this ruling will be a game-changer for builders and developers who interact with federal agencies like the U.S. Department of Housing and Urban Development, the Environmental Protection Agency, the Department of Labor, and the Occupational Safety and Health Administration, reducing the discretionary power these agencies have held.

From the NAHB's perspective, this ruling eliminates what they see as an unfair advantage held by federal agencies in regulatory matters, ensuring that only authorized regulations can be enforced. They argue this will reduce the burden of excessive regulations on the industry, potentially lowering costs and increasing efficiency.

However, as leaders in the homebuilding and residential real estate sectors, we must recognize the broader implications of these developments. While the NAHB views the dismantling of regulatory safeguards and corporate accountability measures as a means to reduce burdensome and unclear regulations, we must consider the long-term impacts of such actions. The weakening of building codes, environmental protections, and expert oversight risks jeopardizing the safety and well-being of communities and the future viability of businesses.

The confluence of these Supreme Court rulings and the push to eliminate ESG and DEI initiatives presents a reckoning moment for business and industry leaders. Stripping away efforts to create more just, fair, and respectful workplaces undermines the progress in fostering team member engagement, commitment, and excellence. Such practices are not merely altruistic; they are strategic imperatives that drive sustainable performance and value creation.

A high-level perspective is essential in understanding the dilemma of placing decision-making power in the hands of courts versus subject matter experts. The New York Times opinion piece [gift link] by Kate Shaw highlights the potential consequences of this shift. Shaw argues that the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo could fundamentally transform Americans' health, safety, and well-being. The Chevron doctrine allowed agencies staffed with individuals possessing deep subject matter expertise to interpret ambiguous statutes. This approach ensured that decisions about air and water pollution, drug safety, and financial market protections were informed by specialized knowledge and experience.

By contrast, the Supreme Court's recent decisions place interpretive authority in the hands of judges who may lack the technical expertise necessary for nuanced regulatory issues. For instance, a recent ruling involving the Environmental Protection Agency (EPA) erroneously referred to "nitrous oxide" instead of "nitrogen oxide," a mistake that experts within the agency would not have made. This highlights the risk of relying on judicial interpretations that may be informed more by formalistic readings of statutes than by the practical realities of regulatory enforcement.

As Webb Analytics' Craig Webb writes here, Tractor Supply's recent decision to cancel its DEI roles and goals and its global warming initiative exemplifies a widening trend among companies retracting from these commitments. This move, influenced by social media campaigns and pressure from anti-DEI advocates, raises questions about the future direction of corporate responsibility. Will other public companies – not just among materials distribution, supply, and manufacturing firms, but homebuilding enterprises, financial investors, and lenders – follow suit, and how will this impact their employee recruitment, customer loyalty, and overall market reputation?

Industry leaders must see beyond polarized agendas and transient business trends. Lasting profitability goes with an essential ride-along – brave and steadfast purpose. A powerful reminder of that is here, from Noah Smith.

To us also falls the task of reminding the world that growth must be sustainable. If we burn the walls of our fortress to throw a party in the moment, there will be nothing left to protect our descendants, and the foe will devour them. It is tempting to believe that manmade climate change is not real, that natural habitats can be razed without consequence, and that the world’s waters represent an infinite safe dumping ground for pollution. These are all just more unaffordable daydreams.
Part of this task is to remind the world of the importance of technological progress. Without newer and more sustainable sources of energy and materials, our choice would be between degrowth and environmental destruction. Technology built industrial modernity, and technology sustains it, and only technology can extend it into the indefinite future.
But most of all, it falls to us to extend the fortress’ protection to every human on the planet. As you read these words, there are still billions of humans living outside the sheltering walls of industrial modernity — still grappling hand to hand with the foe." – Noahpinion

True leadership involves embracing accountability for the long-term impact of decisions on customers, employee team members, land resources, financial stakeholders, etc. It means recognizing that the future success of our companies depends on the responsible stewardship of resources and the cultivation of inclusive, equitable workplaces.

Homebuilding and residential real estate leaders risk compromising their future and that of their stakeholders if they do not uphold their accountability to future generations. Sustainable high performance and value creation require a commitment to ethical practices, a long-term vision, and constant performance improvement through innovation. Now, more than ever, leaders must champion policies and practices that ensure the enduring success of their organizations and the broader communities they serve.

By embracing this responsibility, industry leaders can navigate political and social pressures to build resilient, forward-looking businesses. The goal is clear: to generate value and extend the horizon for value generation into the future, ensuring that the legacy we leave is one of integrity, sustainability, and inclusive growth.

Most of all, let's not repeat ourselves in having to exhaust "all the alternatives" again and again and again before we do the right thing.

ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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