Despite the 2020 elections occurring against a backdrop of social, health, and economic crises, corporate America is bracing for the 2024 election cycle to occur in a more challenging landscape. According to a new survey by The Conference Board, nearly 60% of corporate executives say today's political environment is more difficult to navigate compared to four years ago.

The top factors fueling this challenging environment are polarization among policymakers (according to 71% of survey respondents) and the electorate (60%). Employees are also a major source of pressure, with 48% of respondents indicating that increasing employee demands on social and political matters is exacerbating the situation.

"In today's highly polarized environment that's rife with misinformation, companies need to serve as trusted sources—especially for employees. Organizations can consider efforts that go beyond encouraging employees to vote; a more comprehensive initiative can include educating them about the democratic process, the implications of public policy decisions, and the impact of their own participation in the political process," said Merel Spierings, Senior Researcher at The Conference Board and report author.

The report was produced in collaboration with the international law firm Steptoe LLP. The findings come from a survey of nearly 100 corporate leaders (primarily government relations and legal executives) from large US and multinational corporations. Also informing the insights is a roundtable of executives on navigating the election year. Additional findings include:

The Political Environment for Corporations

The biggest factor fueling today's challenging environment? Polarization among policymakers.

• Polarization among policymakers is the number-one cause for the tough political environment (71%).

• Other leading factors are polarization among the electorate (60%), and increased employee demands on social and political matters (48%).

Taking stands today: Since 2020, a majority of companies have become more selective about taking public stands on hot-button topics.

• 60% of companies have become more selective in the social and political issues they address.

• 40% have established clearer criteria and processes for addressing such issues.

• 29% have established a core group of cross-functional executives to take the lead in addressing such issues.

• 12% have stopped addressing them altogether.

Taking stands tomorrow: A third of companies plan to refrain from taking public stands down the road.

• Looking forward, 36% expect their companies to take fewer stands on social and political issues.

"As companies evaluate whether to take stands on contentious social and political issues, their criteria for responding should include more than whether the issue relates to the company's core values. Having that be the sole determinant risks creating a virtually unlimited license (and perceived obligation) to take stands. Other important factors to consider include the issue's connection with the business and the ability of the company to make an impact," said Matteo Tonello, Managing Director of The Conference Board ESG Center.

The Legal and Regulatory Environment for Corporations

For most companies, today's legal and regulatory environment is becoming more challenging.

• 55% of companies consider the legal and regulatory environment more challenging than in 2020.

The top factor fueling today's challenging environment? Increasing state/local regulations.

• Increasing regulation at the state/local level is cited as the main cause for this tough environment (70%).

• Other leading factors are increasing federal regulation (64%) and uncertainty about regulations and enforcement (53%).

"Scenario planning is a strategic tool companies can use to navigate the rapidly evolving and unpredictable regulatory environment. Proactively designing, analyzing, and preparing for various electoral outcomes can enable companies to anticipate potential regulatory shifts, identify risks and opportunities, and adjust their strategies accordingly," said Adie Olson, Partner, Steptoe LLP.

The Environment for Corporate Political Activity (e.g., Contributions and Lobbying)

About a third of companies find the corporate political activity landscape more challenging than in 2020.

• 36% feel that corporate political activity—including lobbying, PAC giving, and corporate political contributions—is more challenging compared to 2020. 
  • Companies face growing backlash and reputational harm if their political spending and lobbying activities appear to be at odds with their core values, policy positions, and public statements.

Since 2020, most companies have expanded their lobbying activities.

• 60% of companies have expanded the scope of their lobbying to cover additional issues compared to four years ago. These issues range from AI to voting rights to DEI.

State and local lobbying has also steadily grown in recent years: Almost half of companies have increased resources since 2020.

• 43% of companies have increased the resources they direct toward state/local governments since 2020.
  • State and local lobbying can help companies navigate the tension between pro-ESG regulations and anti-ESG sentiment. For example, state-level policymakers and candidates are the leading source of ESG opposition, making it critical for companies to build direct relationships with them.

However, most companies recognize that policy volatility makes lobbying particularly challenging during an election year.

• 65% of companies say the outcome of the US federal elections will impact their lobbying efforts.
• 47% say the same about the outcome of the state/local elections.