If you think 2021 was a tough year for corporate political activity, 2022 may be even more challenging.
That’s according to a recent survey from The Conference Board of government relations executives and managers of political action committees. In the survey, 87% of respondents said they expect 2022 to be at least as challenging as 2021, and 42% anticipate that it may actually be worse. In the aftermath of the January 6, 2021 attack on the Capitol, many companies and CEOs spoke out, signed public statements and determined to pause or discontinue some or all political donations. The heated political climate also heightened sensitivity to any dissonance or conflict between those public statements or other publicly announced core company values and the company’s political contributions, further complicating the political environment for companies and executives. In the survey, respondents cited a number of factors that contributed to the difficult environment for corporate political activity in 2021: in particular, 77% cited the frequent emergence of new social and political issues on which companies faced pressure to take a stance. According to the Executive Director of The Conference Board ESG Center, “With the 2022 mid-term election year bringing sustained scrutiny, companies that engage in political activity need to make the affirmative case for why they do so….They should focus on engaging and educating both internal and external stakeholders on how their activities serve both corporate and societal purposes.”
This new survey was conducted by The Conference Board together with the National Association of Business Political Action Committees. The survey respondents included 120 government relations executives and PAC managers, primarily from Fortune 500 companies.
With regard to the environment for corporate political activity, survey respondents said that unexpected high-profile issues as well as pressure from employees and management made 2021 difficult. When asked to identify factors contributing to the challenging environment, respondents most often (77%) cited pressure on the company to speak out on new hot-button social and political issues. Respondents also cited employee attention (69%); media attention (66%); actions by policymakers that these companies had previously supported (62%); and board/senior management attention (57%). Interestingly, pressure from investors (32%) and activists (27%) was much less of a factor.
As noted above, 42% of respondents anticipated that 2022 (when mid-term elections will be held) will be even more challenging than 2021—with 31% believing that it will be somewhat more challenging and 11% anticipating that it will be significantly more challenging. Almost half of respondents (45%) expect 2022 to be just as challenging as 2021.
With regard to the resumption of PAC activities for companies that paused contributions in 2021, 24% have not resumed contributions, 31% resumed contributions in the second quarter, 19% resumed in each of the first and third quarters and 7% resumed in the fourth quarter. But was it back to the same-old, same-old? Not according to the survey. Rather, “most PACs changed donation criteria and emphasized employee education” in 2021. The survey found that 51% changed criteria for PAC contributions to address issues arising from January 6th and 48% “engaged with employees to educate them on the PAC, why it’s necessary, how it operates.” In addition, 30% percent modified their contribution criteria to address social and environmental issues.
Most respondents (60%) indicated that they do not intend to make further PAC modifications in 2022; only 15% did expect to make further changes and 25% were unsure. Where changes were expected, 44% said that they planned further employee engagement to provide education regarding the PAC.
With regard to changes to political activities outside of PACs, companies that implemented changes to political activities outside of PACs tended to focus on transparency around corporate political donations and lobbying activity (45%). In addition, many companies made an effort to be more vigilant about their external affiliations, improving their “[v]etting of/support for/membership in” industry trade associations (38%) and in other non-industry organizations or business associations (36%). For 2022, 47% responded that they were not planning additional changes to their corporate political activity outside of PACs, and 40% were unsure.
With regard to further efforts at educating stakeholder groups about their corporate political activities, for 2022, respondents said that they planned to increase education and engagement efforts primarily among internal stakeholders, including employees (84%), senior management (76%) and board members (48%). Less emphasis was placed on engagement with external stakeholders, notably investors (15%), trade and business associations (14%) and media/general public (8%).