Tag: corporate political engagement
PwC’s 2024 Corporate Directors’ Survey—how are boards addressing the current uncertainty?
The title of PwC’s new 2024 Corporate Directors’ Survey, Uncertainty and transformation in the modern boardroom, might clue you in to one of its themes: uncertainty—anxiety?—arising out of the looming election. According to PwC, the “2024 election matters more than usual. Not only is the American electorate more polarized than anytime in modern history—making corporate leaders’ every statement and decision subject to public criticism—the results could rapidly reshape the business landscape. Which political party emerges victorious in November, in the White House and/or the houses of Congress, may prove enormously consequential for how every industry functions. The impacts could be dramatic.” We may see policy changes on “tariffs, sanctions, treaties and alliances” that might “upend international trade and disrupt supply chains.” We could see revised tax policy and enforcement priorities, transformed attitudes toward DEI and ESG programs, different views on antitrust enforcement, immigration and possibly, “most significant for many industries, the incentives that have fueled recent sustainability investments could grow further—or be diminished.” That makes “a board’s ability to be agile and stay current in the face of uncertainty” more important than ever. To assess the state of current boardrooms, PwC surveyed 500 public company directors, concluding that boards just might be evolving “too slowly to effectively meet the challenges facing companies today and tomorrow, irrespective of potential political disruptions.” PwC attempts to understand what is driving the results and recommends approaches to addressing the issues.
Can companies escape the trap of politics?
We hear a lot about companies taking public positions on political issues—as well as the backlash that many experience as a result. Whether you think corporate participation in politics is a good thing or a bad thing, you might be interested in this thought-provoking paper from the University of Pennsylvania Institute for Law & Economics, How Did Corporations Get Stuck in Politics and Can They Escape?,© by Professors Jill Fisch and Jeff Schwartz (All rights reserved, 2024). In their paper, the authors observe that, while, historically, companies have long engaged in politics and lobbying, something seems quite different today. How? The difference is that companies seem to be taking public positions on any number of hot political issues, even if those issues are not connected to the conduct of their businesses. That is, while companies may take these positions “for business reasons—to appeal to their customers, employees, or investors”—these issues are not necessarily intrinsic to their business operations. The authors contend that this type of corporate behavior, which they call “corporate political posturing,” is “problematic,” creating potential risks for the company, its shareholders and for society. The authors suggest some ways for companies to depoliticize, including through coordinated “voluntary disarmament.” Certainly, some ideas to think about.
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