Many Orgs Say 2022 Will Be Harder for Political Activity

42 Percent of Corporations Say 2022 Will Be Even More Challenging for Corporate Political Activity

In 2021 corporate political action committees (PACs) suspended contributions and reassessed their policies. A survey by The Conference Board reveals the environment for corporate political activity shows no signs of calming in 2022.

Among Government Relations executives and PAC managers, fully two-thirds (67 percent) found the environment in 2021 for political contributions and lobbying to range between challenging and extremely challenging. Nearly all—87 percent—anticipate the overall environment to be at least as challenging in 2022. And 42 percent are bracing for it to be even more difficult than in 2021.

Respondents cited multiple factors as contributing to 2021’s environment for corporate political activity. More than three quarters (77 percent) cited the frequent emergence of new social/political issues on which companies faced pressure to take a stance, 69 percent cited employee attention, and 57 percent cited the board and senior management. Despite investors’ increasing focus on ESG issues, only 32 percent cited investors as contributing to 2021’s tough landscape.

The survey was conducted by The Conference Board ESG Center in collaboration with the National Association of Business Political Action Committees (NABPAC). A combined 120 Government Relations executives and PAC managers participated, most of whom were from Fortune 500 companies. Highlights from the survey include the following:

THE ENVIRONMENT FOR CORPORATE POLITICAL ACTIVITY

Unexpected issues and pressure from employees and management made 2021 a challenging environment.

Q: If your organization found the environment at least somewhat challenging, what factors contributed to this?

• Pressure to speak out on hot-button issues was the top factor:
  • The most-cited choice was the frequent emergence of new social/political issues on which there was pressure for the company to take a stance (77 percent).

• Employees were the second biggest factor. The board and senior management also were impactful: 
  • Employee attention (69 percent); media attention (66 percent); actions by policymakers you have supported in the past (62 percent); and board/senior management attention (57 percent).

• Investors and activists played a lesser role:
  • Investor attention (32 percent); shareholder activism (27 percent).

The pressures continue: 42 percent think 2022 will be more challenging than 2021.

Q: In looking ahead at the 2022 mid-term election year, compared to 2021, do you expect the overall environment to become?

• Many companies brace for a more difficult landscape in 2022:
  • Respondents say 2022 will be somewhat more challenging (31 percent) or significantly more challenging (11 percent).

• Nearly half (45 percent) think the 2022 environment will remain as challenging as last year’s.

PAC ACTIVITIES IN 2021 & PAC PLANS FOR 2022

The fallout from January 6, 2021 endures: A quarter of PACs haven’t resumed contributions.

Q: If you paused PAC contributions, in what period did you resume?

• Nearly a year after the events of January 6^th, 24 percent continue to halt their contributions.

• A plurality (31 percent) resumed contributions in the second quarter.

• Many resumed contributions in the first and third quarters, but few resumed in the fourth quarter:
  • January—March (19 percent); July—September (19 percent); October—December (7 percent).

In 2021, most PACs changed donation criteria & emphasized employee education.

Q: If your company had a PAC, what changes did you make during 2021 in response to broader issues (e.g., the January 6^th riot, concerns about racial equality, voting rights)?

• The events of January 6^th prompted many PACs to change their contribution criteria:
  • 51 percent changed criteria for PAC contributions to address issues arising from January 6^th.

• Nearly half prioritized employee education:
  • 48 percent engaged with employees to educate them on the PAC, why it’s necessary, how it operates.

• The events at the Capitol on January 6^th weren’t the only reason why PACs changed their criteria:
  • 30 percent changed their criteria to address social and environmental issues.

Most PACs don’t plan on making additional changes in 2022; those that do plan to focus on employee education.

Q: Are you planning additional changes to your PAC during 2022?

• Most don’t anticipate making additional changes, though some are still deciding:
  • No (60 percent); Yes (15 percent); and Not sure (25 percent).

Q: If ‘Yes’, what are you planning to change?

• Employee education is the most popular anticipated change:
  • Engage with employees to educate them on the PAC, why it’s necessary, how it operates (44 percent).

NON-PAC POLITICAL ACTIVITY: CHANGES IN 2021 & PLANS FOR 2022

In 2021, companies that made changes to their corporate political activity—beyond their PACs—prioritized transparency and vetting external affiliations.

Q: If ‘Yes’ [changes to non-PAC corporate political activity], in what areas have you made changes?

• 45 percent made improvements to transparency around corporate political giving and lobbying activity.

• Companies became more vigilant about their affiliations with external organizations:
  • Vetting of/support for/membership in industry trade associations (38 percent).
  • Vetting of/support for/membership in other non-industry orgs or business associations (36 percent).

Uncertainty carries into 2022: Four-in-ten companies are unsure of whether they will make additional non-PAC corporate political activity changes this year.

Q: Are you considering making additional changes to your non-PAC corporate political activity during 2022?

• Yes (13 percent); No (47 percent); Not sure (40 percent).

DEMYSTIFYING CORPORATE POLITICAL ACTIVITY

Prioritizing your people: In 2022, companies plan to ramp up education with their internal stakeholders.

Q: Looking ahead to 2022, are you planning to increase your education and engagement efforts with any of the following? 

• Employees, senior management, and the board are top priorities:
  • Employees (84 percent); Senior Management (76 percent); Board (48 percent).
• External stakeholders will be less of a focus:
  • Investors (15 percent); Trade and business associations (14 percent); Media/general public (8 percent).

“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,” said Paul Washington, Executive Director of The Conference Board ESG Center. “They should focus on engaging and educating both internal and external stakeholders on how their activities serve both corporate and societal purposes.”

Media can contact The Conference Board for interviews and additional results from the survey.

About The Conference Board ESG Center

The Conference Board ESG Center serves as a resource, platform, and partner to help Member companies address their priorities in corporate governance, sustainability, and citizenship.

www.conference-board.org/ESG

About The Conference Board

The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org