A new report from the Center for Political Accountability warns that increasing polarization in state and local politics may increase risks for companies engaged in political and lobbying actions. As more attention is focused on state governments, political spending that might have been glossed over in the past is getting renewed attention from shareholders and consumers. The report advises companies to begin managing these risks by considering the following factors:
“Thus, the critical first step for management and directors is acknowledging the scope and impact of corporate political spending and the real risks it poses to companies. Executives within US companies must consider these features of the transformed political landscape:
- Major scope and impact. Corporate political spending plays a major role in the financing of US elections.
- No longer just a way to gain access. Corporate political spending associates company brands with all outcomes of elections, political causes, and candidates that the spending advances.
- Stakeholders are watching. Employees, consumers, and investors increasingly care about a brand’s political values and reputation.
- The new risk management. The risk calculus that governs decision-making around corporate political spending must be adapted to these new realities.
- Find a framework. Companies need a robust framework that guides them in fully assessing the impact, risks and benefits of each political contribution.”
The report argues that companies are increasingly being held accountable for the actions of the political actors they donate to, even when the purpose of the donations are disconnected from the ultimate political action. How a company makes political donations is a governance issue that deserves some attention. The authors advocate that companies adopt political spending policies in order to assess potential risks and provide consistency for political donations. Back in 2022, political spending got some attention in the context of climate. Stakeholders found that some companies that claimed to be climate forward, also donated to anti-climate lobbying groups and politicians. This report indicates that there may be a resurgence in attention to political spending, and this time the scope could be broader than just climate issues.
Our members can learn more political and lobbying disclosures here.
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