Dolly Parton told a reporter in 2020 that she doesn't "like to get involved in politics, because first of all, I have as many Republican fans as I do Democrats." While that stance might work for a beloved singer/songwriter, your company's brand likely isn't as strong as Dolly's. The events of 2020 kicked off a new phase for American companies, one in which the choice was not whether a company should participate in American democracy, but rather, how to engage and which side of the argument to take. Business leaders feel the pressure from many sides, particularly during an election year: from some shareholders and employees to take a stand that represents their own viewpoint; from other shareholders to focus on growing the business and returning capital. In addition, companies have begun issuing internal policies to align themselves on one side or the other of charged political issues.

Corporate counsel and advisors need to understand the nuances surrounding such engagement to be able to provide strategic and legal advice on political activity by a company and its executives, whether a company is looking to get involved, or to simply issue policies to try to stay out of the fray. This is particularly true in pivotal election years like 2022, where the press is laser-focused on any real or perceived corporate scandal that could be fodder for editorial clickbait. This article aims to highlight some of the challenges of corporate political activity, as well as discuss key points for in-house counsel to consider when advising on those matters.

The Minefield of Unintended Consequences

The business community's increased involvement in political controversies has led to greater scrutiny and consequences when a company acts on an issue. Inaction, or even deciding to take no position on an issue, often is not enough. Indeed, there are several high-profile examples as of late of companies facing scrutiny by simply staying quiet. Without identifying any by name, readers of this publication are no doubt familiar with those instances where major corporations have alienated (and lost) key employees and customers, been the target of legislative retribution or shareholder initiatives, or been subjected to a damning exposé because of some statement on public policy or contribution by its corporate PAC.