Navigating US Election Uncertainty: A Call to Action for Sustainable Business

What Business Leaders Need to Know

More voters than ever before will head to the polls in 2024, with at least 60 countries holding or planning elections. These elections will have profound implications for national policies, global cooperation, and social and environmental progress.

In the United States, electoral uncertainty, threats to democracy, and the potential for instability and chaos are notably apparent as the country faces an enormously consequential election this fall.

This takes place amidst a backdrop of larger volatility and uncertainty, with various risk multipliers poised to amplify disruptive possibilities. Powerful new capabilities enabled and magnified by generative AI mean that misinformation and disinformation are likely to be more persuasive and harder to control than in the past.

Geopolitical instability, in Europe, the Middle East, and East Asia, as well as the repercussions of other elections elsewhere, raise the likelihood of crises that could disrupt the race and scramble existing political alliances. Deepening polarization and persistent economic uncertainty create the conditions for disagreements to escalate into conflict or even violence.

Numerous risks affect the determination of electoral outcomes. Constitutional crises, civil unrest, and violence are all real possibilities in the days and weeks after Election Day and before a winner is declared. At best, we can expect a protracted period of acrimonious and destabilizing proceedings before the next administration comes into office.

Looking ahead, it seems likely that critical institutions including the electoral system, the courts, and the media will continue to suffer from a crisis of legitimacy, and there will be an absence of any broadly shared arbiters of truth. In addition, the country’s political dynamics are simultaneously entrenched, due to a lack of broad consensus, and highly volatile, due to the polarization of the population and political parties.

Rather than taking place in a context of predictable, stable public policy environments, businesses will have to operate amidst growing volatility—with drastic policy swings and dwindling common ground between the two parties. This raises new challenges in the effort to create more just and sustainable businesses.

Climate Policy and Action

The outcome of the elections will have profound ramifications for the future of US climate policy.

The Inflation Reduction Act is widely expected to remain in force. Beyond the political challenges of overturning it, analysts point to the fact that many of its benefits flow primarily to red states. However, many observers believe that a Republican administration would likely roll back tax credits for electric vehicles, (perhaps) battery manufacturing and efforts to curb methane emissions.

The Supreme Court decision to overturn the Chevron deference precedent means litigation against climate action by agencies such as the Environmental Protection Agency (EPA) is likely to become more frequent and successful. Recent EPA restrictions on emissions from power plants and transportation seem likely to be reversed, as does the rollout of the SEC climate risk disclosure rule.

Under a Republican administration, we can expect an expansion of oil and gas leasing on federal lands and offshore areas, including in the Arctic, as well as streamlined permitting for fossil fuel projects including Liquified Neutral Gas (LNG) exports. Prior approvals for offshore wind projects could be suspended. Conversely, a second Democratic administration would likely act to expedite large renewables projects and take a more moderate approach to oil and gas.

A Democratic administration would likely increase investment in Electric Vehicle (EV) charging infrastructure whereas a Republican administration would favor expanding pipelines and refineries. One potential area of common ground is the need for permitting reform to accelerate the interconnection of new energy projects to the grid.

We should anticipate that climate justice policies will be strongly contested and perhaps reversed.

Diversity and Equity

Attention to a broad range of equity and rights issues will take very different directions based on election outcomes. This is particularly acute when it comes to reproductive rights and access to abortion services, diversity and racial equity, and LGBTQI+ rights, all of which are squarely and directly relevant to business.

No matter the outcome, the courts and several states have sharply reduced the right to abortion, and the viability of DEI programs, and have made transgender rights a target. Equally, many states have enshrined these rights in their constitutions, to provide protections.

A further layer affecting these developments is generational change and the steady diversification of the population. This means that the expectations and needs of customers and employees will continue to point toward greater expectations of equity, even as the policy context and judicial decisions create a chilling effect—and at times outright prohibitions—on such actions.

Responsible Investing

Responsible investing has become yet another flashpoint in American politics. As with diversity issues, it will remain so, and while the election will have significant impacts, the ongoing split loosely defined as being between red state and blue state approaches will remain in place regardless of who holds the White House and Congress.

Climate and diversity remain at the core of the battle over whether sustainable investing—whether labeled as ESG or not, and it is increasingly not—will be with us for years to come. Many state governments remain committed to halting or slowing the clean energy transition, and their efforts to brand sustainable investing as “boycotting fossil fuels” will continue. The pushback by several companies, most visibly with the energy company ExxonMobil’s legal challenge to shareholder resolutions this spring, will likely continue. 

This is not to say that the election outcome won’t make a significant difference. The fate of the new SEC regulations mandating disclosure of material climate risks could be rolled back. The fact that doing so would have no impact on companies subject to such rules coming from California, Europe and elsewhere is immaterial; such a move would inject uncertainty in capital markets and play some role in slowing the energy transition. One other flashpoint is the likelihood that a Republican administration would seek to rescind the US Labor Department’s rule permitting pension plan fiduciaries to invest using ESG considerations, a step that was first taken during the prior Republican term.

Countering these developments is the “freedom to invest” movement, which pushes back on these efforts to thwart sustainable investing, and which has made progress. It is also the case that many companies and investors will continue to apply such principles in allocating capital because they consider it wise stewardship or are required to in other jurisdictions around the US and the world.

Global Cooperation

The election presents a stark choice between international cooperation on shared global sustainability objectives and a nationalist approach that defines subjects in more of a zero-sum manner.

This divide is seen most clearly in the question of whether the US remains committed to the Paris Agreement. This will prove centrally important in the run-up to COP30 in Brazil in 2025, when countries are expected to submit their updated Nationally-Determined Contributions (NDCs). The absence of the US from COP30, either altogether or through neglect or inaction, will make a successful outcome at a critical time far less likely. As was seen between 2017-2021, pressure to act will then shift to the private sector, despite the absence of policy signals needed to promote business ambition.

If the next administration imposed substantial tariffs, it could cause economic and political volatility. This may lead to increased nationalism, making it harder to find common solutions for issues such as nature and biodiversity, oceans, human rights, responsible technology, reporting and disclosure. Commitment to global cooperation is hardly a guarantee of success; we have seen this on display in recent years. The absence of efforts to achieve global direction, however, creates a level of inconsistency and unpredictability that can undermine both business certainty and desired outcomes.

Act

• Use scenario planning to ensure resilient business and sustainability strategy: Identify potential short- and long-term risks related to the elections and their potential impacts on sustainable business priorities. This may include identifying what aspects of company sustainability strategy are most reliant on the existing legislative and regulatory landscape, and making contingency plans for their removal; “gaming out” state-level implications of potential restrictions on women’s healthcare in the workforce, and understanding potential changes post-election, including the broad political context as it relates to workforce and customers.
• Clarify policies and engage crucial business functions and internal stakeholders to mitigate risks associated with polarization in the workplace. Sharply divergent views on issues at play in this year’s election, potentially distorted by misinformation and disinformation, risk creating discord in the workplace. Companies should clarify policies and procedures in advance, engage relevant internal teams in contingency planning efforts, proactively engage internal stakeholder groups to spot emerging risks, and prepare internal communications.
• Game out operational contingencies resulting from the immediate aftermath of the election. The potential for election-related unrest and social conflict could affect operations, employee relations, and external communications. The last two national elections have brought unexpected results that have led to calls for business to take action. It is essential that companies consider potential contingencies, both at a national and local level, to ensure business continuity and effective communication in the context of a polarized environment.
• Promote civic participation by employees such as by joining Time to Vote, supporting employees in early voting and on Election Day, and supporting workers who wish to serve as poll workers.

Enable

• Emphasize collaborative efforts, which not only lead to more systemic changes to address significant issues but also mitigate exposure to political opposition on action on certain issues.
• Review and engage with industry groups/trade associations to ensure that those groups are aligned with your broader sustainability priorities and values, and ideally, to engage them in advocating for public policies supportive of just and sustainable business.
• Engage networks including with other business leaders, address these issues to act collectively and find “strength in numbers.” Key initiatives in the US include Leadership Now, Civic Business Initiative, and the ABA Taskforce for American Democracy.

Influence

• Demonstrate the economic value of sustainable business, to reinforce the broadest possible support for policies that enable climate action, capital markets alignment, and diversity. There is a strong business case for these matters and businesses are uniquely positioned to show how competitiveness, innovation, and employment are enhanced by sustainable, responsible business.
• Reinforce the importance of American leadership globally, to ensure sustained engagement in global cooperation. Businesses can make the case for US engagement in the Paris Agreement, in favor of addressing social and environmental principles in global trade, and for ongoing harmonization of reporting and disclosure.
• Offset mis/disinformation, which can take the form of both inaccurate and misleading information concerning sustainability questions, as well as interference with democratic processes.
• Publicly reinforce democratic norms, such as maintaining civic space free from violence and supporting the peaceful transfer of power. Consider noting the importance of democratic norms for business resilience and vitality, especially in the event of election controversies. Endorse activities that strengthen the social fabric of democracy, such as supporting nonpartisan efforts in civics education. This can often happen through business groups or associations.
• Establish red-line conditions on your support for elected officials that include ongoing support for essential responsible/sustainable business matters, as well as rule of law and free and fair elections.

How BSR Can Help

BSR is working with companies to help them understand, navigate, and shape the many potential outcomes and impacts of the upcoming elections. BSR’s advisory services can help your company to:

• Establish effective board oversight about election-related topics and potential impacts on ESG issues.
• Create opportunities for confidential dialogue with peers to share perspectives, benchmark actions, and potential collaboration.
• Undertake scenario analysis with BSR’s Sustainable Futures Lab to support contingency planning, board engagement, and the identification of post-election risks and opportunities for sustainable business strategies.
• Strengthen stakeholder relationships and expert networks: Understand stakeholder perspectives, concerns, and impacts, and strengthen stakeholder relationships to build resilience amid potential social/cultural flashpoints that affect companies, their employees, and their stakeholders (e.g. stakeholder engagement, stakeholder impact mapping, Stakeholder Advisory Councils).