Ideas

Political Risks in a Global Election Year

Written by Ronald Chan | Jun 5, 2024 1:16:44 PM

 

 

Chart 1: Map of countries holding election in 2024. Source: The Guardian 

Reading headlines from across the globe, it would appear that one common thread running across the 2024 elections is that policymakers across the globe are adopting a more inward-looking rhetoric in political campaigns. This, coupled with the adoption of nationalistic economic and social policies, would seem to reflect a broader shift away from globalisation but to what extent and how rapidly? This poses a unique set of challenges for organisations operating in multiple jurisdictions, who have for years enjoyed the relative benefits of the flat world.

The difficulty for organisations now will be to communicate cohesively on a global level while navigating domestic inward-looking policies that are quickly becoming the norm.

In our case study, we argue that multinational companies have to be mindful of the diversity of policymakers’ needs this election year introduces. In election cycles, policymakers demand more localised data from companies, but comms that resonate in one jurisdiction may provoke offence in another. Companies must therefore identify these pitfalls early on in order to avoid external risk.

EU Strategic Autonomy

While discussion of strategic autonomy has been prevalent for years, a proliferation of policies from the EU aimed at making this a reality signals a shift towards a more introspective stance from European policymakers. ‘Strategic autonomy’ was originally coined to refer to Europe’s security concerns amid geopolitical shifts. Events such as Brexit, the election of U.S. President Donald Trump, and declining relations with China promoted its presence in the policy landscape, while Covid-related supply chain shortages and Russia’s invasion of Ukraine have underscored its necessity. Even Europe’s biggest trade partner and ally, the U.S., has not been spared from the scrutiny of strategic autonomy, as European policymakers are wary of the power of U.S. corporations:

Everybody’s scared of the Chinese… But if you look at the technologies, if you look at the amount of data that’s being collected on people, and the amount of [American] companies that are getting the personal information of every single person in the country, they’re both the same.

– Former Member of Parliament, Right, Netherlands

As EU parliamentary elections approach in June, political campaigns across parties are adopting inward-looking policies, focusing on domestic issues and production protections. In the last few months we have seen the ambitious green agendas of years past watered down in favour of more realist policies that focus on the concerns of European citizens rather than issues on the international stage. One such example is the European Union’s response to the recent uproar around the greening of agricultural policies and the subsequent farmers’ protests in Brussels, connected to the impact that such greening would have on food prices and farmers’ income.

Similar introspective policies have been observed in the US, where the political rematch between Joe Biden and Donald Trump has unearthed little alignment between Democrats and Republicans – apart from their nationalistic trade and economic policies.

In this current environment, how should a global company speak to policymakers confidently? How do they ensure their common message that may excite one market doesn’t cause reputational harm in others?

Election Year Best Practices for Corporations

Traditionally, in an election year, companies need to localise their message to policymakers. This year is no different. Localising your ask is still important.

In a webinar on the US elections, Penta President Matt McDonald shared the importance for the private sector, especially those with an international presence, to contextualise their policymaker engagement within the local advocacy environment. This means not only having an understanding of the specific processes and quirks of the markets you operate in, but also their institutions and traditions, in order to provide policymakers with localised information that is relevant to them.

What companies need to do is send relevant data that targets specific regions. I don’t only need to know how many jobs you’ve employed across Europe, but also in my country… Because if you can’t deliver that to me, then I can’t showcase it for the election. In an election year, everything becomes local.

– Head of Cabinet, Centre Left, Parliament, Eastern Europe

However, a focus on local issues in one market may not resonate with policymakers in the other markets. Those local messages may even be picked up by policymakers in other markets and cause offence.

Case Study: Divergent in ESG

One such example is on the issue of ESG, where a global company will have to avoid the pitfalls of different expectations from policymakers around the world.

Penta has been studying the growing divide in policymaker perspectives towards ESG in the United States and Europe. In the US, we see a clear difference in perceptions around ESG. Close to 80% of Democrats surveyed by Penta express that environmental responsibility is extremely or very important in influencing their perception of an organisation, compared with 42% of Republicans.

Environmental Responsibility 

 

Chart 2: US Federal Policymaker Research on the importance of environmental responsibility

 

 

This polarised outlook towards ESG, especially the growing anti-ESG sentiment expressed by Republicans, has led to companies in the US engaging in ‘greenhushing’ - a phenomenon where companies are silent about their sustainability initiatives, even if they are taking positive steps.

Conversely, demonstration of environmental impact is crucial for policymakers in the EU. EU policymakers across the political spectrum have a favourable view towards companies that demonstrate a robust commitment to ESG.

 

 

Chart 3: From EU Policymaker Research on what types of contents and information do policymakers want to hear from companies when it comes to their environmental work

 

In particular, EU policymakers negatively judge companies who remain silent in the environmental debate, and those who fail to engage meaningfully around the issue.

[A European company] is a little bit different. They are more European…They have this European target. It’s different from [an American company]. So it’s seen in a different way.

– Former Political Advisor, Member State Parliament, Southern European, Centre Left

This demonstrates the importance of having comprehensive messaging that addresses both the concerns of policymakers across jurisdictions and avoids drawing vulnerable attacks from differing priorities. ESG messaging that is effective with EU policymakers could have a negative effect with US policymakers, and vice-versa.

Conclusion - Importance of research

In an election year, policymakers are seeking localised data. But localised custom data is inherently framed by domestic political quirks that, at best, don't translate across borders, and at worst, create inharmonious perceptions of your brand. As such, to be able to operate effectively across jurisdictions, companies must start looking at their stakeholder management through a global framework.

First, companies must identify a baseline understanding of the common-ground themes emerging and the associated risks to ensure coherence across their messaging. Next, it is important to understand who matters in driving the conversation across all stakeholder groups. Identifying and activating a dedicated group of stakeholders with a high level of engagement will drive the conversation forward, especially around issues where a company requires a more deft and targeted approach.

All politics are local. In this politically contentious time, stakeholder management requires adept and detailed global data. The challenge this year will be using the actionable data wisely to run global communications with a domestic focus.

**Penta Policy Insiders will conduct our fourth annual Policymakers Research initiative this summer. The project will uncover fresh insights and perspectives from policymakers across the EU and compare the year-over-year priority shifts that dictate the trends and conversations in Brussels. The study will be conducted alongside our annual U.S. Federal and State research to provide a comprehensive picture of the policymaking landscape in two of the most influential international policy jurisdictions.