Why a midterm ‘red wave’ will put companies’ ESG efforts on the chopping block

A Republican big win in the midterms would not be a victory for ESG. (Photo credit: Getty Images)
A Republican big win in the midterms would not be a victory for ESG. (Photo credit: Getty Images)

Experts predict the Republicans will win at least one house of Congress and wield their power against ‘woke’ corporations.

Public affairs experts are getting ready for big changes in the House of Representatives and possibly the Senate after the November 8 midterm elections — and, depending on the outcome, they say corporate America may need to take a hard look at its ESG initiatives. 

That the Republicans will flip the House is a foregone conclusion for many former political campaign advisers and strategists, and the Senate is up for grabs, too, they say. 

“The House is a virtual lock for the Republicans,” says Alex Conant, founding partner at Firehouse Strategies and former Republican National Committee press secretary and Sen. Marco Rubio (R-FL) campaign comms director. “I think the Senate is too close to call, but Republicans clearly have the momentum.”

Following the Supreme Court’s decision to overturn Roe v. Wade in June, the Democrats had looked poised to retain the House and Senate by making the midterms about women’s reproductive rights. However, high inflation and rising interest rates have again put the Democrats behind the eight ball. 

“A soft economy creates formidable headwinds for any governing party. It becomes hard for anything else to become important when the economy is not doing well,” says Conant.

Dan Scandling, head of APCO Worldwide’s government relations practice and a 25-year veteran of Capitol Hill, including as comms director for Rep. Frank Wolf (R-VA) and the late Herb Bateman (R-VA), agrees with Conant’s prediction about the House. He wagers that the Republicans will take the Senate, too. 

“The Democrats, rightfully so, were standing on the abortion issue to help them get across the finish line in the midterms,” says Scandling. “But the issue on the minds of voters has come back to their pocketbooks, given everything is so much more expensive than it was, from the price of gas to groceries.” 

With voters getting their October investment statements, whether for their retirement or kids’ education, just before election night, poor financial returns will surely be top-of-mind among the electorate, he adds.

“I think the issue for the Republicans is not if they will win the House, but by how big or little a margin,” says Scandling. “If it is narrow, it will still be hard for House Minority Leader Kevin McCarthy to lead, just like it has been for House Speaker Nancy Pelosi. Her trying to navigate with a five-seat margin has been a lot more difficult than it would be with a wider margin. McCarthy will be wanting the party to turn as many close contests as possible.” 

To counter the loss of momentum, “the Democrats are starting to switch up their messaging,” notes Scandling. In a new spot, the Democratic National Committee is focusing on its work to lower prescription drug pricing, while simultaneously attacking Republicans on their push for a nationwide abortion ban

The Democrats may also benefit from news this morning that the U.S. economy grew last quarter by 2.6%, after falling in the first and second quarter of this year. 

Former Democratic campaign and legislative aides are not giving up just yet.

“The party of the incumbent president tends to lose ground during midterms elections,” acknowledges Ashley Etienne, senior counselor at Powell Tate, the DC-based public affairs arm of the Weber Shandwick Collective and former communications director to Vice President Kamala Harris and Pelosi. 

Still, she predicts the Democrats will rebuff a red wave “with a swell of voter turnout driven by three factors.” 

The first, she says, is “the Supreme Court's Dobbs [v. Jackson] decision on Roe that is galvanizing voters across the political spectrum, especially young voters.” The second is that the quality of Republican candidates “may turn off independent voters.” And third, voters will turn out in support of “President Joe Biden's efforts to lower healthcare costs and build infrastructure, which are localized and pocketbook issues,” says Etienne. 

Some predict that whichever party comes out on top, they will do so in a big way, running the table on most close contests. 

“I learned a long time ago to stay out of the prediction business,” says Dan Bartlett, EVP of corporate affairs for Walmart, who served as White House communications director for former President George W. Bush. 

“I do think it’s safe to say it’s going to be more like a wave cycle for the party not in control,” he says. “But [I’m] not sure how much that translates into seats, particularly in the Senate.”

Jeff Sadosky, a partner at Forbes Tate Partners and former comms director for Sen. Rob Portman (R-OH), thinks the Republicans will gain seats in the cycle, beating original expectations. But he doesn’t think it’s a lock. 

“Never underestimate Republican candidates’ ability to shoot themselves in the foot,” Sadosky says. “You never know what’s going to end up being the deciding factor, and two weeks is still a long, long time in politics.” 

Another possible wildcard: former President Donald Trump.  

“While Republican candidates in tight races might not admit it, they’re praying Trump stays out of their race, and that he makes no big announcement about his future plans before Election Day,” says Sadosky. 

Election Day aftermath

On November 9, Americans could wake up to a very different incoming makeup in the House and Senate, but many experts worry the results will be in flux, possibly for days. 

“I’m most concerned that many of the key races will not be decided on election night and could take days to sort out,” says Etienne. She says this will likely “foster anxiety, suspicions and contribute to conspiracy theories about the integrity of our elections.” 

“This should concern us all as the current disruption in politics is affecting every aspect of society,” she says. 

What are the implications if the Republicans take over Capitol Hill? 

“Expect Donald Trump to announce soon after that he’s running for president again,” predicts Scandling. “He’ll want to take credit for delivering the House and Senate to the party.”

What it could mean for in-house teams

A Republican-controlled Senate will pose significant challenges for corporate America, a stark contrast to the past, when the GOP and big business often seemed like bedfellows. 

Republican personalities have been attacking corporations for being “woke” and controlled by the “militant left” and have even said they would investigate the U.S. Chamber of Commerce for endorsing environmental, social and governance as a way to punish certain sectors, like energy. 

“If they have a majority, Republicans will have the ability to call hearings and investigations, and turn the business world upside down,” says Scandling. “Corporations need to be ready.” 

“The new GOP distrust of ‘Big Anything,’ not just Big Government, and the growing backlash against ‘woke capitalism,’ both of these dynamics will shape a GOP congressional majority’s agenda,” agrees Sadosky. “If anyone goes into this next Congress assuming it will be like the last time the House was under GOP control, they’re fooling themselves.” 

“Assuming Republicans take control in Congress, either just the House or by taking both the House and the Senate, it’s all the more important you have an advocacy message that can speak to GOP priorities without turning off the Biden Administration,” he adds. “There will be a few key moments over the next year to move an issue, or a bill, and clients will need to thread the political needle very carefully.” 

Andrea Hagelgans, MD of U.S. social issues engagement at Edelman, agrees. She previously served as the highest-ranking communications pro in former New York City Mayor Bill de Blasio's administration. 

“Beginning with the ‘Don’t Say Gay’ bill in Florida, we’ve seen an acceleration of societal issues as part of the business conversation, but also push back and politicization of ESG,” says Hagelgans. “Anti-ESG campaigns are being waged, and we could see similar examples in the coming year legislatively.” 

“If you are at a company, in any state, you should be thinking about the broader legislative agenda and how that might impact your employees, your customers and other key stakeholders,” she says, listing Texas as an example. “There has been push back against policies that might be seen as more climate-friendly. The midterm elections, depending on the outcome, could embolden those campaigns being waged against ESG efforts.”

This story first appeared on PRWeek U.S.

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