USA - NATIONWIDE: An Introduction to Political Law

Corporate Social Responsibility, Political Activity and Compliance:

A Changing Landscape

The outcome of the 2024 elections, new positions by the second Trump Administration, shifting Environmental, Social, and Governance (“ESG”) priorities, reduced shareholder proposals, and ongoing private ordering by the regulated community have changed the legal landscape for corporate political activity and compliance.

As the regulated community enters the 2026 election cycle and reacts, expect to see corporate political activity reshaped and consider recommended best practices for maintaining political law compliance.

SEC & corporate social responsibility

During the prior administration, Corporate Social Responsibility priorities predominated. The SEC’s approach to ESG has notably shifted under the Trump Administration.

On June 12, 2025 the SEC formally withdrew a Biden-era rule requiring enhanced ESG disclosures. This rule aimed to increase transparency around ESG investing, including how funds define and apply ESG strategies.

While aggressive ESG rulemaking is unlikely, investor demand for transparency keeps the issue relevant for public companies. Voluntary disclosures still carry risk, as the SEC may pursue enforcement for inaccuracies and inadequate controls.

Additionally, through Staff Legal Bulletin (“SLB”) No. 14M, the SEC reintroduced a company-specific materiality standard for evaluating shareholder proposals. Under SLB 14M, companies may seek to exclude shareholder proposals from proxy materials if they lack economic relevance or intrude on ordinary business operations.  

Shareholder proposals

There has been a notable drop in the overall number of shareholder proposals filed during the 2025 proxy season. This decline reflects a number of factors including: (1) increased exclusion opportunities under SLB 14M; (2) fewer, more focused proposals; (3) a “wait and see” approach amid regulatory uncertainty and possible legal challenges; (4) proactive engagement with shareholders; and (5) an increase in voluntary ESG disclosures.

Despite this decline, ESG-focused submissions still account for a substantial portion of the total. Corporate political activity remains a top priority, especially among institutional investors and public pension funds. Shareholders are particularly focused on: (1) disclosure of direct and indirect lobbying expenditures; (2) alignment between lobbying and public commitments; (3) superPAC and 527 organization transparency; and (4) board and leadership oversight over political and lobbying activity.

Moreover, third party watchdogs and good government groups continue to rate corporate political activity and compliance, emphasizing self-regulation by private ordering. For example, the Center for Political Accountability, in conjunction with the Wharton School of Business at the University of Pennsylvania, encourages disclosure of payments to trade associations and other political spending through an annual rating (the CPA-Zicklin Index), and proposed a Model Code of Conduct.

DOJ & foreign influence oversight

The Trump Administration, through Executive Orders, has emphasized foreign influence on U.S. companies and politics. For instance, it temporarily halted enforcement of the Foreign Corrupt Practices Act (“FCPA”) while the DOJ reassessed its enforcement policy; the DOJ then issued new guidelines on June 9, 2025  focusing enforcement on substantial bribery and national security, particularly by individual actors, not corporate structures.

The DOJ has also signaled continued interest in FARA (the “Foreign Agents Registration Act”), though with a different focus than under the previous Administration. Notable DOJ directives: (1) focusing efforts on immigration, drug cartels, transnational criminal organizations (“TCOs”), and human trafficking; (2) limiting criminal investigations and prosecutions under FARA and 18 USC § 951 (a law aimed at regulating foreign government influence utilized in connection with FARA and as a standalone enforcement mechanism to pursue foreign influence cases) to matters involving "conduct similar to more traditional espionage by foreign government actors"; and (3) focus Counterintelligence and Export Control Section and the FARA Unit on civil enforcement, regulatory initiatives and public guidance regarding FARA and 18 USC § 951.

Executive Orders, agency action, and federal legislation

The Trump Administration has issued a series of Executive Orders aimed at deregulation, reducing perceived administrative overreach, and curtailing ESG-related mandates across agencies. These orders demonstrate a centralization of federal authority (EO 14215, EO 14248) and a sharp rollback of Biden-era priorities (EO 14148, EO 14209).

In February 2025, the Democratic Party’s three national committees filed a lawsuit challenging Executive Order 14215 as unlawful as applied to the FEC. Commissioner Weintraub filed an amicus brief in support of the plaintiff’s arguments, also contending that her firing reflected a broader executive attack on agency autonomy. In June 2025, U.S. District Judge Amir H. Ali dismissed the lawsuit. With this dismissal and other departures, at the time of this publication, the Commission had fallen short of the quorum of four needed for formal actions in investigations, rulemaking, advisory opinions, or enforcement. However, routine activities continued, including the collection of campaign finance reports, processing of such filings, and maintenance of public data.

CEOs and senior executives are increasingly engaging directly with the White House, raising concerns about undisclosed lobbying and potential gifts to or made at the request of government officials.

Congressional Republicans and Democrats have introduced several bills targeting transparency in campaign finance and lobbying, although bipartisan approval of these proposals seem unlikely.

Political compliance framework

Traditionally, three areas of law (collectively called “political laws”) have established the legal parameters for private sector interaction with U.S. federal, state, and local governments: campaign finance, lobbying disclosure, and government ethics.

In light of controversies and shifts of priorities in recent election cycles, most companies have already adopted rigorous compliance procedures, enhanced voluntary disclosure, and pressure-tested corporate compliance processes in regard to their political activities. The changing landscape under the second Trump Administration warrants a fresh look at evolving best practices.

Recommendations

Maintain strong, measured compliance programs and think long-term.

While federal enforcement has slowed or changed direction, enforcement priorities can quickly change. Companies should not interpret the current federal posture as a green light to relax internal controls.Your corporate compliance program should not be reactive or politically-driven. Avoid walking back positions and programs that are important to your company in reaction to the changing political landscape. Regulators, investors, and the public value predictability and stability.

Ensure alignment of political and lobbying activity with public-facing policies and positions.

Your public-facing policies and positions should align with your on-the-ground political and lobbying efforts. Ensure that all internal departments have consistent messaging. 

Consider the role your management and board play. Set the tone at the top.

Shareholders want to know that your board and leadership are involved in overseeing compliance and political engagement. 

Evaluate your third-party due diligence practices and disclosures.

Weak oversight of payments to third parties can create downstream risks (legal and reputational), even if the company itself is compliant with relevant laws. Outline clear parameters regarding the use of your funds, including any disclosure expectations.

Engage your shareholders and other stakeholders early and often.

Use engagement as a proactive tool to explain the company’s approach, gather feedback, and potentially mitigate shareholder proposals and reputational risk. Companies that allow proposals to go to a vote risk policy changes that are mandated rather than developed by the company.

Stay vigilant. Continue to monitor and assess the changing federal, state, and local political landscape.

The regulatory rollback at the federal level does not mean uniform deregulation. States and localitiesmay introduce new and competing compliance burdens. Compliance teams should maintain a monitoring function for policy and enforcement changes at all levels of government.