The corporate culture wars represent one of the biggest risks of the year, Eurasia Group president Ian Bremmer writes in a newly released report.

Why it matters: In a particularly fraught election year, U.S. businesses and brands are more vulnerable to political attacks. These can directly impact a company's reputation and its ability to do business in certain states — and corporate affairs teams are the first line of defense.

Be smart: In 2019, The Business Roundtable, a collective of 200 CEOs from America's top companies, declared that corporations should do more than just make a profit — they should also support the well-being of customers, employees, suppliers and communities.

• Since then, such events as a global pandemic, racial reckoning, the overturning of Roe v. Wade and ongoing wars across the globe have put this commitment to the test.

Yes, but: The past year has also shown how courts, elected officials and activists can punch back against corporate initiatives they disagree with.

• Florida Gov. Ron DeSantis attacked Disney after it opposed the state's Parental Rights in Education law, which critics refer to as "Don't Say Gay."
• Seven attorneys general from red states ordered Target to remove specific Pride Month merchandise, claiming it violated their states' child protection laws.
• And California Gov. Gavin Newsom attempted to ban Walgreens for not distributing mifepristone, the drug used in medication abortions.

State of play: Following these political pressures, companies have started to slow walk or reframe their environmental, social and governance (ESG) strategies.

• Plus, many are taking a more reserved approach when weighing in on societal or geopolitical matters — opting for strictly internal messages as opposed to loud, public statements.

What they're saying: "Firms operating in both blue and red states — [which is] most of the Fortune 500 — will struggle to adopt cohesive nationwide strategies that satisfy Democrats and Republicans alike," writes Bremmer.

• "Increasingly, these companies will face a tough choice: comply with laws and regulations that offend their corporate and customer values and risk getting 'canceled,' or exit certain state markets. And with the GDP of some U.S. states rivaling that of sovereign countries — California's economy is larger than the UK's, Texas' GDP tops Italy's, and New York's economy is bigger than Russia's — these are expensive decisions."

What to watch: It will be noteworthy to see how companies engage — or disengage — with hot-button issues that impact their stakeholders and how these responses vary from the years prior.

Go deeper ... Top risks in 2024: U.S. turmoil, ungoverned AI, Middle East conflict

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Corporate diversity, equity and inclusion (DEI) efforts are under even more scrutiny in 2024.

Why it matters: Corporate DEI strategies will continue, but boasting about them will not.

Driving the news: Billionaires like Elon Musk, Bill Ackman and Chip Wilson have created a lot of noise by publicly debating the merits and legality of DEI initiatives.

• This paired with the recent Supreme Court decision about affirmative action have corporate communicators, human resource professionals and in-house counsel working to better define and explain their inclusion practices.

Be smart: The terms affirmative action and DEI have been conflated, says Valerie Capers Workman, chief legal officer for recruiting platform Handshake.

• "Those who practice DEI need to clearly explain what it is and what it is not," says Workman. "It is not about preference or prioritizing one group over another" like affirmative action for groups that have been historically discriminated against.
• "It's about ensuring that the best candidates are found. … Talent is everywhere. Excellence is everywhere. But access to opportunity is not equal, which means you have to widen the search."

By the numbers: According to a recent study by The Harris Poll, a vast majority of adults (81%) believe that corporate America should reflect the diversity of the nation.

• Meanwhile, young job seekers are still motivated by corporate diversity and inclusion efforts, with 50% of college students seeking out companies that prioritize and practice DEI and 77% preferring companies that have a diverse leadership team, per a Handshake study.
• Plus, chief human resource officers do not plan to scale back their DEI strategies, according to a recent survey conducted by the Conference Board.

Instead, they are reframing how these strategies are marketed — similar to how companies are pivoting away from phrases like "ESG" and "sustainability" in favor of terms like "impact."

• DEI branding is now being replaced with terms like "well-being" and "employee experience."
• Plus, some companies are expanding how diversity is defined by including demographics like religion or socioeconomic factors, reports Axios' Emily Peck.
• "We're seeing companies be more clear that diversity is about equal access to opportunity and so we're seeing the terminology change a bit, but the desired result has not changed — which is a diverse employee population," says Workman.

What to watch: "There is a blurred line between where good strategic business decision-making ends and where more risky corporate activism begins," says Mission North co-CEO Tyler Perry.

• "I think we'll see companies focus more on getting their house in order and less on promoting external work unless it is truly authentic to their brand. This means taking a closer look at their internal policies, supporting their employees, focusing on community engagement, and prioritizing causes and issues most relevant to their employees and their business."

The bottom line: While companies might stop publishing lengthy DEI reports on an annual basis, the commitments will continue.

A majority of Americans support the notion of diversity in the workplace, but they don't love how it's branded.

By the numbers: According to a recent survey from The Harris Poll, roughly half of Republican voters view the term "DEI" as divisive, while only 27% of Democrats agree.

• A majority of Republicans polled also believe terms like "BIPOC," "LatinX" and "ESG" create more division.

The intrigue: Voters from across the aisle find terms like "cancel culture," "woke" and "underrepresented" to be alienating.

Zoom in: This linguistic disconnect also transcends generations, according to the Harris Poll.

• 75% of baby boomers view the term "BIPOC" as divisive, followed by terms like "underrepresented" (70%) and "Latinx" (67%).
• Meanwhile, Gen Z is more likely than any other generation to find "conservative" (65%), "patriotic" (53%) and "progress" (31%) to be the most divisive terms.

What they're saying: "DEI, like many of these acronyms and phrases, have devolved into ideological dog whistles. Americans hear and sort them like voters, instead of consumers. They're either red or blue," says John Gerzema, CEO of The Harris Poll.

The bottom line: Words matter.

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How one views academia is increasingly becoming a red or blue litmus test.

Why it matters: Harvard's reputation started to nose dive following former university president Claudine Gay's reaction to the Israel-Hamas war, her congressional testimony and the public relations crisis that has since ensued.

• Zoom in: In a recent Morning Consult poll, the school's net favorability rating reached its peak in June at 36% but has since dropped 15 points across all U.S. adults, regardless of party affiliation.

What they're saying: "One of the reasons that we've seen [Harvard's] metrics move so dramatically is because of the constant drumbeat of media coverage and headlines," says Joanna Piacenza, Morning Consult's head of industry analysis.

• Plus, the blast radius of bad press received by Harvard, MIT and the University of Pennsylvania has negatively impacted the way Republican voters view Ivy League schools as a whole, per Morning Consult data shared with Axios.

The bottom line: Americans' confidence in higher education has been on shaky ground and the Supreme Court's affirmative action decision along with university leaders' responses to the Middle Eastern conflict has accelerated the decline, says Piacenza.

Methodology: Morning Consult poll results are based on daily surveys conducted between Jan. 1, 2023, and Jan. 6, 2024, among an average sample of 16,997 respondents with an approximate margin of error of plus or minus 0.75 percentage points.

"A work environment is at its most productive when communication flows honestly and frequently. It's impossible to over-communicate with the team."