Do Political Donations Really Predict Corporate Behavior?

Our friends at CSRHub measure the performance of companies from an environmental, societal and governance perspective (ESG). In other words, CSRHub measures whether or not a company pollutes, underpays its workers, or has leadership that doesn’t care about whether the company is ethically run. At Goods Unite Us, we believe that all of these factors are important and not readily apparent just from seeing the label or price on a product.

That’s why our team combined datasets with CSRHub to see if any obvious correlations showed up in terms of political affiliation and ESG scores. And some did. 

Our new joint report, which to our knowledge is the first of its kind, is available here. In short: 

Blue companies outperform red companies overall and in three of four ESG categories.

CSRHub’s ratings measure four main categories: a company’s relationship with its community, its employees, the environment, and the boardroom governance that guides all of it. We found that the political leanings, right or left, of a company’s leadership could predict it’s scores overall and in three of the four ESG categories.

The findings of our joint report paint an amazingly clear picture of how the political leanings of a firm’s leadership affect its relationships with the environment, its supply chain, and its own workers. If a company is blue, it is statistically more likely to have better scores in all of these areas.

CSRHub’s Chief Technology Officer and cofounder Bahar Gidwani notes: “Both corporate managers and investors are interested in understanding the relationship between a company’s political activity and its social impact. This study demonstrates that there is a connection and suggests that political contributions should be seen as part of a company’s sustainability profile.”

The findings were statistically significant in all categories except for governance, where Democrat-leaning companies did score higher, but not in a way significant enough to show a generalizable pattern. 

In a nutshell, political donations are an exceptionally good predictor of not only a company’s political views, but also of its actual behavior. As Abigail Wuest, our CEO and cofounder, puts it, “These donations can tell you a lot about a company’s day-to-day behavior. And that’s priceless information to have when you’re deciding who to buy from or invest in.”

Our final report is available here.

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