The slew of criticisms from some of the largest American companies in response to the Georgia voting law has done little to reverse the legislation, but has raised questions over the escalating antagonism between business and politics in the country. 

The 98-page voting law, passed on March 25, targets postal voting, which disproportionately affects black and urban voters — a demographic that won the Democrats a narrow victory at the ballot box last November. Stacey Abrams, a former Georgia state legislator, has told the Associated Press that the legislation responds to “an increase in voting by people of color by constricting, removing or otherwise harming their ability to access [new ways of voting].”

Georgia’s biggest companies, such as Coca-Cola and Delta Airlines, moved from issuing general statements about the right to vote to express explicit disappointment with the decision to remove voting practices. JP Morgan — one of the largest investors in the state — Apple, Microsoft, Google and others have also come out in criticism of the law. Republican politicians, by contrast, have also called for boycotts of “woke” brands. 

While this war of words is unlikely to scare off investors eyeing Georgia, it has highlighted a simmering division between policymakers and business leaders in the US that could reset the dialogue between business and politics.

With the long shadow of a disputed election result, the Republican Party — which is typically considered to be pro-business — is now seen to be pitting itself against democratic rights and, by extension, environmental, social and governance (ESG) principles, which companies of all sizes have been espousing with increasing tenacity.

In 2020, the state welcomed 58 greenfield foreign direct investment (FDI) projects, worth an estimated total of $3.4bn in capital expenditure, according to fDi Markets. Compared to other states in the country, Georgia ranks sixth highest in terms of number of projects and fourth highest in terms of capex. 

Last year, the ‘Peach State’ was also the setting of an IP-related legal case between two Korean battery producers, SK Innovation and LG.

Arun Pillai-Essex, US lead analyst at Verisk Maplecroft, tells fDi that the Georgia voting law itself is not unprecedented, as many Republican-led states are moving to change election laws across the country. 

What is particularly noteworthy is the scale and the partisan nature of the response. “It’s rare for wide swathes of corporate America to line up and effectively rebuke the actions of one of the two major parties, particularly one which has historically advanced their interests, especially around taxation and regulation,” Mr Pillai-Essex says.

But it is noteworthy that much of the interstate and foreign investors in Georgia have set up shop in Democrat areas. An fDi analysis, using both FDI and interstate investments, illustrates a strong correlation between areas that voted Democrat in the 2020 election and the number of greenfield projects installed. The lion’s share of the state’s investment goes to Democrat-voting Fulton county, whose seat is the state capital Atlanta.

Knowledge economy FDI, including sectors such as financial services and software and IT services, are also significantly more prominent in Democrat counties, while Republican counties tend to welcome projects in industrial equipment, automotive components and plastics.   

Dennis Donovan, principal at WDG Consulting, says: “In my view, it is not sufficiently egregious to deter most companies from considering Georgia. There may be a few companies that will forgo Georgia because of this, but I don’t think it will be many.”

Didi Caldwell, founder at Global Location Strategies, says “I think what we saw in Georgia and in other places is that the corporate world is watching”.

Before the pandemic, the economist Milton Friedman’s creed that a company’s sole responsibility is to its shareholders had been challenged by deepening inequalities and rising environmental concerns. The Black Lives Matter protests over the past year have also given the ‘S’ in ESG fresh impetus.

Ms Caldwell observes that the perception of companies’ stakeholders is crucial. “If a named-brand company is investing in a state that just passed legislation that is considered very regressive, that may be hard for them to explain to their investors, customers, employees and their board.” 

In environmental matters particularly, businesses have newfound clout over governments, she says. “In the absence of the government stepping up with environmental regulations, you see businesses taking on some of the initiative themselves.”

For now, the pamphlet war between populism and stakeholder capitalism is yet to move the dial; however, as has rang all too true over recent years, the volatility that accompanies political polarisation is anything but predictable.  

“If this rhetoric [against corporations] starts affecting programmes and policies, then you’ve got a real issue,” Mr Donovan says. “You could eventually have the party that was pro-business being viewed as anti-business — it’s possible. We’re not there yet, but I see troubling signs.”

Naomi Gallagher contributed research for this article.