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