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October 02, 2013
New Edition of Corporate Political Spending Index Published
    by Robert Kropp

The third annual edition of the CPA-Zicklin Index of Political Accountability and Disclosure documents improvements in disclosure of political spending by corporation.

For the third year, the Center for Political Accountability (CPA) and the Zicklin Center for Business Ethics Research at the Wharton School have updated their 2013 CPA-Zicklin Index of Political Accountability and Disclosure, a ranking of major US corporations according to their political disclosure and accountability.

For the second year in a row, the Index includes the top 200 companies in the S&P 500 by market capitalization.

Since 2003, when CPA launched its investor-supported effort to increase disclosure of political spending by corporations, the landscape associated with the issue has undergone changes. For one thing, in large part due to the persistence of CPA and its allies, the number of large US companies agreeing to disclose political spending slowly increased.

"When we began," Bruce Freed, president of CPA, told in 2011, "Few if any companies had disclosure and board oversight policies."

In recent years, shareowner advocates led by Walden Asset Management have pressured corporations to disclose or end their their political lobbying expenditures, which accounts for almost 90% of corporate political spending.

And in 2010, the Citizens United decision by the US Supreme Court had several consequences. It opened the floodgates of corporate spending on elections to the extent that the the 2012 Presidential election was the most expensive in the nation's history. It also galvanized sustainable investors and others to press more vigorously for limits on political spending; a petition submitted to the Securities and Exchange Commission (SEC) in 2011, the Committee on Disclosure of Corporate Political Spending—a group of ten corporate and securities law experts, co-chaired by Lucian Bebchuk of Harvard Law School and Robert Jackson of Columbia Law School—gained hundreds of thousands of letters of support.

The petition requested that the SEC “develop rules to require public companies to disclose to shareholders the use of corporate resources for political activities.”

But little brings the issue into starker relief than quantitative rankings; whatever their reasons for doing so, increasing numbers of large companies are improving their disclosures in meaningful ways. “The third annual CPA-Zicklin Index of Political Accountability and Disclosure – issued on the 10th anniversary of the Center’s founding – shows widespread, dramatic change that could not have been imagined in 2003,” the Index states. That “scores of publicly held companies have adopted new practices...reflects a growing shareholder demand for transparency as well as company recognition of sound business practices in a political landscape transformed by new rules and by escalating spending.”

“A strong cross-section of the top tier of American business has established political disclosure as a corporate mainstream practice, and we’re very encouraged to see this strong trend gaining momentum,” Freed observed.

In almost every respect corporate disclosure has improved since the publication of the Index in 2012. Almost 70% of the 195 companies studied for the Index now disclose their direct political spending. Forty-three percent report on their payments to trade associations, and another seven percent specifically request that such entities not use their payments for political purposes. More than a third disclose payments to so-called social welfare organizations such as Karl Rove’s Crossroads Grassroots Policy Strategies.

To further demonstrate how disclosure has taken hold among large corporations: “Of the 195 companies studied by the Index for the second year in a row, 78 percent improved their overall scores for political disclosure and accountability.” Also, “The number of companies in the top five ranking this year more than doubled, increasing from six last year to 16 this year.”

“It is heartening to see corporate political disclosure and accountability emerge as powerful proxies of good governance and, now, as a competitive advantage,” William Laufer, director of the Zicklin Center, said.


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