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September 27, 2014
Voluntary Corporate Disclosure of Political Spending Improves
    by Robert Kropp

The fourth annual CPA-Zicklin Index, which tracks voluntary disclosures of political spending by major corporations, notes improved transparency in the absence of effective regulation.

The facts in the matter of electoral interference in the US by corporate treasuries hardly require recounting. The US Supreme Court's controversial Citizens United decision in 2010, as expected, led directly to astronomical increases in spending by corporations and other outside groups in the almost five years since the decision was announced.

I don't believe it's off topic, for instance, to point out that the majority of Republicans in both houses of Congress deny that climate change is real; as ThinkProgress pointed out recently, “The 30 climate deniers in the Senate have taken $22,578,644 in dirty energy contributions while the 70 Senators who haven’t denied the science have only taken $13,679,265 in career contributions.” Also, “The 133 climate deniers in the House have taken $36,318,451 in dirty energy contributions while the 293 voting members who haven’t denied the science have only taken $23,502,845 in career contributions.”

But climate change is only one of the important issues on which corporate political spending can wreak havoc in the electoral system of a government whose relationship with democracy has become increasingly frayed. Yet despite the fact that overwhelming numbers of Americans—including Republican voters—say corporate political contributions should be limited in some way, not one Republican Senator voted in favor of overturning Citizens United.

Which leaves a beleaguered Executive branch with regulatory avenues to address the problem on a macro level. But despite receiving a record-setting one million comments in favor of a petition to regulate corporate political spending, the Securities and Exchange Commission (SEC) seems disinclined to take up the issue.

Which in turn leaves sustainable investors and other corporate governance advocates with the unenviable task of persuading companies to adopt political disclosure on a voluntary basis. And in reality, as the recently published fourth annual CPA-Zicklin Index of Corporate Political Disclosure and Accountability indicates, progress can be discerned.

Since 2003, investors allied with the Center for Political Accountability (CPA), which with the Zicklin Center for Business Ethics Research produces the Index, have introduced increasing numbers of shareowner resolutions requesting disclosure of political spending activities, and over the years the resolutions have in turn attracted increasing percentages of shareowner support.

The Index, which was expanded this year to look at the policies and practices of the top 300 companies in the S&P 500, found that “a majority of almost 200 publicly held companies that were examined in both 2013 and 2014 received higher overall scores for political disclosure and accountability this year.”

Furthermore, even among those companies with which shareowners have not formally engaged, “voluntary disclosure is making inroads.”

To date, CPA recently reported, engagement by its investor allies has resulted in more than 120 companies adopting some form of political spending disclosure. “Leading public companies are standing up for sunlight,” CPA President Bruce Freed said. “They’re effectively laying a foundation for a new route to political disclosure and accountability at a moment when our established political disclosure systems have collapsed, and dark money threatens to become the chief political currency.”

“This nonpartisan Index, established and reviewed by academic experts, definitively shows that more leading companies are establishing political disclosure as a mainstream corporate practice,” Freed said.

However, as Timothy Smith of Walden Asset Management pointed out recently, “Despite the progress of close to 150 companies choosing to disclose information about their political spending, we desperately need a level playing field where all companies disclose comparable information. The SEC can play an important role for investors by creating a standard regulation providing for such disclosure.”


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