More Corporations Embrace Disclosure, Despite Conservative Opposition
By Justin Miller | Sep 28, 2016
Republican Senate Majority Leader Mitch McConnell is in a standoff with Democrats as he refuses to remove a rider to a short-term funding bill that would prohibit the Securities and Exchange Commission from strengthening political disclosure requirements for corporations.
Stopping measures that would shine some light on corporations’ secret political spending is a top priority for McConnell, along with his powerful allies at one of the leading sources of dark money: the U.S. Chamber of Commerce. Chamber officials argue that requiring more disclosure is a just an underhanded ploy to keep corporations from exercising free speech.
Yet an increasing number of American companies don’t see it that way. With greater scrutiny on corporate money in politics, businesses are adopting internal policies that specifically disclosure their political activities and some are even voluntarily curbing their campaign spending, according to a new report on corporate transparency from the Center for Political Accountability and the Zicklin Center for Business Ethics Research at the University of Pennsylvania’s Wharton School.
“We find that companies now recognize that political spending is a risk and that they need to have disclosure policies in place,” says Bruce Freed, president and founder of the Center for Political Accountability (CPA). He says that after Citizens United corporations face greater pressure from trade associations, political nonprofits, and super PACs who want their money and find that putting transparency policies in place can provide a buffer against such requests.
For the first time, the annual CPA-Zicklin Index of Corporate Political Disclosure and Accountability compares the policies of all Standard & Poor’s 500 companies, including some of the biggest political spenders in the country, over consecutive years. The analysis examines corporate policies regarding political spending; board of directors’ oversight of political spending; disclosure of trade association dues and contributions to 501(c)(4)s; and other metrics.
The CPA-Zicklin Index finds that a growing number of companies have addressed the rise of dark money by developing or strengthening policies that require some level of disclosure of payments to trade associations like the U.S. Chamber of Commerce, the Business Roundtable, and the American Chemistry Council as well as social-welfare 501(c)(4)s. These groups have been driving forces behind the increase in undisclosed political campaign contributions.
Nearly half of all S&P 500 companies disclosed some type of payment to trade associations or specifically directed these groups not to use their money on election spending. Nearly one third disclosed some type of information about contributions to social-welfare groups, noted that they prohibited contributions to these types of groups, or had directed these types of groups not to use contributions on election-related activities. The report noted that 53 companies instituted some type of limitation on payments made to social-welfare groups and trade associations, up from 40 in 2015.
“Companies have a responsibility to know how their money is being used and have a say in how it’ll be spent,” Freed says. “Even if they don’t disclose payments but do disclose memberships, that means that questions can be asked. Shareholders know; journalists know; the public knows.”
The chamber, along with other trade groups, has pushed back against the CPA-Zicklin Index. Last year, The Huffington Post published an email message sent to the Carlton Group, a Washington, D.C., corporate interest group, by Lisa Rickard, president of the chamber’s Institute of Legal Reform, calling the Index “part of an orchestrated campaign to ultimately limit the business community’s ability to engage in political and policy debates.”
Many of the companies leading the way on transparency are also members of the U.S. Chamber of Commerce, despite the organization’s stark opposition to any type of corporate disclosure—mandatory or voluntary. Of the 94 companies in the top tier of the index, 36 are verified members of the chamber, according to a tally provided to the Prospect by the CPA. Those member-companies include industry behemoths like Pfizer, Monsanto, Morgan Stanley, Wells Fargo, Dow Chemical, Aetna, and Altria.
“That’s the thing we find very ironic,” Freed says. “The chamber’s opposition has had no effect on companies decisions on disclosure and has had no impact on continued pace of disclosure. We’ve seen no companies back down.”
The chamber is the largest source of dark money in the 2016 election so far, according to the Center for Responsive Politics, having already spent more than $22 million this election cycle to protect the Republican Party’s majority in the Senate. The trade group’s spending, funded by undisclosed donors, has fueled record-levels of dark-money contributions across the country. Meanwhile, political nonprofits have already spent nearly $50 million in federal elections, and that figure is expected to skyrocket in the weeks leading up to Election Day.
Still, disclosure advocates argue that the voluntary corporate transparency policies do not negate the need for uniform and universal disclosure regulations, as the proposed SEC rule would require.
“This trend of increasing voluntary disclosure is a sign that this is becoming a norm and that is happening because investors want this disclosure,” says Lisa Gilbert, director of Public Citizen’s Congress Watch division. “The SEC should take their cue from those investors.”