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E-MailLeading US public companies are making political disclosure and accountability a mainstream corporate practice. That’s a key finding of the 2013 CPA-Zicklin Index of Corporate Political Accountability and Disclosure released on September 25. Now in its third year, the Index benchmarked the top 200 companies of the S&P 500 on their policies and practices for disclosing, decision-making and managing the risks associated with their political spending. (The actual total was 195 after discounting mergers and other factors.)
The increase in the average overall Index score of all companies—a 41 percent jump from 38 last year to 51 in 2013—showed strong across the board improvement in company policies. Over three quarters of these companies—about 78 percent—saw their scores rise. Biggest gains came in board oversight, with 66 percent of the companies improving scores in that area, followed by disclosure, with 57 percent improving, and political spending policies, with 42 percent improving.
As important, the Index found a more than 150 percent jump in the number of companies with top policies, from six in 2012 to 16 this year. A cross section of business, the companies included Merck, Qualcomm, and United Parcel Service, all with an overall score of 94.3 out of 100; AFLAC, CSX, and Microsoft, 92.9; Noble Energy and Gilead Sciences, 91.4; Conoco Phillips, Exelon, JP Morgan Chase, Time Warner, and Wells Fargo, 90; and Intel, PG&E, and Yum! Brands, 88.6. The italicized companies were newcomers as top scorers.
The Index was developed by the Center for Political Accountability in conjunction with the Carol and Lawrence Zicklin Center for Business Ethics Research, located at The Wharton School of the University of Pennsylvania.
More specifically, the 2013 Index showed gains in the following types of political spending:
- Direct Spending: In 2013, a total of 104 out of the 195 companies (more than 53 percent) disclosed information about their contributions to state candidates, parties and committees. A total of 33 companies, or 17 percent, said it is their policy not to make such contributions directly. (No 2012 data is directly comparable.)
- Independent expenditures: in 2013, 56 companies (29 percent) disclosed information about their independent expenditures. A total of 49 companies, or more than 25 percent, said it is their policy not to make such expenditures. In 2012, just 18 percent disclosed information in this category, and 20 percent said they had a policy against such spending.
- Trade Associations: In 2013, 84 companies (43 percent) disclosed information about their payments to trade associations. A total of 14 companies, or seven percent, said they instruct trade associations not to use these payments on election-related activities. In 2012, about 36 percent of the companies made disclosure and almost five percent said they restricted their payments.
- “Social welfare” or 501 (c)(4) organizations: In 2013, 51 companies (about 26 percent) disclosed information about their payments to politically active and tax-exempt social welfare organizations, called 501(c)(4) groups for their classification under Internal Revenue Service codes, while 18 companies (more than nine percent) said their policy is not to give to these groups. In 2012, about 16 percent of the companies made disclosure and almost 9 percent said they don’t give to such groups.
In addition, the Index highlighted company adoption of policies on how they spend their money politically. This included more than 66 percent that disclosed detailed policies on their political spending; more than 34 percent that had some restriction against a category of political spending the company may engage in; and about 25 percent that had a policy against making direct independent expenditure to intervene in an election.
The Index showed that close to two-thirds (62 percent) of the companies said that their board of directors oversees their political spending, with a slightly smaller percentage—about 57 percent—identifying a specific board committee directly responsible for oversight.
Strong media coverage highlighted the Index and the increase in disclosure of corporate campaign spending and related policies. A Bloomberg article, “Reynolds, Noble Energy Join Others in Donation Disclosure,” quoted Noble Energy’s general counsel as saying that the company is “committed to doing ‘business with integrity and transparency and applies this commitment to its stakeholder interactions and public disclosures.’” Noble Energy ranked third among the 195 companies in the study, with 91.4 in overall score on a 100 percent basis.
Additional news media coverage included the following: Washington Post, “Some public companies are divulging more details about their political contributions;” CNN.com, “Companies shed more light on their political donations;” The Oregonian, “Intel receives high score for disclosing political donations; Nike, Precision Castparts ranked lower;” Inside Counsel, “Companies become more transparent with association donation disclosures;” Pensions & Investments online , “Merck, Qualcomm, UPS tie at No. 1 in corporate disclosure, accountability rankings;” and Pharmalive.com, “How Well Does Pharma Disclose Political Spending?”
