2014 CPA-Zicklin Index of Corporate Political Disclosure

Bruce F. Freed is president and a founder of the Center for Political Accountability. This post is based on the 2014 CPA-Zicklin Index of Corporate Political Disclosure and Accountability by Mr. Freed and Sol Kwon; the full report is available here. Work from the Program on Corporate Governance about corporate political spending includes Shining Light on Corporate Political Spending by Lucian Bebchuk and Robert Jackson, discussed on the Forum here. A committee of law professors co-chaired by Bebchuk and Jackson submitted a rulemaking petition to the SEC concerning corporate political spending; that petition is discussed here.

Dozens of leading American corporations have embraced political transparency without the prodding of shareholder proposals. This is a new and important finding in the fourth annual CPA-Zicklin Index of Corporate Political Disclosure and Accountability released by the Center for Political Accountability on September 24.

At the same time, the Index found that companies that have already adopted disclosure and accountability continue to strengthen their policies, making them more robust and comprehensive. All this is happening in the face of intense opposition by several of the leading business trade associations.

For 2014, the Index was expanded to look at the policies and practices of the largest 300 companies in the S&P 500. In these top echelons of American business, the Index found that more than 60 percent of companies were disclosing voluntarily at least some information on giving to candidates, parties, and political committees; and about half opened up about payments made to trade associations.

The Index revealed that voluntary disclosure was making inroads among public companies that have not been engaged by shareholders to disclose. Of the 139 companies with no history of shareholder resolution on the issue, 34 disclosed full or partial information on their direct political expenditures or said they do not make such expenditures. Some also disclosed their payments to 501(c)(4) groups and trade associations.

In addition, the Index showed 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. The average overall score for these 102 companies improved by an average of 12.5 points.

Data from 2014 Index yielded these other striking findings:

  • Among the top 300 companies in the S&P 500, 20 received top-five rankings for political disclosure and accountability.
  • Two companies tied for a first-place ranking with a score of 97.1 points, the highest in the four-year history of the Index: Noble Energy, Inc. and CSX Corp. Other top five companies included Becton, Dickinson & Co.; Capital One Financial Corp.; Exelon Corp.; Qualcomm, Inc.; United Parcel Service Inc., AFLAC Inc.; Biogen Idec Inc.; Edison International; Microsoft Corporation; Morgan Stanley; PG&E Corp. (Holding Company); Gilead Sciences, Inc.; Intel Corp.; Mylan Inc., Norfolk Southern Corp.; Hershey Company (The); Merck & Co., Inc.; and Time Warner Inc.
  • Companies showing the greatest improvement from 2013 to 2014 were Applied Materials, Inc., improving from an overall score from 7.1 to 72.9; BlackRock, Inc., raising its total score from zero to 65.7; and Schlumberger Ltd., receiving a score of 95.7, up from 38.6.
  • A total of 133 out of the 299 companies (44 percent) disclosed some information on their direct contributions to candidates, parties and committees, while 50 companies (17 percent) said it is their policy not to make such contributions directly.
  • Almost half of companies in the top echelons of the S&P 500 have opened up about payments made to trade associations. Of the 299 companies, 127 (43 percent) disclosed some information on their payments to trade associations while 18 (6 percent) said they asked trade associations not to use their payments for election-related purposes.

Significant room for improvement remained, however. Sixty-five companies had disclosure and accountability scores of 10 percent or less, and 20 of them had scores of zero.

CPA plans to cover the entire S&P 500 in next year’s Index to provide a comprehensive picture of company policies and practices.

The Index continued to receive extensive and positive media coverage. Some examples: The New York Times (“Tech Firms and Lobbyists: Now Intertwined, but Not Eager to Reveal It”), two Washington Post articles (“Study: Major companies are increasingly disclosing their political spending” and “20 well-known companies that aren’t being transparent about their politics”), Reuters (“U.S. Companies Offer More Political Spending Detail: Study)” and the Center for Public Integrity (“Secret politics pervade popular companies; But overall trend points toward big corporations volunteering more details, new survey says”).

The CPA-Zicklin Index of Corporate Political Disclosure and Accountability was produced in conjunction with the Carol and Lawrence Zicklin Center for Business Ethics Research. The Zicklin Center is located at The Wharton School of the University of Pennsylvania.

The annual benchmarking study examined policies and practices published on corporate websites. Its accompanying report did not make any judgments about a company’s political spending or whether its disclosure is complete. The report was entitled The 2014 CPA-Zicklin Index of Corporate Political Accountability and Disclosure: How Leading Companies are Making Political Disclosure a Mainstream Practice.

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