2015 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 2015 CPA-Zicklin Index of Corporate Political Disclosure and Accountability by Mr. Freed and Marian Currinder, CPA’s associate director. The full report is available here. Related research on corporate political spending from the Program on Corporate Governance includes Originalist or Original: The Difficulties of Reconciling Citizens United with Corporate Law History, by Leo Strine and Nicholas Walter (discussed on the Forum here), and Shining Light on Corporate Political Spending and Corporate Political Speech: Who Decides?, both by Lucian Bebchuk and Robert Jackson (discussed on the Forum here and here).

On the eve of a blockbuster election year for political spending, more of America’s largest publicly traded companies are disclosing their corporate expenditures on politics and are starting to place restrictions on their political spending. These are key findings of the fifth annual CPA-Zicklin Index of Political Disclosure and Accountability that, for the first time, measures the transparency and accountability policies and practices of the entire S&P 500.

Released on October 8, the 2015 Index also reveals that:

  • companies included in previous Indexes have shown steady improvement;
  • those companies that reached agreements after engagement by shareholders received sharply higher scores;
  • 25 percent of companies place some type of restriction on their political spending; and
  • almost nine out of 10 companies recognize the importance of adopting political spending policies.

The Index was developed by the Center for Political Accountability in conjunction with the Carol and Lawrence Zicklin Center for Business Ethics Research at The Wharton School of the University of Pennsylvania.

This year’s Index provides the first portrait of how the largest and most influential public companies are navigating political spending, and how this is changing five years after the Supreme Court’s Citizens United decision allowed much greater corporate political spending. These companies are dominant political spenders and establish the best practices for American business.

The additional transparency has come despite fierce opposition from leading business trade associations. It also comes as recent polling shows that Americans are voicing alarm over the power of corporations and other wealthy donors to influence politics.

The Index identifies the following 23 S&P 500 companies as receiving top-five rankings for political transparency and accountability: Becton, Dickinson and Co.; CSX Corp.; Noble Energy Inc.; Edison International; Microsoft Corp.; Unum Group; Capital One Financial Corp.; Exelon Corp.; Intel Corp.; Monsanto Co.; Norfolk Southern Corp.; PG&E Corp.; Qualcomm Inc.; United Parcel Service Inc.; AFLAC Inc.; Biogen Idec Inc.; General Mills Inc.; JPMorgan Chase & Co.; Bristol-Myers Squibb Co.; EMC Corp.; Gilead Sciences Inc.; Mylan NV; and Prudential Financial Inc.

Data from the 2015 Index, which is based on a survey of information publicly available on company websites, has been added to a one-stop database recently launched at the CPA website. Here are details of the Index’s major findings:

  • Shareholder engagement brought higher company scores. Companies engaged by shareholders that reached an agreement had notably better disclosure and accountability policies. The average overall score in 2015 was 72.6 for companies with an agreement. The average overall score was 43.1 for companies that were engaged but did not reach an agreement. For companies that were not engaged at all, the overall score was 24.4.
  • Steady improvement has occurred. For 83 companies studied by the Index since 2011, the overall average score improved to 71.3 in 2015 from 45.2 in 2011. For 186 companies studied since 2012, the overall average score rose to 59.4 this year from 38.1 in 2012.
  • Most companies now have policies addressing political spending. Companies recognize the importance of adopting these policies. Eighty-seven percent of the S&P 500 companies, or 435, had a detailed policy or some policy governing political spending on their websites. Over half, 52 percent or 259 companies, had a detailed policy; 35 percent, or 176 companies, had a brief or vague policy.
  • Companies increasingly have placed restrictions on their political spending. This is a major change since 2004 when few companies imposed such restrictions, or had policies about how they would spend on politics. The Index found that 124 companies, or 25 percent, placed some type of restriction on their political spending. This included restrictions on direct independent expenditures; contributions to candidates, parties and committees, 527 groups, ballot measures, or 501(c)(4) groups; and payments to trade associations for political purposes.

Media coverage of the 2015 Index has been extensive and positive and included the Washington Post, Huffington Post, NPR, San Francisco Chronicle, the Center for Public Integrity, CQ Roll Call, the St. Louis Post-Dispatch, the Baltimore Sun and Politico’s Influence newsletter. Also, Covington & Burling issued a release on the Index.

Here are coverage highlights:

“I, quite honestly, think [the Index] has helped drive behavior. There is an increasing race to the top here,” Dan Bross, Microsoft’s senior director for corporate citizenship, told The Huffington Post for its article, headlined “This Ranking System Is Increasing Corporate Political Disclosure.”

The Center for Public Integrity quoted Monsanto spokeswoman Charla Lord as calling the Index “highly credible.”

“Top companies from General Mills to Merck & Co. are more fully disclosing their campaign activities and a growing number have even started voluntarily putting the brakes on their political spending, according to a report released Thursday,” CQ Roll Call reported.

Covington’s special report said the Index “will result in more pressure on public companies to voluntarily disclose information about their political spending.”

The annual benchmarking study examines policies and practices published on corporate websites. Its accompanying report does not make any judgments about a company’s political spending or whether its disclosure is complete. The complete publication, entitled The 2015 CPA-Zicklin Index of Corporate Political Accountability and Disclosure: S&P 500 Review Shows Political Disclosure Enters Corporate Mainstream, is available here.

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