2016 CPA-Zicklin Index of Corporate Political Disclosure

Nanya Springer is associate director and Bruce Freed is president of the Center for Political Accountability. This post is based on a CPA publication. Related research from the Program on Corporate Governance includes 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), and Corporate Politics, Governance, and Value Before and after Citizens United by John C. Coates.

Even in a record-breaking year for money in politics, America’s largest publicly traded companies are steadily moving toward making disclosure and oversight of corporate political spending a common practice. The sixth annual CPA-Zicklin Index of Political Disclosure and Accountability contains this and other key findings, providing for the very first time a year-to-year comparison of the transparency and accountability policies and practices of the entire S&P 500.

Released on September 29, the 2016 Index reveals that:

  • almost 90 percent of S&P 500 companies have a publicly available policy governing political spending from corporate funds;
  • companies are strengthening their policies on “dark money”—almost half of the S&P 500 disclose, or restrict to non-election purposes, their payments to trade associations, and almost a third disclose or restrict payments to 501(c)(4) social welfare organizations;
  • the number of “top-rated” and “most improved” companies has jumped by 52 percent and 33 percent, respectively; and
  • overall scores of companies in the S&P 500 continue to rise steadily in each of three categories: disclosure, policy and oversight.

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.

The Index compares the political spending policies and practices of companies in the S&P 500—companies that comprise the country’s dominant corporate political spenders and establish best practices for American businesses. Such disclosure and transparency policies have become common practice despite strong opposition from some trade associations and non-profit groups.

The Index identifies the following 35 S&P 500 companies as top scorers for political transparency and accountability: Becton, Dickinson and Co.; CSX Corp.; Edwards Lifesciences Corp.; Noble Energy Inc.; PG&E Corp.; and Sempra Energy and State Street Corp., both newcomers to the top-five rankings. Other top-five companies included Edison International; Microsoft Corp.; Morgan Stanley; Unum Group; Capital One Financial Corp.; Express Scripts Holding Co.; Intel Corp.; Norfolk Southern Corp.; Symantec Corp.; United Parcel Service Inc.; Wells Fargo & Co.; AFLAC Inc.; Bank of America Corp.; Biogen Inc.; EMC Corp.; General Mills Inc.; International Paper Co.; JPMorgan Chase & Co.; Tesoro Petroleum Corp.; Visa Inc.; Altria Group Inc.; Bristol-Myers Squibb Co.; Celgene Corp.; Coca-Cola Co.; Exelon Corp.; Gilead Sciences Inc.; Prudential Financial Inc.; and United Technologies Corp.

Data from the 2016 Index, which is based solely on information publicly available on company websites, has been added to CPA’s corporate political spending database. Additional findings of the Index include:

  • Shareholder engagement resulted in higher company scores. Companies that were engaged by shareholders and reached an agreement had notably better disclosure and accountability policies. The average overall score for companies with an agreement was 71.8 percent, compared to 48.8 for companies that were engaged but did not reach an agreement. For companies that were not engaged at all, the overall score was 26.7 percent.
  • Overall scores have been steadily improving. For the 462 companies that were analyzed by the Index in both 2015 and 2016, the overall average score increased from 39.7 to 43.3 percent with 3-4 percent increases occurring in each of the categories of disclosure, oversight and compliance.
  • Companies’ policies are becoming more robust. Of the 441 companies with a political spending policy, more than half—56 percent—had a policy that was detailed, compared with 52 percent of companies in 2015.
  • Companies have continued to place restrictions on their political spending. This is a major change since 2004 when few companies imposed any restrictions or had policies about how they would spend on politics. The Index found that 143 companies, or 29 percent, placed some type of restriction on their corporate political giving. This included restrictions on direct independent expenditures; direct contributions to candidates, parties and committees, 527 groups, or ballot measures; and indirect contributions to 501(c)(4) groups or trade associations that may be used for election-related purposes.

This year’s Index received extensive coverage, including in The Washington Post, The Wall Street Journal, The American Prospect, and the Newark Star Ledger. Moyers and Company explained, “The Center for Political Accountability has gotten corporations to open up on their contributions…. The CPA’s annual index of corporate political disclosure … has also proven a motivator. CPA gives companies a heads-up about their scores before publication, and many have asked for advice about how to improve their score.” The Washington Post noted that the Index “comes at a time when Congress is taking a step in the other direction. Lawmakers [have] passed a short-term spending bill, or continuing resolution, that includes a provision preventing the U.S. Securities and Exchange Commission from requiring public companies to disclose their political spending.”

The CPA-Zicklin Index examines policies and practices available on corporate websites. The accompanying report does not make any judgments about a company’s political spending or whether its disclosure is complete.

The complete report is available for download here.

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