Cailin Slattery is Assistant Professor of Business and Public Policy at University of California Berkeley Haas School of Business; Alisa Tazhitdinova is Assistant Professor of Economics at the University of California, Santa Barbara; and Sarah Robinson is a PhD candidate in economics at the University of California, Santa Barbara. This post is based on their recent paper.
Related research from the Program on Corporate Governance includes Corporate Political Speech: Who Decides? (discussed on the Forum here) by Lucian Bebchuk and Robert J. Jackson Jr.; The Untenable Case for Keeping Investors in the Dark (discussed on the Forum here) by Lucian Bebchuk, Robert J. Jackson Jr., James David Nelson, and Roberto Tallarita; and The Politics of CEOs (discussed on the Forum here) by Alma Cohen, Moshe Hazan, Roberto Tallarita, and David Weiss.
In January 2010, decades of legal precedent were overturned when the Supreme Court, in Citizens United v. FEC, decided that the government cannot restrict independent political expenditures by corporations, labor unions, and other associations. Critics decried the devastating impacts of independent spending by corporations. For example, the editorial board of the New York Times wrote that it “paved the way for corporations to use their vast treasuries to overwhelm elections and intimidate elected officials into doing their bidding.”
The Citizens United ruling was in fact followed by a substantial increase in independent spending. Spencer and Wood (2014) find that although spending increased in all states post-Citizens, the increase in independent expenditures was twice as large in states that restricted corporate spending before the ruling. Similarly, Petrova, Simonov and Snyder (2019) find that Citizens United led to significant increases in political advertising. The question remains whether this increase in political spending had a meaningful effect on government policies.
SEC Climate Disclosure Comments Reveal Diversity of Views
More from: Karina Karakulova, Noam Cherki, Paul Hodgson, Subodh Mishra, Institutional Shareholder Services Inc.
Subodh Mishra is Global Head of Communications at Institutional Shareholder Services, Inc. This post is based on an ISS Corporate Solutions publication by Paul Hodgson, Senior Editor at ISS Corporate Solutions, Noam Cherki, Regulatory Affairs Intern, and Karina Karakulova, Director of Regulatory Affairs and Public Policy, at Institutional Shareholder Services.
Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance (discussed on the Forum here) and Will Corporations Deliver Value to All Stakeholders? (discussed on the Forum here) by Lucian A. Bebchuk and Roberto Tallarita; Restoration: The Role Stakeholder Governance Must Play in Recreating a Fair and Sustainable American Economy—A Reply to Professor Rock (discussed on the Forum here) by Leo E. Strine, Jr.; and Stakeholder Capitalism in the Time of COVID (discussed on the Forum here) by Lucian Bebchuk, Kobi Kastiel, and Roberto Tallarita.
The Securities and Exchange Commission in March published its long-awaited proposed rule requiring U.S.-listed companies and foreign private issuers to provide more in-depth and standardized climate-related information in their registration statements and annual reports. The regulator has received about 11,000 comments on the proposal—far more than usual—and continues to get submissions nearly a month after the close of the official review period. Our analysis shows that while there was overwhelming investor support for climate disclosure regulation in general, comments diverge significantly on the recommended regulatory path ahead.
Comment Perspectives
ISS Corporate Solutions examined a representative range of comments from investors (both asset owners and managers) and investor groups, such as CalSTRS, BlackRock, The Council of Institutional Investors; non-profits and consumer protection groups, such as As You Sow and Ceres; former SEC chairs and commissioners; legal and academic scholars; corporations, such as Occidental Petroleum, Hewlett-Packard and United Airlines; banks, including Norges Bank and Citigroup; associations, such as the Society for Corporate Governance and the Business Roundtable; and auditing firms such as EY. Comments from different parties did not always fall along corporates vs. investors, though some did. The Business Roundtable and the Chamber of Commerce described the proposed disclosures as completely unworkable.
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