2022 CPA-Zicklin Index on Corporate Political Disclosure and Accountability

In a major expansion, the 2022 CPA-Zicklin Index, the nation’s premier benchmarking of U.S. companies for transparency and accountability of their political spending, doubled its rating from the S&P 500 companies to the Russell 1000.

The Index is a nonpartisan scorecard that now gives attention to large and medium-cap U.S. companies that are not S&P 500 components. This will help protect more shareholders and others concerned about increasing risks of company political spending and will enable companies to compare, their policies and practices with those of their  peers and leaders in their industries.

Former Securities and Exchange Commission Acting Chair and Commissioner Allison Herren Lee highlighted in the Index foreword the progress made and the remaining holes that pose an even greater threat as U.S. democracy comes under heavier assault.

As she pointed out, the threat is fueled in part by corporate political money. “[C]orporations continue to pour billions of dollars into political coffers around the country, with little transparency, and thus little accountability, for the political spending decisions made in the twelve years since the Supreme Court’s ruling in Citizen’s United opened the spigot on corporate political spending,” she wrote. “The trend lines in the CPA-Zicklin Index over the past decade show some laudable increases in transparency, but the analyses also show that non-transparency around corporate influence in the political process remains a significant issue.”

According to the newest Index, there is a dramatic gap between transparency and accountability policies of S&P 500 companies and those additional companies that are in the Russell 1000’s roughly 500 companies.

The overall Index score for all S&P 500 companies this year, for example, is 57.0 percent. For all non-S&P 500 companies in the Russell 1000, the average is 12.3 percent, on a scale of zero to 100.

There are 52 companies in the non-S&P 500 portion of the Russell 1000 with general board oversight of company political spending, compared with almost six times as many, 307 companies, in the full S&P 500yhat have board oversight.

The 2022 Index continues its year-by-year comparison of S&P 500 companies. These largest public companies are making continuing progress, especially by increasing their board oversight of potentially controversial political donations and payments, according to the Index.

Companies in the full S&P 500 with board committee review of direct political contributions and expenditures increased to 278 this year, from 255 a year ago; and with board committee review of spending through third-party groups rose to 256 from 228 a year ago.

This trend is notable in a hard-fought midterm election year with control of Congress and key state-level offices at stake, and in the wake of the January 6, 2021, attack on the Capitol, efforts to reject the 2020 presidential election results, and the Supreme Court’s reversal this year of a constitutional right to abortion.

These events have sharpened polarization and hyper-partisanship and have heightened scrutiny of company political spending. In this climate, corporate political activity is “fraught with risk,” according to The Conference Board, the nation’s leading business research organization.

The 2022 Index findings underscored that voluntary disclosure and accountability remain the only option because of continued Congressional blockage of an S.E.C. rule requiring corporate political disclosure.

Here are more major findings from the 2022 Index:

AVERAGE COMPANY SCORES RISE: The average Index score for political disclosure and accountability for all S&P 500 companies rose from 54.1 percent last year to 57.0 percent now; and from 62.5 percent last year for core companies (scored in the Index continuously since 2015) to 66.7 percent now.

DISCLOSURE MILESTONES: The number of companies in the entire S&P 500 that fully or partially disclosed their political spending in 2022 or that prohibited at least one type of spending was 385. This is nearly 78 percent of the S&P 500 companies evaluated. It is a record high for this category.

The number of companies that disclosed some or all of their political spending was 300. The number of companies that prohibited direct donations to state and local candidates, political parties, and committees was 156, another record high.

FIRST-TIER COMPANIES UP: 185 companies in the full S&P 500 and 164 in the core S&P 500 are in the top Index tier (scoring from 80 percent to 100 percent), compared to 171 companies and 150 companies last year, respectively.

STIGMA FOR THE BOTTOM TIER? The number of core S&P 500 companies in the bottom tier for overall scores keeps shrinking, as it has consecutively since 2015. The number of these companies decline from 57 last year to 43 now, the lowest on record. For the full S&P 500, it dropped from 128 last year to 112 this year.

Here are 89 companies at the top of the Index, earning Trendsetter status:

The newest Index findings create a foundation for company boards of directors to consider adopting the Model Code of Conduct for Corporate Political Spending.