In 2010, the Supreme Court issued the landmark decision in Citizens United v. FEC, holding that corporations could not be prohibited from engaging in political speech. In so holding, the Court also encouraged corporations to actively disclose such activity, stating:
“With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.”[i]
Corporations have appeared to heed such advice, with an increasing number voluntarily disclosing political contributions.[ii] In fact, the 2018 CPA-Zitlin Index of Corporate Political Disclosure and Accountability, which scores S&P 500 companies on their political transparency, shows continued upward trends in both the number of companies disclosing activity, and the quality of the disclosure and accountability programs.
The companies with the highest scores on the Zitlin index demonstrate (1) that they have developed and implemented corporate policies on political giving; (2) that they broadly disclose contributions to candidates, party committees, PACs, independent expenditure committees, 501(c)(4) organizations, trade associations, and other political organizations; and (3) that they have board oversight of their political activities.
Shareholders have continued to push companies to implement political accountability programs through proxy resolutions. Such activism continues to grow, and national news organizations have taken note. In 2018, political disclosure rules were the most common shareholder proposal.[iii] Additionally, Congress has now proposed required disclosure rules in two consecutive sessions, the most recent being the Corporate Disclosure Act of 2019, which would specifically direct the SEC to issue uniform disclosure regulations to public companies.[iv]
As shareholders, the legislature, and the public continue to push companies towards increased disclosure, companies should consider implementing political accountability programs in consultation with counsel. By proactively disclosing contributions and developing political giving policies, companies will be better positioned to engage in the public debate and showcase their commitment to transparency.
Contact Liz Roggio to discuss your company’s political disclosure and accountability programs.
[i] Citizens United v. FEC, 558 U.S. 310, 352 (2010)
[iii] Brian Croce, Corporate Political Disclosure Moves Firmly into Mainstream, Pensions and Investments (June 25, 2018).