Firms disclosing political spend after law abolished

A growing number of US companies are voluntarily disclosing their political spending and putting restrictions on the political use of their money, according to a new report ahead of the 2012 presidential elections.

The Zicklin Center for Business Ethics Research and the Center for Political Accountability (CPA) have collaborated to build an index of political disclosure and accountability, seen as ever more urgent in light of the US Supreme Court’s recent Citizens United decision, which allows unlimited corporate political funding in the country. It argues that transparency on the issue is “becoming a mainstream corporate practice”.

The index found that 57 of S&P100 companies now disclose their direct corporate political spending and have adopted board oversight – or, in the case of Colgate-Palmolive and IBM, prohibit political spending entirely.

CPA president Bruce Freed said that when his organisation began its research in 2003, “few if any companies had disclosure and board oversight policies”.

Based on seven key policy and practice indicators, including regular board oversight, political spending reports and a breakdown disclosure of various expenditures, the index ranked Colgate-Palmolive, energy firm Exelon, IBM and Merck as the most responsible firms, with each chalking up a score of 100. Fourteen companies, on the other hand, were given a score of zero, including: Amazon.com, Berkshire Hathaway, Cisco Systems, Halliburton, Mastercard, Nike and Walt Disney.

Unsurprisingly given the magnitude of its lobbying and political involvement, the most transparent sector was healthcare, while telecommunications firms performed the poorest overall.

CPA and the Zicklin Centre say they are trying to get companies to “enhance their policies”, and though its report makes no particular recommendations, its criteria could become important for firms in the future, given the index’s plans to annually update the research and, indeed, expand it to encompass all S&P500 firms next year.

Furthermore, the index is published following a call from the International Corporate Governance Network – which counts Coca-Cola, Hermes and the California State Teachers’ Retirement System among its members – for the US Securities & Exchange Commission to make political spending reports compulsory for all public firms (EP13, issue 5, p3).