Corporate Political Activity

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The number of resolutions on corporate political activity remains high chiefly lobbying and election spending—even as it has fallen from a peak four years ago; corporate participation in the fraught public discourse ensures debates will persist. Proponents have filed about 80 resolutions so far in 2018, compared with 90 last year, down from about 100 the year before; a few more are likely to crop up by year’s end. The proponents say decline in resolutions filed is more a reflection of how many companies have already been approached or taken steps to address this issue and is not an indication of any lessening of interest by shareholder proponents.

It remains the case that more address spending for lobbying rather than elections, but disclosure in both areas is still the chief focus. (See bottom chart, showing the rare occurrence of other resolution types.) Despite the decline in proposals filed, the tally going to votes has not fallen much, since proponents are less likely than in the past to withdraw them. (See top chart.)

Companies are more willing to discuss their election spending than lobbying, yet expenditures on lobbying dwarf what goes to elections. Transparency about both sorts of activity is increasing some, but a key sticking point remains disclosure about memberships and payments to intermediary groups that legally may keep their funders private—trade associations, “social welfare organizations” (known as 501(c)4 groups for their tax exemption in the Internal Revenue Code) and charitable groups that skirt political activity prohibitions.

Shareholder proponents include social investment and faith-based organizations, leading pension funds such as the New York City and state funds, trade unions and some individuals. Investor concern about corporate political activity began in earnest when the Center for Political Accountability (CPA) started up in 2003 and intensified after the 2010 Citizens United U.S. Supreme Court decision that opened up new avenues for corporate spending. The CPA’s model oversight and disclosure approach is the standard template for lobbying transparency, too. The umbrella Corporate Reform Coalition supports shareholder activity on corporate spending and includes other reformers, as well.
Key references for investors are the CPA’s CPA-Zicklin Index, most recently updated in September 2017, covering the S&P 500 index. The Conference Board’s Committee on Corporate Political Spending offers a more corporate but generally supportive perspective on disclosure and oversight.

Multiple proposals:
Since 2013, proponents have been able to file both election spending and lobbying proposals at the same company; this year six companies have two such requests —Alphabet, American Water Works, Emerson Electric, Exxon Mobil, Ford Motor and General Electric.