This Ranking System Is Increasing Corporate Political Disclosure

Corporations are increasingly adopting policies that govern their participation in the political process, acting to voluntarily disclose political contributions and impose restrictions on donations.

The findings come from the 2015 CPA-Zicklin Index of Corporate Political Disclosure and Accountability, released Thursday by the Center for Political Accountability and The Carol and Lawrence Zicklin Center for Business Ethics Research at the Wharton School of the University of Pennsylvania.

The index ranks corporations on a scale of zero to 100, based on their adoption and execution of political spending policies.

Corporate political spending has become a hot button issue across the country ever since the Supreme Court’s 2010 Citizens United decision opened the door to unlimited corporate political spending, provided it remains independent from candidates themselves. While numerous campaign finance reform groups aim to push a variety of responses to the decision, from disclosure to amending the Constitution, the Center for Political Accountability directly engages corporations through shareholders to convince them to adopt political spending rules as part of their corporate social responsibility platform.

The center has been pushing businesses to adopt political spending and transparency policies since 2003, and launched the index with the Zicklin Center in 2011. The 2015 CPA-Zicklin Index covers the entire Standard & Poor's 500 index for the first time. This is significant, because advocates believe the index has a critical role in driving corporations to adopt political spending policies, particularly transparency policies.

“The S&P 500 companies are the most influential, biggest companies,” Center for Political Accountability President Bruce Freed said. “They have the wherewithal to spend and some of them have accepted, in principle, the fact that they need to address political spending.”

The inclusion of the full S&P 500 means that companies rated for the first time can now see the index as a competitive measure of good corporate governance practices. Companies that have been included in the index for some time show significant improvement. Since the first index came out, the scores of the original 83 companies it examined rose from an average of 45.2 in 2011 to 71.3 in 2015. Scores for the 186 companies the index has tracked since 2012 have risen from an average of 38.1 to 59.4 this year.

“I, quite honestly, think [the index] has helped drive behavior,” said Dan Bross, the senior director of corporate citizenship at Microsoft. “There is an increasing race to the top here.”

Each company's score is an aggregate based on how well it has adopted and executed a range of policies, from simply having a stated policy and web page expressing a public sentiment on political spending to the disclosure of political and lobbying expenses.

Medical technology company Becton, Dickinson and Company, transport company CSX Corporation and Noble Energy tied for the top score in 2015. 

"Noble Energy is committed to conducting its business with integrity and transparency and applies this commitment to its stakeholder interactions and public disclosures,” Arnold Johnson, senior vice president of corporate affairs, general counsel and secretary of Noble Energy, said in a statement. “We are pleased that these efforts continue to be recognized in the Center for Political Accountability-Zicklin Index.”

Edison International, Microsoft Corp. and Unum Group, a newcomer to the index, tied for second with a score of 95.7. Another 22 corporations received a score of at least 90, including Monsanto Co., Exelon Corp., Aflac Inc., JPMorgan Chase & Co. and General Mills Inc.

Whether or not shareholders have engaged a company on political spending appears to be a key factor in how well the company scores. Overall, shareholders have engaged 211 S&P 500 companies on the issue, and those companies have an average score of 60.7. The other 286 companies examined in the index had an average score of 24.4.

One way companies receive a high score on the index is by adopting disclosure or restriction policies for contributions to trade associations and politically active 501(c)(4) social welfare nonprofits. These types of groups have increased their spending on elections since the Citizens United decision, and are not being bound by campaign finance disclosure rules.

The Center for Political Accountability's push to get corporations to disclose these contributions created a backlash from corporate trade associations led by the U.S. Chamber of Commerce, Business Roundtable and National Association of Manufacturers. These corporate lobbying groups have publicly and privately attacked the center and the index as a left-wing tool to silence corporations.

Freed, however, looks at the continued uptick in corporate scores on the index and sees that these arguments are not resonating. “Companies are really not responding [to the attacks],” Freed said. “They’re ignoring it.”

So far, 204 companies have adopted some kind of policy to fully or partially disclose trade association contributions. Currently, 124 companies disclose full or partial contributions to social welfare nonprofits.

Bross said that he could not comment on positions of the Chamber and other trade associations attacking the index, but added, “I’m hard-pressed to think of a company who has stepped back and said, 'Because of this ranking and rating and because of this disclosure, we’re no longer going to engage in the political process.' I don’t know that that’s necessarily the case.”

-Huff Post