Bruce F. Freed is president of the Center for Political Accountability. Charles E.M. Kolb was president of the Committee for Economic Development from 1997 to 2012 and served as deputy assistant for domestic policy to President George H.W. Bush from 1990 to 1992.
In the nearly five years since the Supreme Court’s controversial Citizens United ruling, a significant movement in U.S. corporate governance has gained traction without attracting much notice: An expanding cross-section of U.S. businesses are acting independently to create a culture of transparency and accountability in regard to their influence on our political system.
But those of us who urge greater disclosure of corporate money in politics were nonetheless accused at a recent U.S. Chamber of Commerce Foundation conference in Washington of making “war” on corporations and their free speech. That is simply not the case.
Advocates of undisclosed “dark money” spending, concerned that they are losing ground, are falsely representing themselves as the voice of mainstream business, hoping to sway companies away from their better instincts. Far from wanting to return to the pre-Watergate days, however, U.S. businesses increasingly are showing that they want to conduct political activity in the open, where shareholders, directors and managers all can assess the risks and benefits of a company’s political spending.
The Supreme Court’s endorsement of disclosure in Citizens United served to reinforce this movement. Recognizing the importance of transparency, Justice Anthony Kennedy wrote in his majority opinion, “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.”
Kennedy added, “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.”
But Congress has not responded by mandating disclosure, on the Internet or otherwise. Dark money — anonymous political donations from individuals or companies — keeps increasing dramatically. There is urgency to asking corporations to pull back the veil voluntarily, and more public companies are doing so, letting sunlight shine on their political spending and thereby promoting accountability.
According to the Center for Political Accountability-Zicklin Center Index of Corporate Political Disclosure and Accountability, more than 60 percent of the top 300 companies in the S&P 500, or 183 companies, have disclosed full or partial information on their contributions to political entities. Almost half of these companies disclose their payments to trade associations; a third have opened up about payments to “social welfare” nonprofit organizations — such as Crossroads GPS on the right and Priorities USA on the left — that keep their donors secret.
Furthermore, 129 U.S. companies — including more than half of the S&P 100 Index — have adopted political spending disclosure policies as a result of agreements with shareholders. A majority of almost 200 public companies studied last year and this year received better transparency scores this year, continuing several years of increasing sunlight.
The chamber and other advocates of secret spending condemn our annual benchmarking study of the political disclosure and accountability policies of the top U.S. companies. They characterize it as a weapon to muzzle companies’ free speech. If that were true, would blue-chip companies such as JPMorgan Chase, Exelon, Merck, Microsoft, EMC, Lockheed Martin, Altria, Noble Energy and Boeing choose to spotlight their transparency ratings in public?
These are among the companies leading the way in adopting disclosure voluntarily because they understand the perils of secret political money. A company’s reputation can be harmed if a political payment is exposed as conflicting with its stated values or business objectives. When donations are secret, a politician can quietly shake down a company. When a company “outsources” its politics through payments to a third-party advocacy organization, it can lose control over the funding. The Watergate scandal four decades ago illustrates the dangers of dark money.
Over the past decade, the business community has moved toward more corporate board oversight and voluntary disclosure when it comes to corporate political spending. This not only enhances disclosure; it also reflects a greater appreciation of the unnecessary harm and risks posed to a corporate brand that can come from focusing on political campaigns rather than on marketplace challenges.
On several other fronts, including supply chain management, executive compensation, privacy and environmental impact, U.S. companies are moving more broadly toward transparency. Disclosure of political spending is part of this continuum. Despite the critics’ attacks, it is bringing sunlight and promise for a new mainstream standard in the post-Citizens United political era.