CPA-Zicklin Index Sees Increasing Disclosure of Corporate Political Spending

Catherine Dunn

Corporate Counsel

09-28-2012

During an election year in which the flow of undisclosed political donations has reached record highs—and in which, thanks to the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision, companies can engage in unlimited political spending—advocates for transparency shouldn’t be entirely despondent. A new study finds that more top U.S. companies are opting to disclose their spending practices in the political arena—including Aflac Inc, Chubb Group of Insurance Cos., and Halliburton Co.

“Political disclosure is on the corporate agenda, and companies now are looking at it and adopting policies,” says Bruce Freed, president of the Center for Political Accountability, which published The CPA-Zicklin Index of Corporate Political Accountability and Disclosure [PDF] with the Zicklin Center For Business Ethics at the University of Pennsylvania’s Wharton School.

The CPA-Zicklin Index began in 2011 with an examination of companies in the S&P 100. The index analyzes a range of factors, including board oversight of political spending, and whether a company publicly discloses giving to candidates and/or to tax-exempt organizations that might use funds for political purposes.

This year’s follow-up index expands the pool to the top 200 companies in the S&P 500—and finds that nearly 60 percent are disclosing at least some political spending information to the public.

Among the 88 companies that the index measured for two years in a row, 85 percent improved their accountability scores. The authors highlighted increases in disclosure in the following areas:

• Direct Spending: Sixty-one companies “disclosed some information about their direct contributions to candidates and political parties”—up from 52 companies who did so last year. Both this year and last, 12 companies said they don’t give to candidates and political parties.
• Trade Associations: Forty-five companies disclosed some info about payment to trade associations in 2012, compared to 36 companies who did so in 2011. Interestingly, nine companies are now asking trade associations “not to use their payments for political purposes”—up from four that “placed similar restrictions” last year.
• Independent Expenditures: Twenty-four companies disclosed some information in this area, up from 11 companies in 2011. At the same time, 40 companies said they wouldn’t spend on independent expenditures in 2012, compared to 20 companies that said no to this kind of spending in 2011.

Some companies also improved their score by leaps and bounds when they adopted additional policies and practices. For example, Costco Wholesale Corporation’s score shot up from three to 85. “A newly available policy stated that Costco generally does not use corporate funds for political activities, except for some ballot measures, and it mandates that its payments to trade associations not be used for political purposes,” the report states.

Capital One Financial Corporation lifted its 2011 score of 20 to 63 this year. According to the study, the company “discloses its direct spending on political candidates, committees, and for independent expenditures and 501(c)(4) payments, and it makes some disclosure of trade association payments.”

The companies with the five highest scores on the index are Merck & Co. Inc., with 97; Microsoft Corporation, with 94; AFLAC Inc., with 93; Gilead Sciences, with 92; and Exelon Corporation and Time Warner Inc., each of which scored 88.

Indeed, out of the 196 companies that CPA-Zicklin Index reviewed and contacted, 88 companies engaged in follow-up with the center, according to Freed. That kind of response rate “shows a high level of company interest” in the subject, he says.

See also: "Are Shareholders Happy With Your Company's Political Spending?" CorpCounsel, September 2012.