Corporations seeking to change the public policy landscape to benefit their own bottom lines is nothing new. But since Citizens United opened the door to unlimited spending to influence elections, corporate power over our democracy has been amplified to unprecedented levels. Because non-profits and trade associations are able to spend freely to influence campaigns but are not required to disclose their donors, we have witnessed extensive clandestine political lobbying activity and spending of undisclosed sums of secret money to influence our democracy.
Corporations are confident that by doing the one-two step of donating to an organization that will in turn influence elections, it allows them to cloak their spending under the cover of shadows. That way, the public cannot see their attempts to influence public policy and they will face no consequences for those efforts if they are supporting candidates and issues that do not resonate with their customers.
For the health of our democracy, it’s time we dispel those shadows that hide who is influencing our elections and otherwise affecting policy decisions. Despite the more than 1.2 million public comments that have been submitted to the U.S. Securities and Exchange Commission (SEC) calling for a requirement to be disclosed, there currently exists a provision blocking the SEC from finalizing such a rule that could only be removed by Congress. Because this extremely corporate-friendly administration is unlikely to make companies list where they are pouring money to influence elections and policy outcomes, and because corporations are not exactly known for their selflessness, the best way to pressure corporations into disclosing their political spending and lobbying is for their own shareholders to use their collective power to make disclosure a reality.
Public Citizen and the Corporate Reform Coalition (CRC), a partnership of dozens of national advocacy groups, investors, and unions, work to ensure that the public understands the many ways corporations are attempting to influence policy and elections. By encouraging shareholders at S&P 500 corporations to vote for proposals that call for more disclosure of election spending and lobbying, we are closer to our goal of ensuring that public is informed about how corporations’ spending impacts elections and the legislative process.
Each year, publically traded companies are required by federal law to hold a meeting for all of their investors. At these meetings, shareholders can vote on changes to companies’ corporate governance, self-created rules that outline how the company should behave, including those related to disclosure of political spending and lobbying efforts. By encouraging shareholders to vote in favor of disclosure resolutions at these meetings, we can ensure that particular corporations’ influence in our democracy is brought out into the open for the public to see. The work of the CRC builds on efforts by shareholders at major companies who have been calling for increased transparency and disclosure from public companies for years.
Though political and lobby spending disclosure resolutions will be voted on by shareholders at a number of annual meetings, the CRC has chosen to highlight resolutions brought by shareholders of four major corporations: Pfizer, Equifax, ExxonMobil, and Facebook. All of these companies have significant incentives to increase their disclosure policies to give their investors and customers a better idea of where their money will be spent.
Pfizer, Equifax, and Facebook were all recently named among the most hated companies that Americans have to deal with every day. Each has its reputation on the line as it wrestles with a major scandal: Pfizer’s role in the national opioid epidemic; Equifax’s massive data breach; and Facebook’s shady practices of collecting and selling users’ personal data to advertisers. ExxonMobil, likewise, deals with the constant PR liability of representing Big Oil and the fossil fuel industry’s anti-environment agenda, and a number of high-profile oil spills from recent years. In short, all of these companies could stand to benefit from reestablishing the public’s trust in their brand.
Not only is increased transparency good for attempting to repair these companies’ public image, it can be good for their bottom lines too. For one, American consumers are paying increasing attention to the ethical behavior of the companies they patronize. A number of recent high-profile boycotts and social media campaigns continue to make headlines and have negatively impacted profits. Corporations can avoid taking these hits to their bottom lines by being upfront about their political activity, so that they do not risk a backlash when secret political efforts are discovered. These customer boycotts and other bad press are important considerations for investors, and are a main point raised by shareholders in support of increased transparency resolutions.
One roadblock to increased transparency at the company level are mutual fund companies like Vanguard and BlackRock. These mutual fund companies hold significant ownership stakes in public companies and therefore wield incredible voting power over company policy changes. However, Vanguard in particular almost always votes against or abstains from voting for shareholder proposals calling for increased political spending and lobbying disclosure. Especially since it characterizes itself as looking out for its clients first and foremost, Vanguard has a responsibility to the families whose retirement savings it manages to ensure that the corporations where their money is invested are practicing sound corporate governance and risk management. If Vanguard were to change its voting habits, we would see a dramatic increase in overall support for these proposals.
Corporations are not going to open themselves up to public scrutiny out of the goodness of their hearts. The SEC could finalize a rule requiring corporate disclosure of political activity, but only after Congress has removed the current provision blocking the SEC from finalizing such a rule. Both of these possibilities are extremely unlikely under the current Congress and the Trump administration. Until the winds have shifted in D.C., the best way to tackle the excessive power corporations have over our democracy is for shareholders to force transparency and accountability on a company-by-company basis. Even if you’re not a shareholder at one of these companies, with your help, we can win the fight for more transparency of corporate political activity. Find ways you can participate in the campaign here.
Cross-posted on Corporate Reform Coalition.