Big business continues trend toward political transparency

Introduction

Monster Energy’s slogan may be “unleash the beast,” but its parent company appears to suffer from scaredy-cat syndrome when it comes to political transparency.

Corona, California-based Monster Beverage Corp. isn’t alone: about one-in-10 of the nation’s largest companies volunteer almost no information about their politicking, according to a new study on corporate political transparency by the Center for Political Accountability, a nonpartisan transparency advocacy group, and the Zicklin Center for Business Ethics Research at the University of Pennsylvania’s Wharton School.

Well-known companies such as Advance Auto Parts Inc., Expedia Inc., M&T Bank Corp., Netflix Inc., Paychex Inc., Urban Outfitters Inc., United Rentals Inc. and Berkshire Hathaway, billionaire Warren Buffett’s holding company, also received zero points on the annual index’s 70-point scale that measures companies’ political disclosure practices and published accountability policies.

American Airlines Group Inc., Whole Foods Market Inc., Macy’s Inc., Dollar General Corp. and Hasbro Inc. didn’t fare much better, with scores in the single digits.

In contrast, seven companies received 68 points — nearly perfect scores. Among them: railroad company CSX Corp., power company PG&E Corp. and medical products firm Becton, Dickinson and Co.

Coca-Cola Co., computer chip maker Intel Corp., tobacco conglomerate Altria Group Inc., food giant General Mills and financial institutions Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. likewise performed well.

Such high scorers helped drive what study authors say is a years-long trend toward increased corporate political transparency, despite calls from prominent business groups — notably, the U.S. Chamber of Commerce — for corporations to not reveal more information than what’s legally required of them.

Across 24 categories, the Center for Political Accountability/Zicklin index awards points to companies that, for example, voluntarily disclose contributions to certain nonprofit groups, publish policies that govern political expenditures from its corporate treasury and reveal money spent to influence state-level ballot initiatives.

From 2015 to 2016, the average corporate disclosure score rose slightly, according to the study. Similarly, the number of S&P 500 companies publicly disclosing their political spending and public policy priorities increased from 2015 to 2016.

Sector-wise, utilities, heath care, food/staples and telecom outfits performed best.

Why should consumers and voters care?

“It shows more and more companies value sunlight and are taking peoples’ concerns about secrecy seriously,” said Bruce Freed, president of the Center for Political Accountability. “Corporations are becoming much more sensitive to the risks that they face when they aren’t more open.”

CSX’s index-leading political disclosure “is part of its commitment to transparent reporting, corporate social responsibility and accountability to its shareholders” and “shows our commitment to transparent business and reporting practices,” company spokeswoman Melanie Cost told the Center for Public Integrity.

Said PG&E spokeswoman Lynsey Paulo: “We take this benchmarking tool, and its results, seriously. We believe it is important to participate in the political process on behalf of our customers, employees and business, and it is equally important that we comply with the law and that we are transparent.”

Several companies improved their scores by at least 50 points from the Center for Political Accountability/Zicklin’s 2015 study to the 2016 study.

They include Edwards Lifesciences Corp., Electronic Arts Inc., T. Rowe Price Group Inc., Apache Corp. and Nordstrom Inc.

But plenty of companies show little interest in revealing more about how they’re attempting to influence politics.

For example, just 35 companies surveyed — fewer than one in 10 — disclose payments to both 501(c)(4) “social welfare” nonprofits and 501(c)(6) nonprofit business associations.

Such nonprofits may spend unlimited amounts of money advocating for or against political candidates, but unlike bona fide political groups, aren’t by law required to publicly reveal their donors.

As it has since the Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission, the issue of secret corporate contributions to politically active nonprofit groups — “dark money” to detractors — has enraged mainly liberal-leaning politicians who in some cases have been targets of it.The Center for Public Integrity contacted more than 20 companies, including Monster Beverage Corp., that received an index score of zero. Most either declined to comment or did not return messages.

But representatives of a few low-scoring companies explained they don’t disclose their politicking simply because they don’t do much of it — if any at all.

Paychex, which earned a zero, doesn’t make political contributions or engage in lobbying activities, so it “has never done any public disclosure because we don’t engage in activities that require registration or disclosure,” spokeswoman Laura Saxby Lynch explained.

The political activity of asset management company Legg Mason Inc., which also scored a zero, is “very limited,” spokeswoman Mary K. Athridge said. “As such, we have not encountered particular interest or questions about political activity and spending … the industry largely doesn’t do it, and stakeholders aren’t that focused on it.”

Spokeswoman Anne Marie Squeo said Netflix’s political spending “is quite small relative to most companies reviewed by the Center for Political Accountability,” and that her company, which distributes the political drama “House of Cards” among other popular shows, complies with federal disclosure requirements.

American Airlines “strives to be a leader on public policy issues, and we are proud of the work we do in Washington,” airline spokesman Matt Miller said.

The U.S. Chamber of Commerce, which has poured tens of millions of dollars into backing or attacking U.S. congressional candidates this year, has for years criticized the Center for Political Accountability/Zicklin study as a tool for activist investors to “harass and pressure” companies from engaging in political debates.

U.S. Chamber spokeswoman Blair Latoff Holmes panned this year’s study as she did last year when the Center for Political Accountability released its 2015 study.

“Let’s be absolutely clear — the call for more ‘disclosure’ is not coming from your typical investor, as unsuccessful vote after unsuccessful vote on shareholder proposals plainly show,” she said. “Rather, disclosure is a tool employed by activist investors — in coordination with CPA and other ideologically aligned parties — to generate information about a company’s lobbying and political activities that can then be used by those same activist investors to harass and pressure the company into disengaging from political debates. We don’t think this is good for businesses or, ultimately, the millions of investors who do not share the activists’ extreme and narrowly focused political agenda.”

Freed, of the Center for Political Accountability, expressed hope that next year’s study will reveal even more corporations making public their political activities and policies — regardless of what the U.S. Chamber has to say.

“With corporations, there is some keeping-up-with-the-Joneses involved,” he said.