Risk Management

Political Spending Disclosures Increase

Three more companies agree to disclose aspects of their political spending, disclosures that in some cases will include payments to trade associati...
Stephen TaubDecember 27, 2006

Verizon Communications, Monsanto, and General Dynamics are the three latest large companies to agree to disclose some or all political spending made with corporate funds, according to a joint announcement last week from a number of shareholder activist groups. In addition, Monsanto and General Dynamics also agreed to establish board oversight of their political spending, a practice already in place at Verizon.

This brings to 15 the total number of companies that have adopted political transparency and accountability policies during the 2005 and 2006 shareholder resolution season, according to the joint announcement from the Center for Political Accountability (CPA), Domini Social Investments, the Adrian Dominican Sisters, Sisters of Mercy-Detroit, and Trillium Asset Management.

The other 12 companies are Bristol-Myers Squibb, Staples, Amgen, McDonald’s, Southern, General Mills, Morgan Stanley, Johnson & Johnson, Schering-Plough, PepsiCo, Coca Cola, and Eli Lilly.

The companies also agreed to post a complete list of corporate political contributions on their websites and disclose the guidelines for their political giving, the activists said.

General Dynamics also agreed to report, and have board oversight of, its payments to trade associations that are used for political purposes, according to the activists, who called this “a significant broadening of political disclosure.” Monsanto, which does not have such a policy, nonetheless agreed to hold further discussions with the activist groups regarding trade association political spending.

“These latest developments mark a major change in corporate outlook. Companies are recognizing that political disclosure and accountability must encompass the range of their political spending. They also see this as good corporate governance,” said CPA Co-Director Bruce Freed, in a press release. “The Center applauds Verizon, General Dynamics and Monsanto for recognizing their responsibility to make public and account for their political spending with shareholder money.”

Current campaign finance law allows corporations to make donations in many states and to political committees commonly known as 527s, but not to federal candidates. However, the activists note, companies aren’t required to disclose contributions of corporate funds made to trade associations that are used for political purposes.

Activists also charge that associations aren’t required to disclose the specifics of their political spending or their membership, leaving institutional investors and individual shareholders in the dark about the use of company resources for political activities.