In-Depth Report: Corporate Political Spending

Why are public companies facing shareholder proposals asking for reporting on their political donations and expenditures?

Because a rigorous oversight process for political expenditures is a key component of corporate accountability. Transparent policies can minimize a company’s exposure to legal, reputational, and financial risk by ensuring that donations are made in accordance with federal and state law, and that donations are consistent with both a company’s stated values and its long-term interests.

With the option to divert money to political causes, companies can choose to donate to candidates they believe will serve their business interests – and most do donate. Based on a political spending survey in 2010, nearly 60% of the largest U.S. companies spend shareholder money from the corporate treasury on political campaigns and 2/3 have political action committees (PACs) that spend money contributed by executives. Yet less than one quarter of S&P 500 companies required board oversight of political spending, and more than 80% of S&P 500 companies in the survey did not provide information on what they spend.

Since 2010, resolutions relating corporate political spending have been one of the most common shareholder proposals voted on by shareholders at annual meetings in the United States. Many of these proposals, particularly those seeking reports on political contributions and expenditures, received record levels of shareholder support. This proxy season, boards and management will once again be asked to address their political expenditures. Investors will be asked to vote — and will need to understand the issues involved. Glass Lewis’ newly updated Corporate Political Spending report provides crucial context, from an overview of how corporate donations enter the political sphere, background on notable advocacy groups, along with the legal landscape and academic research. The report is part of Glass Lewis’ “In-Depth” series, a growing library of ESG-focused literature that illuminates the topics at the top of the agenda for investors and public companies.

In-Depth: Corporate Political Spending is available now. Glass Lewis customers can access the report on Viewpoint via the Help & Resources menu, or Governance Hub, or contact their Glass Lewis Representative for more information.

Not yet a customer? Click on the button below to download.

New call-to-action