Corporations and Political Activity – Where is Your Board?

Plutocracy or democracy?

With a record $ 6 billion spent during the most recent elections, corporate political contributions and lobbying are of increasing concern to shareholders, activist groups and individual citizens.  According to a recent poll, nearly 90 percent of people in the U.S. say there is too much corporate money in politics.

During the 2012 proxy season, several institutional investors led proposals on:

  • Increasing disclosure of political donations, trade association payments, and lobbying.
  • Challenging company political action committee spending as being in conflict with professed corporate values.
  • Resolutions for companies to stop making political contributions altogether.

So it’s an especially important time for Boards to step back and evaluate what role, if any, their companies should play in attempting to shape public policy or influencing election outcomes.

I recommend that Boards honestly address the following five questions with the intention of developing or clarifying specific policies and an oversight process for political engagement. After each question, I offer the Triple Ethos perspective.

1.  What is our Board’s role?

Since a company’s political activity carries potential compliance and reputational risk, Boards have a fiduciary responsibility to play an active role in strategy development and oversight.

2.  What is our guiding philosophy?

We believe that private campaign contributions have a corrupting influence on democracy, so should be eliminated or severely restricted and replaced with a publicly funded option.  We do believe, however, that organizations have the right to participate in public policy advocacy as long as they do so with complete transparency and full disclosure.

3.  What are our policies and overall strategy?

Triple Ethos will commit resources in advocating for policies designed to foster a more sustainable and socially equitable economy, and will do so with full disclosure.  Our primary strategy will be to join with other mission and values-aligned groups to accomplish specific public policy goals.

Triple Ethos recently joined the American Sustainable Business Council, and signed their Business for Democracy Statement of Support petition to overturn Citizen’s United with a constitutional amendment.

4.  How transparent are we with our shareholders and stakeholders?

Triple Ethos will fully disclose all memberships, affiliations, and political activities on its web site.  The recently published CPA-Zicklin Index of Corporate Political Disclosure and Accountability provides a good overview of how the leading publicly held U.S. companies are dealing with this issue.  Fifty six percent of the companies said their boards regularly oversee company political spending.

5.  To what degree are the above aligned with our stated values and commitment to corporate social responsibility?

This is the true litmus test, isn’t it?

 

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