Disclosure is a bedrock principle of our capital markets and our democracy. Neither can function properly without it.
This is why, for more than ten years, investors have been seeking full disclosure of the funds corporations spend to influence elections. The Securities and Exchange Commission has clear authority to require disclosure of this information, which is necessary to enable fully informed investment decisions. And now, the SEC has more than a million reasons to do so.
The SEC has been flooded with more than one million messages, requesting full corporate political transparency. In addition to many members of the general public, these supporters include several state treasurers, the Council of Institutional Investors and a global coalition of investors managing more than half a trillion dollars that signed a letter written by Domini. We even met with the Chair of the SEC to make our case.
Corporate political activity presents significant risks to our economy. The Financial Crisis Inquiry Commission concluded that deregulation was a contributing cause of the financial crisis. Corporate campaign contributions certainly helped pave the way. A study conducted by the International Monetary Fund, for example, drew a link between banks’ political spending and heavy involvement in risky sub-prime mortgages.
Disclosure could help us distinguish between companies that compete and win through superior products and services, and those, like Enron, that merely appear to do so due to superior access to lawmakers.
Shareholders have also gone directly to corporate management to seek disclosure, and with remarkable success. Shareholder proposals seeking corporate political transparency, including proposals filed by the Domini Social Equity Fund, have received consistently strong votes. Investors have convinced more than 100 major corporations to voluntarily disclose their political contributions.
What does the Supreme Court think of full disclosure? “[P]rompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are ‘in the pocket’ of so-called moneyed interests.” (Citizens United v. FEC)
Companies including Microsoft, Merck, Intel and Time Warner are leading the way through voluntary disclosure. These companies should be commended for their efforts. Now is the time for the SEC to require all companies to do the same in the name of good corporate governance.
We are told this spending is for our benefit. We look forward to an SEC rule that will allow us to evaluate that claim for ourselves.
Invest with Domini and join more than a million others in asking the SEC to demand transparency in corporate political activity.
Center for Political Accountability (For more than ten years, the CPA has led the shareholder campaign for greater corporate political accountability)
New York Times Editorial: The S.E.C. and Political Spending (October 30, 2014)
New York Times Editorial: Keeping Shareholders in the Dark (December 4, 2013) (citing a Domini-authored letter on behalf of a coalition of institutional investors)