Institutional Investors Demand Disclosure on Companies’ Political Spending

On January 21, 2010, the day the Supreme Court delivered its landmark decision on Citizens United vs. Federal Election Commission that it would overturn most of a century’s worth of regulations on corporate political spending, the $140 billion New York State Common Retirement Fund corporate governance department happened to be meeting to discuss the problem of untraceable political spending by companies in its portfolio. Patrick Doherty, the fund’s director of corporate governance, was making the pitch to New York State Comptroller Thomas DiNapoli that the political spending issue should be a central focus of New York Common’s corporate governance campaign for the coming year.

The overlap was coincidental; before the court’s final decision on Citizens United, the case hadn’t attracted too much attention in the comptroller’s office or among most of the general public. That changed after January 21. Despite New York Common’s pre-Citizens United efforts to improve disclosure around corporate political spending — which primarily consisted of a concerted support of any shareholder resolution pushing the issue — the fund’s leaders hadn’t heard constituents express their opinions on the topic. But they spoke up after the decision on Citizens United, says DiNapoli.

“Since Citizens United, many folks expressed concern,” he says, adding that New York Common changed tack after the court’s January 2010 decision, too. “We’ve always put a priority on the transparency and accountability of a company’s operations, but all that was obviously heightened by the Supreme Court decision and a sense that some corporations were going to embark on an even more aggressive pattern of engaging in corporate spending for political campaigns.”

法院对公民团结的决定通过违反了公司国债的政治支出，以违反第一次修正案保护的致辞自由的政治支出，对公司资金的雪崩蔓延到政治进程中的道路。（法律仍然禁止对联邦候选人的直接公司捐款，但是，公司对其政治捐款的金额，收件人或时间没有限制。）

The consequences of the court’s decision came into sharp relief right away. According to data from Public Citizen’s Congress Watch division, spending by outside groups between the 2006 and 2010 midterm elections jumped from about $50 million to $275 million. This year’s presidential, state and local races are expected to set records as far and away history’s priciest; in April alone, Barack Obama and the Democratic National Committee took in $43.6 million, and Republican candidate Mitt Romney’s campaign and the Republican National Committee raised $40.1 million.

最高法院从未指定任何这一无限的企业支出应该匿名行使。相反，它显然反对非透明度支出的想法：法院的大多数意见，肯尼迪凭借“披露允许公民和股东以适当的方式对公司实体的讲话作出反应。”However, opaque corporate political spending has become the reality anyway, as companies have opted to make their donations through organizations formed under section 501(c)(4) of the U.S. tax code (reserved for “social welfare groups”) and section 501(c)(6) (for business associations, like the Chamber of Commerce) which don’t require the public disclosure of their funders. From the perspective of institutional investors like New York Common, this introduces more than a note of unquantifiable risk into the portfolio, and several major investors have mobilized behind the mission to wipe their portfolios clean of anonymous corporate political spending.

“We see this as an area of risk in terms of a possible impact on shareholder value,” DiNapoli says. “You’ve seen some situations where companies have made decisions about political spending that have come back to hurt the bottom line for the company.”

Dinapoli在基于明尼阿波利斯的零售商目标周围的去年夏天的Firestorm指向说明。2010年7月，新的释放了政治支出限制，公司向MN捐款150,000美元，这是一个非营利组织，此后很快就会为汤姆埃默尔德，明尼苏达州牧师候选人和大声对手跑到一个汤姆·埃伯尔·候选人和同性恋婚姻的大声对手。（它仍然尚不清楚目标是否知道州法律将透露其贡献者的贡献者。）抵制，抗议和在全国目标商店的抵制。亚达波利表示，当公司暴露于那种声誉风险时，股东应该知道。

About a month after the Citizens United decision, New York Common joined the California Public Employees’ Retirement System, the New Jersey State Investment Council, the Connecticut State Treasurer and others on a campaign organized by the Center for Political Responsibility and the Council of Institutional Investors to write letters to the 427 companies in the S&P 500 that lacked disclosure policies on corporate political spending. New York Common filed its first shareholder proposal on the issue with AIG for the company’s fall 2010 general meeting.

今年，纽约共同提出了17个此类提案 - 超过任何其他美国投资者 - 到目前为止，它已达成关于其中七个披露政策的协议，包括PG＆E，Safeway和Kroger。可持续投资研究所的研究发现，2012年的代理赛季已在政治披露上专注于纪录125股股东决议。

Last summer, California Treasurer Bill Lockyer sent a letter to the two biggest public pension funds in his state and in the U.S. — the $238 billion California Public Employees’ Retirement System (CalPERS) and the $153 billion California State Teachers’ Retirement System (CalSTRS) — entreating both to develop a formal policy of their own on the issue of political spending by portfolio companies.

“In order to accurately assess a company’s sustainability, shareholders must be able to analyze whether political spending is consistent with the company’s values,” Lockyer wrote in the letter, “and whether it poses risks to the firm’s brand, reputation or profitability.” He also cites studies — one from Harvard Law School and another from the University of Minnesota School of Management — that have found negative correlations between a firm’s political spending and its returns and overall value.

In November both California funds adopted policies to consistently support shareholder efforts focused on improving disclosure of political contributions.

But a company-by-company shareholder campaign is no match for the sweeping scope of the Citizens United decision. In August 2011 a coalition of prominent law professors asked the Securities and Exchange Commission to step in and exercise its power to make an overarching rule. The group of professors, called the Committee on Disclosure of Political Spending, filed a rulemaking petition asking the SEC to require that corporations publicly disclose their political contributions.

SEC commissioner Luis Aguilar has issued his strong support of the rule change. In February, in his speech at the annual SEC Speaks event, where the commission gathers to discuss its most pressing issues, Aguilar argued that the SEC should adopt the new disclosure rule.

“When it is clear that investors are in the dark and not receiving adequate disclosures, the commission should act, and act swiftly, to ensure that investors have the information they require,” he said in the speech.

He added that he believed the disclosure gap was one that the Supreme Court had left the regulator to fill. The court made explicit in its decision on Citizens United, he said, that full, real-time disclosure on the new spending it allowed would be critical. And yet it offered no means to enforce such disclosure.

“Unfortunately, the court envisioned a [disclosure] mechanism that does not currently exist,” Aguilar said at the SEC Speaks event. The SEC has received a record 180,000 comment letters supporting the professors’ rulemaking petition.

Some investors say that requiring disclosure may not go far enough; companies need to altogether exit from political spending that’s funded straight out of the corporate treasury, they insist. This proxy season, socially responsible investment firm Trillium Asset Management filed the first shareholder proposal by an institutional investor that asks a company to completely refrain from channeling funds from the corporate treasury to political ends. The targeted company was Bank of America.

“We think money coming from the corporate treasury is the riskiest to play around with,” says Shelley Alpern, director of shareholder advocacy at Trillium. “It’s the most directly tied to the company image.”

On the resolution’s first go-round, support was low — 4.8 percent voted in favor of Trillium’s no-spending resolution at Bank of America — much lower than the average support of roughly 25 percent garnered so far this year by resolutions asking for more disclosure on political spending. Alpern says she believes that support will rise as investors come to understand that such a resolution doesn’t target lobbying or spending by corporate PACs at all — just the money that comes straight from corporate treasury coffers.

Adam Kanzer, managing director and general counsel at Domini Social Investments — a firm that has been filing shareholder resolutions and engaging companies on their political spending disclosure policies since 2003 — says that though all of the proposals Domini has filed with companies on the political spending issues have focused on disclosure, he is seriously considering going the way of Trillium and asking for a full stop to corporate-treasury contributions. “If that’s really what we want, then that’s really what we should ask for,” he says.

Beyond concerns of brand risk, is it possible that the First Amendment rights of shareholders are being impinged upon by the changes that followed Citizens United? The Supreme Court may soon have the opportunity to rule on that question, thanks to a showdown over Montana’s corporate political spending rules that has moved through district court to the state’s supreme court and has recently been appealed to the U.S.’s highest justices.

Domini is among a coalition of investors managing more than $100 billion — the roster includes Trillium Asset Management, the Interfaith Center on Corporate Responsibility, Calvert Asset Management and Walden Asset Management — that filed an amicus curiae brief in support of Montana’s effort to retain its corporate political spending ban, despite post-Citizens United challenges to that restriction.

这项简短的主要论点是，一项重大的公共公司的政治贡献违反了股东首次修正权，因为他们有义务通过他们的财务关系在未经他们同意的情况下向该贡献“讲话”。

“A corporate and securities law regime that compels millions of investors to underwrite political speech to which they cannot meaningfully object may itself be unconstitutional,” states the brief.

The Supreme Court is expected to announce whether it will rule on the Montana case in June, and if it is accepted, it will be argued around Election Day. Kanzer and others hold to a careful hope that the state’s case could present the Supreme Court an opportunity to revisit its earlier decision in Citizens United.

但在没有最高法院的心脏变化的情况下，机构投资者表示，他们计划在股东决议，一家公司继续削减该问题。亚博赞助欧冠

“问题是,信息披露和监督strategy has been successful beyond everyone’s wildest dreams,” Kanzer says. He points to a recently passed milestone announced by the Center for Political Accountability, a nonprofit that has been working to help investors persuade companies to improve political spending disclosure rules: 100 companies, including half of the S&P 100, have agreed to adopt transparency policies on political contributions since the nonprofit began its efforts in 2003.

Kanzer说：“当我第一次开始这个时，我想，”这是正确的事情，“但我没有认为有机会公司实际上要这样做。”