Shareholders: The Next Transparency Advocates


A new breed of transparency advocate is making itself heard this week, taking to the streets and to corporate boardrooms to demand transparency from corporations that use shareholder money to engage in political activities. These corporate transparency advocates also inundated the Securities and Exchange Commission with more than 178,000 letters in support of a rule mandating disclosure.

Protests, including one yesterday outside a 3M shareholder meeting in St. Paul and one today at Bank of America in Charlotte are scheduled to coincide with votes on resolutions to ban the corporations from making political contributions. Directors of both companies oppose the proposals, which follow on the heels of votes by shareholders of other companies to attempt to have corporations disclose their political spending.

The push for corporations to reign in or disclose their political spending stems from anger over the Supreme Court’s Citizens United case, which for the first time in a century allowed corporations (and labor unions) to funnel unlimited amounts of money from their corporate coffers to political campaigns. Although corporations are still barred from directly giving corporate funds to candidates—they have their PACs for that—the spending they are engaging in now is far more nefarious and harder to track. Money from corporations’ exceedingly deep pockets is being funneled through Super PACs and nonprofit “social welfare” organizations to pay for campaign ads and other political activities with minimal or no disclosure.

The growing discontent among shareholders may be a result of learning that corporations are spending their money on positions the shareholders disagree with. (A threatened boycott of corporate sponsors of the American Legislative Exchange Council—famous for its support of the Stand Your Ground gun laws implicated in the shooting of an unarmed Trayvon Martin—resulted in Coca-Cola, Kraft and Pepsi cutting ties to the group.) Shareholders may simply be protecting their own financial well being, as recent studies have shown companies that make political donations underperform those that stay out of the political realm.

Whatever the reason, it will be a victory for transparency if any of the disclosure resolutions pass, but it won’t be the end of the story. There must be mandatory, blanket disclosure by all corporations of their political activities to ensure a level playing field. More importantly, disclosure will ensure that shareholders feel confident that corporations are acting in their best interests and will provide the public with a better sense of who is supporting their elected officials.

That’s why it is so important for the SEC to heed the call of the 178,000 letter writers and take a stand for transparency. (The Corporate Reform Coalition, of which Sunlight is a member, spurred the letter writing campaign.) At least one SEC commissioner gets it. Luis Aguilar publicly supported mandatory disclosure stating, “Unfortunately, there is no comprehensive system of disclosure related to corporate political expenditures–and that failure results in investors being deprived of uniform, reliable, and consistent disclosure regarding the political expenditures of the companies they own. It is the commission’s responsibility to rectify this gap and ensure that investors are not left in the dark while their money is used without their knowledge or consent.”

The election season is not yet in full swing and yet well over $100,000,00 in dark money has been spent by Super PACs, corporations, nonprofits and labor groups. Shareholders may be the key to finally finding out where that money is coming from.