How Companies Can Earn Back Our Trust After Charlottesville
The demise of President Donald Trump’s two business councils this week was swift, as some of the country’s top CEOs realized the dangers of being associated with the president’s support for Neo-Nazis in Charlottesville, Va. and ran for the exits.
Let’s hope they take from this a larger lesson: Americans are paying close attention to which companies have close ties to the president and endorse his agenda.
That means that transparency is critical. One way that companies can prove that they are above the political fray is to disclose all their political spending and lobbying activity.
Since the reckless 2010 U.S. Supreme Court decision in Citizens United, corporations can spend money to influence elections through organizations that are not required to tell us who their donors are. This means that companies can keep shareholders and the public in the dark about their efforts to influence politics and skip the accountability that the public can bring to bear on brands we trust.
But secret spending is unpopular. In addition to the moral and political reasons to make corporate political spending public, investors (which is all of us through our 401k accounts and pensions) are keenly interested in this information and have been filing resolutions at major companies for almost a decade calling for transparency.
This year, resolutions at almost 100 companies calling for disclosure of corporate political activity were filed, making this issue one of the top resolutions for investors. A petition for a rulemaking at the U.S. Securities and Exchange Commission (SEC) that would require all public companies to disclose their political spending has received a whopping 1.2 million public comments (almost all supportive), the most in the agency’s history.
Increased transparency would protect against political backlash when both customers and shareholders discover that the companies they buy from and invest in are playing in politics. In addition, having a strong oversight policy and transparency about political spending helps companies shield themselves against a politician’s shakedown. If a politician were to offer special access or corporate-friendly policies in exchange for secret support for an agenda, an executive can cite the company’s policy of disclosing its political activity and sidestep any unsavory dealings.
The nonprofit Center for Political Accountability (CPA) rates companies on how well they disclose their political engagement. Newell Brands, Nucor Corporation, and Whirlpool Corporation—all members of Trump’s now-defunct American Manufacturing Council—score low on CPA’s index, meaning they barely disclose their political activity. While other companies on both the manufacturing council and the other disbanded entity, the Strategic and Policy Forum, scored higher on the index, a lack of uniform disclosure requirements means we have no way of knowing what political causes or campaigns these CEOs are spending corporate dollars on. This is why SEC rules are so important for accountability in our democracy.
We urge the SEC to begin work soon on this critical rule and urge congressional Republicans to cease attempts to block it by tacking policies against it into appropriations bills. In the meantime, though, if CEOs are truly interested in remaining above the kind of political fray that embroiled them this week, they should offer to be honest with their shareholders, customers, and the public about their political engagement.
Companies must resist the temptation to throw a little money at the party in power to gain pro-business policies and recognize the underlying risks to their games in Washington. To earn back our trust, they should become more transparent and prove that they are neither aligned with nor giving money to those that support hate.
Lisa Gilbert is vice president of legislative affairs for Public Citizen. Rachel Curley is democracy associate for Public Citizen’s Congress Watch division.