Political Spending: Will the Pause Change the Game?
Last week’s attack on the Capitol – I still can’t believe I’m writing those words – has prompted many companies to hit pause on their political contributions. Initially, corporate donors targeted Republican lawmakers who objected to the certification of President-Elect Biden’s victory, but many have at least temporarily halted all political contributions.
Critics have suggested that these actions are merely symbolic, and that companies will jump back into the political game once the news cycle moves on to something else. I have no doubt that they’ll be back, but it’s just possible that last week’s attack may represent a turning point when it comes to how companies approach political spending. Why? Well, this pause isn’t occurring in a vacuum, and it may help accelerate some existing and emerging trends:
– Institutional investors and companies are under increasing pressure to align their political spending with their stated priorities & to disclose more information about that spending. Ironically, on the day of the attack, Liz’s lead blog was all about BlackRock’s efforts to urge greater transparency among the companies in which it invests when it comes to corporate political activities.
– The results of the latest CPA-Zicklin survey indicate that companies themselves are continuing to become more transparent about & accountable for their political spending.
– Activist investors increasingly look for ESG hooks to expand their base of investor support for their campaigns. In an increasingly divided and volatile environment, a company’s political spending may prove to be low hanging fruit for activists.
It also looks like political spending disclosure will be a priority issue for the SEC under the Biden Administration. The SEC will need a little help from Congress if the agency intends to act on disclosure rules. As I blogged last month, Congress recently continued the bipartisan tradition of stealthily prohibiting the SEC from using any of its funding to adopt political spending disclosure rules.
-John Jenkins, TheCorporateCounsel.net January 14, 2021
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