The CPA-Zicklin Index of Corporate Political Disclosure and Accountability (from the Center for Political Accountability and the Zicklin Center for Business Ethics Research at the Wharton School of the University of Pennsylvania) annually benchmarks public companies’ disclosure, management and oversight of corporate political spending. The Index also includes specific rankings for companies based on their Index scores, as well as best practice examples of disclosure and other helpful information. (See this PubCo post.) CPA launched the Index in 2011 following the decision by SCOTUS in Citizens United, benchmarking only the S&P 100. In 2015, it began to benchmark the S&P 500. The Index has just announced that, beginning this fall, it will expand its coverage to the Russell 1000. As reported in MarketWatch, the President of CPA observed that, “[w]ith companies under much greater scrutiny on their election-related spending, it really is incumbent on them that they have strong [governance] policies that they adhere to. They face the threat of boycotts. They face the threat of employee morale problems….They face the threat of very harmful publicity. Bottom lines can be adversely affected by the way companies engage in political spending.”
According to an April statement issued by CPA, the Index was created “to measure how transparently companies report and oversee their election-related spending.”
Specifically, the Index examines the following:
- “Disclosure of direct and indirect election-related spending by the companies in six areas:
- contributions to political candidates, parties and committees;
- contributions to the full range of political organizations, from Super Pacs to multiple candidate committees such governors’ associations, state legislative campaign committees and attorneys general associations;
- independent political expenditures made in direct support of or opposition to a candidate for public office;
- payments to trade associations that the recipient organization may use for political purposes;
- payments to advocacy organizations, such as 501(c)(4)s, that the recipient may use for political purposes;
- payments made to influence the outcome of ballot measures.
- Internal decision-making policies related to the spending, and
- Board and committee oversight of the companies’ political spending.”
After conducting a thorough review of company policies and practices in 24 areas, the Index then calculates a score for each company. Companies with a score of 90 or above are identified as “Trendsetters,” which reflects “robust disclosure and oversight.”
The CPA statement was issued because companies were “citing their Index scores as arguments in opposition to shareholder resolutions calling for lobbying disclosure or company reports on the alignment of their political spending with core values and positions.” However, the statement indicated, the “Index does not make a value judgment on a company’s political spending or alignment with its publicly stated values and does not cover company lobbying spending or activities.” Rather, as reported by Bloomberg, CPA’s president maintained that the Index “only looks at how the company governs and manages its election-related spending. Still, once the dollar figures are known, money managers and their investors can better decide if they align with a company’s stance.”
