In this fraught election season and just before tomorrow’s important election day, the Center for Political Accountability has released its annual study, The 2024 CPA-Zicklin Index of Corporate Political Disclosure and Accountability. The report concludes that, overall, leading companies in the S&P 500 have been maintaining “established norms of political disclosure and accountability.” And “companies are not backsliding,” with improvements showing throughout the Index. In 2016, the report discloses, “there were roughly three bottom-tier core companies for every two top-tier core companies. In 2024, over five times as many core companies placed in the top tier as in the bottom.” And keep in mind that those norms have held firm even in the face of “fierce headwinds” against ESG for U.S. companies. In the foreword to the report, former SEC Commissioner Robert Jackson, Jr. writes: “At a moment when our nation is narrowly divided on so much, nearly 90% of Americans agree that corporations should disclose to investors their use of corporate money on politics—even more than the 73% who took that view in 2006. The decades since have seen a financial crisis, a global pandemic and three Presidencies. Those events, and more, have divided voters. Yet the American people have grown even more firm in their conviction that, when corporations participate in the nation’s politics, it is incumbent upon those companies to carefully consider, and explain to investors, how and why they do so.” As Jackson observes, “today, more than 20% of S&P 500 firms scored 90% or above on the Index’s accountability measures, nearly double the number from 2016,” reflecting recognition of “the benefits of independent oversight, careful controls, and transparency.” This information, he maintains, is important for investors to enable them “to decide whether, and how, to invest in American public companies.”
Be sure to VOTE! Election day is tomorrow!
Compared to prior presidential election years of 2020 and 2016, the report concludes, “[m]any large public companies have realized major gains in disclosure and accountability for their election-related spending from corporate funds, and the gains are permanent. Whether examining the overall number of S&P 500 companies in 2024 or the 331 companies that have been consistently in the Index since 2015”—termed the “core S&P 500”—the period since 2017 has seen “solid and dramatic increases in corporate political disclosure and accountability.”
Progress in Index tiers. The Index reflects improvement in the numbers in the top tier and declines in the bottom tier. In the Index, each company is scored based on a review of company policies and practices in 24 areas, from contributions to board oversight. Companies that receive a score of 90 or higher (believed to indicate “robust disclosure and oversight”) are identified as “Trendsetters.” The report found that the number of S&P 500 companies designated as Trendsetters has increased to 103—over 20% of all S&P 500 companies evaluated—representing a substantial increase over the 79 Trendsetters identified in 2020 and the 35 Trendsetters identified in 2016. Among the core S&P 500, there were 88 Trendsetters in 2024, up from 70 in 2020 and 32 in 2016.
Companies that score between 80% and 100% are considered to be in the top tier. This year, there were 206 companies in the top tier (over 41% of the S&P 500, a dramatic increase over the 156 companies in 2020 and 94 top-tier companies in 2016). For core S&P 500 companies, this year saw 170 companies in the top tier, a substantial increase from 129 in 2020 and 74 in 2016.
Companies that score between 0% and 20% are considered to be in the bottom tier. The number of companies in the full S&P 500 categorized in the bottom tier has been cut almost in half, declining from 194 in 2016, to 163 in 2020 to 98 companies in 2024. The number of core S&P 500 companies in the bottom tier has declined precipitously from 106 in 2016 to 73 in 2020 to 31 this year.
Index average scores. The average overall scores for political disclosure and accountability have risen steadily from election to election. For all companies in the S&P 500, the average overall score this year was 59.9%, up from 50.1% in 2020 and 42.3% in 2016. Companies in the core S&P 500 averaged 69.6% this year, increasing from 58.1% in 2020 and 47.1% in 2016.
Disclosure and prohibitions. The report indicates that, among companies in the full S&P 500, 394 companies “fully or partially disclosed their political spending or prohibited at least one type of spending” in 2024, an increase from 332 companies in 2020 and 304 in 2016. Among the core S&P 500, the number in 2024 was 296, compared to 257 in 2020 and 229 in 2016. According to the report, for core companies, the “biggest percentage increase since 2016 in any category—102.5 percent, to 162 companies from 80 in 2016—came in disclosure or prohibition of donations to tax-exempt 501(c)(4) organizations….The next greatest percentage increase since 2016, of 96.8 percent, came in disclosure of, or restriction on, payments to trade associations for political purposes.” This year, there were 183 companies with these policies, compared to 93 companies in 2016. The report indicates that, with regard to disclosure about contributions to trade associations, “[m]ost companies disclose the nondeductible portion (used for election-related or lobbying activities) of their payments, including dues and special assessments, to trade associations in a given year. Many companies use a threshold that triggers disclosure (e.g. $25,000 a year) to reduce the burden of reporting and focus on politically active trade associations.”
Looking only at prohibitions, the number of companies that prohibit at least one category of corporate election-related spending has increased 83.2% since 2016—from 143 companies (29.0%) in 2016, to 201 companies (40.9%) in 2020 to 262 companies (52.9%) in 2024.
Political spending policies. The report contends that, “[b]y setting out objective criteria for political spending, a company provides a context for decision-making. An articulated policy provides a means for evaluating the risks and benefits of political spending; measuring whether such spending is consistent and aligned with a company’s overall goals and values; determining a rationale for the expenditures; and judging whether the spending achieves its goals.” According to the report, “347 companies (70.1 percent) posted a detailed political spending policy on their websites, while 103 (20.8 percent) provided brief or vague policies. In total, 450 companies (90.9 percent) disclosed either detailed or brief policies governing election-related expenditures with corporate funds.” More specifically, 205 companies (41.%) described the political entities to which they may or may not contribute, and 181 companies (36.6%) “provided detailed information about the public policy issues that provide the basis of their political spending decisions.”
Board oversight. According to the report, board oversight of corporate political spending “assures internal accountability to shareholders and to other stakeholders.” The report advises that, in conducting oversight of political spending, boards need a framework to help them “make decisions that are informed; consistent with company strategies, policies, and values; and that mitigate risks as much as possible.” To that end, “directors must be able to do three central things: 1) decide whether the company should engage in election-related spending 2) decide whether to disclose such spending 3) ensure that appropriate oversight and other policies and procedures are in place.”
In 2024, the boards of over 60% of S&P 500 companies (319 companies) oversaw company political spending, up from 259 in 2020 and 229 in 2016. Even more striking is that 76% of core S&P 500 companies (251 companies) had general board oversight of company political spending, compared to 205 companies in 2020 and 169 companies in 2016. The report stresses that general board oversight of political spending may position boards “to expand oversight to address the broader impact of their companies’ spending.”
In over half of the companies in the S&P 500 (282 companies), direct political contributions and expenditures are overseen by board committees, a big jump from the 227 companies in 2020 and 189 in 2016; in the core S&P, the numbers were 227 companies in 2024, 186 in 2020 and 141 in 2016. Similarly, spending through third-party groups, including payments to trade associations and 501(c)(4) organizations—so-called “dark money” because there is no requirement to disclose the donors—was subject to board committee review at 261 companies, an increase from 199 companies in 2020 and 147 in 2016; in the core S&P, the numbers were 215 companies in 2024, 163 companies in 2020, and only 113 in 2016.
Shareholder proposals. The report observes that there seems to be a “strong positive correlation between shareholder engagement and high scores on the Index.” Among the S&P 500, since 2004, the report counted 235 companies that have received a shareholder proposal on the issue of corporate political spending disclosure and accountability, with 153 having reached agreements with shareholders. Among companies that reached agreement, the average overall score on the Index score was 79.9%, compared to 67.6% for those companies that received proposals but failed to reach agreement. By contrast, among the 260 companies with no history of shareholder engagement, the average score was 45.8%.
The bad news. There were 22 companies that received Index scores of zero last year—and zero again this year.
Be sure to VOTE! Election day is tomorrow!
