January 21, 2014
Four years ago this week, the Supreme Court’s Citizens United decision unleashed a flood of secretive corporate money into our democracy, leading to the most expensive elections in our country’s history, and allowing a new class of mega-donors to drown out the voices of regular Americans. Yet the decision didn’t just hurt democracy and regular voters: It also hurt investors, by letting corporations spend huge sums of money for political purposes without the knowledge or approval of their shareholders.
That’s why, on the fourth anniversary of the Court’s fateful decision, U.S. PIRG and Green Century Capital Management are calling on the Securities and Exchange Commission to fulfill its mission of protecting investors by requiring corporate political spending transparency.
For Green Century, the manager of environmentally responsible mutual funds, the undisclosed corporate money being spent as a result of Citizens United is particularly concerning. It means that our investors’ money may be used to support causes and candidates whose policy positions contradict their values, like climate denial.
Furthermore, corporate money in politics is increasingly opposed by a large proportion of the public, causing consumer backlash and even boycotts against companies that support controversial issues or candidates. Absent disclosure, investors have no way of evaluating the risks that may be associated with corporate political contributions. While some progressive companies are starting to voluntarily disclose their political contributions – many of them in response to pressure from shareholders – a much larger number continue to leave shareholders and the public in the dark about how their money is being used to influence public policy.
Regulation that would require companies to disclose their political spending to shareholders is critical for ensuring a transparent marketplace and enabling informed investment decisions. This information is increasingly demanded by investors – in 2013, just under one third of all environmental and social shareholder resolutions filed at corporations pushed for reports on corporate contributions to election campaigns, as well as spending on lobbying.
The SEC must act to protect investors by requiring publicly traded companies to disclose all political spending, including money funneled through nonprofits and trade associations. Such a rule has been proposed, and received unprecedented support from the public and investors – generating the most public comments in the history of the agency, with all but five of the 700,000 comments in support of the rule.
For the SEC, this decision should be a no-brainer: By requiring corporate political spending transparency, it will not only be fulfilling its mission of protecting investors; it will be making democracy more vibrant and more transparent for all Americans.
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