CSRwire Talkback

By Elaine Cohen

Is corporate political spending responsible business practice or unreasonable use of corporate power and influence? Either way, if more corporations do not disclose their contributions, you may just be voting, inadvertently, for your least favorite candidate.

How many companies does it take to win an election?

One to fund the campaign advertising, one to cover the campaign travel budget, one to buy campaign equipment, one to purchase tickets to campaign events, one to provide sponsorships and one to make donations to a trade association which makes donations to political candidates. Each "one" company in the above list may well be hundreds of corporations that use treasury funds to advance political parties and gain "friends in high places" when the votes are in.

However, what goes around comes around, and this is probably more characteristic of party politics than any other aspect of civic life. Corporate donations reached $305 million in the 2010 midterm elections in the U.S.

Globally, this probably amounts to billions of dollars of corporate political funding each year. Much has been written about the implications of Citizen's United court ruling in January 2010, which opened up the floodgates for corporate political spending through blocking the ban on corporate donations. Some claimed it was a victory for free speech; others a path to the corruption of democracy.

Why would corporations contribute to political parties and support election candidates? Corporations are not divorced from the political nature of the world we live in – they are part of it and invested in making it work. Can any group or individual actually be apolitical in today's world? Whatever we do or do not do has political implications. It seems obvious that corporations would have a vested interest in shaping a political landscape that could be guaranteed to deliver conditions for doing business more easily or more profitably.

On the other hand, maybe corporations' motivations are entirely altruistic.

By supporting certain political candidates and their campaign platforms, perhaps corporations truly believe they are making a contribution to the betterment of society. In this sense, political donations may be considered part of a company's corporate community investment, a practice that is considered not only positive but obligatory in today's business environment. Whether motivated by enlightened self-interest or values-based philanthropy, corporations are expected to contribute to society's wellbeing. If corporate leaders believe that the victory of one political platform over another is likely to bring benefit for their companies, and by extension, for society, then surely political support is quite a legitimate aspect of a company's responsibility to society and a sustainable future.

On the other hand, there is a fine line between contributing to society and controlling it. There is a tenuous link between corporate wellbeing and equitable social good. Allowing corporations to influence the political process is like asking the cat to watch over the milk. Even if corporate intentions were entirely purist and selfless, companies have stakeholders from whom their "license to operate" derives. Stakeholders may come from every point on the political spectrum and may object to corporations associating a party political position with the brands they buy, the bosses they work for or the investments they sink their dollars into. Corporate community investment is generally regarded as non-political and this, perhaps, is what lends such practice broadscale legitimacy. Political expenditure is the exact opposite and looks rather like a savings account with guaranteed interest.

Earlier this year, Howard Schultz, Starbucks' CEO, made headlines when he took issue with the U.S. administration's position on the national debt ceiling and issued a call to CEOs to stop all political campaign contributions. Over 100 CEOs signed the pledge. However, the nonprofit, nonpartisan Center for Political Accountability (CPA) has a different approach. Transparency.

In the CPA's recent publication, The CPA-Zicklin Index of Corporate Political Accountability and Disclosure, the authors confirm: "Disclosure of corporate political spending … gives shareholders the facts they need to judge whether corporate spending is in their best interest. It identifies possible sources of risk. Disclosure also can provide invaluable early warning signals about potential company problems or questionable management behavior." The Global Reporting Initiative, whose mission is to drive business transparency through sustainability reporting, includes a performance indicator (SO6) in the Sustainability Reporting Framework, which requires corporations to disclose details of public spending, for the same reasons.

In the CPA-Zicklin Index, of the S&P 100 companies surveyed, 68 percent of those corporations which engage in political spending disclose details of their contributions on their corporate websites. Healthcare, industrials and utilities sectors are the most transparent on the subject of political spending while consumer goods and telecoms companies are the laggards. Only two percent of the S&P 100, however, has a policy in place which prohibits political contributions in all forms (IBM and Colgate-Palmolive). Clearly, the transparency argument is leading the pack and Howard Schultz has an uphill climb if he wants to convert the two percent into the 99 percent.

In the meantime, it would make sense to check the fine print on the website of any corporation you have an interest in, just in case you find they are using your dollars to secure votes for political platforms which you would prefer not to be associated with. You may not have voted for your current political leaders, but maybe your dollars did. 

About Elaine Cohen

Elaine Cohen is a Sustainability Consultant and Reporter at Beyond Business and blogger on sustainability reporting.

This commentary is written by a valued member of the CSRwire contributing writers' community and expresses this author's views alone.

Readers: Would you stop buying goods from a company that funded politicians you didn't agree with? Tell us on Talkback!