The Baruch Index of Corporate Political Disclosure

Issue Background

In January 2010, the United States Supreme Court rendered its decision in the Citizens United v. Federal Election Commission case. That verdict allowed corporations (among others) to be much more active in election campaigns, through methods that are publicly disclosed as well as methods that are both undisclosed and unlimited. Under the Citizens United ruling from the U.S. Supreme Court, corporations are free to engage in a variety of campaign activities at all levels (federal, state, and local) and branches of government (legislative, executive, and judicial). This has led some to fear a tremendous influx of corporate money into the campaign system, particularly through anonymous, unlimited avenues such as trade associations, social welfare organizations, and 527 groups. Baruch College’s Robert Zicklin Center for Corporate Integrity initiated the creation of the Baruch Index in order to track corporate disclosure of these activities.

Corporate political disclosure refers to the corporation’s volitional communication to stakeholders of corporate information (resource expenditures, policies, procedures, and governance) relevant to corporate support for political activities (candidates, campaigns, causes, ballot measures and the like) through either in-kind or monetary expenditure. In the current U.S. institutional environment, mechanisms include direct donation, or donation via vehicles such as political action committees, trade associations (501(c)6s)*, social welfare groups (501(c)4s), or 527 committees.

Though free speech cannot (and should not) be stopped, one avenue for understanding the issue and impact of corporate political activity is to measure corporate campaign disclosure. That is: What do corporations tell the public about what they are doing in the political arena? Corporations can be rated against their peers on ease of access of information, presence of policies and procedures, and actual disclosure of political activity. Such a rating system gives the public, investors, analysts, and media a tremendous tool to bring accountability to the corporate political campaign arena. Research has shown that transparency alone is necessary but not sufficient to provide strong business ethics. It is others using that information to render corporations accountable that brings strong business ethics into existence.

Baruch College, through its Robert Zicklin Center for Corporate Integrity, developed the Baruch Index of Corporate Political Disclosure to rate the S&P 100 companies with a weighted system of 57 items measuring corporate political activity at all levels and branches of government. The data will be made available for use by media, practitioners and academics alike. We strongly believe the intensity of the issue of corporate political activity and the presence of this data source will make the Baruch Index a staple in corporate measurement, and drive corporations to improve their conduct in the arena of corporate political activity.

The Baruch Index of Corporate Political Disclosure measures a company’s willingness to disclose (transparency) regarding its corporate political activity with regard to:

  • Ease with which someone can find the relevant materials on the corporate website;
  • What policies, procedures, and corporate governance structures are in place and disclosed; and
  • What the corporation says about who and what it gives to, and how those donations are made.