Wharton ranking measures transparency of political endorsements

With the Philadelphia mayoral election taking place today and the 2012 Presidential election less than a year away, the question of who will take office is at the forefront of many minds.

A recent ranking jointly released by the Lawrence Zicklin Center for Business Ethics Research at the Wharton School and the Center for Political Accountability aims to ensure that elections in the United States are a question of politics, not sponsorship.

The ranking, released Oct. 28 evaluates major companies’ political endorsement and their degree of transparency.

Since Nov. 2003, the CPA has helped almost 90 companies increase the transparency of their political endorsements, CPA President Bruce Freed said.

Following the Supreme Court ruling Citizens United v. Federal Election Commission from 2010, political sponsorships from corporations will not be limited in the 2012 presidential race.

The study released last month ranked 99 American-based companies from the Standard & Poor’s 100 Index — which compiles a list of influential players in business.

The ranking analyzed publicly available information from these companies based on 29 indicators selected with help from Wharton professor William Laufer.

For Freed, the ranking offered a “comprehensive portrait” of how companies engage in and manage political spending.

Of these 99 companies, about one-half disclose direct political spending, while about one-third place some restrictions on how their money can be used in a political setting.

Companies such as Colgate-Palmolive and IBM do not use corporate funds to support any sort of political activity.

Johnson & Johnson, Dell Inc. and Wells Fargo all scored above a 75 out of 100, which indicates that they devote a small amount to political endorsements and are relatively transparent about such transactions.

Some companies scored a 0 out of 100 for these same indicators, such as Amazon.com, Mastercard Inc., Nike, Wal-Mart and Walt Disney Co.

Since it is predicted that the 2012 election will cost more than $6 billion — a record-breaking number — Freed is confident that “this political spending poses a growing and increasingly-serious risk.”

“The question is: How do companies manage this risk?” Freed added.

Many corporations are pressured to fund organizations that in turn secretly fund campaigns — which can not only affect the election, but also the companies’ business.

Companies can fund campaigns with different values and policies than they espouse, Freed said.

By disclosing their spending and providing board oversight, companies can move towards transparency and political accountability to diminish these risks, he added.

“Investors and the public can make decisions based on what companies are doing [by] what they demand of companies,” he added.

College sophomore Andrew Brown, the communications director for Penn Democrats, said consumers cannot be expected to track their purchases and make sure their political ideals are reflected by every product they purchase.

Freed agrees, adding that investors can affect change more than consumers.

For Brown, the idea that a few large companies could control the election is something to be afraid of.

Instead, Brown and the Penn Democrats are hoping to make a difference the old-fashioned way: with voters.

“We’re all fired up and ready to go,” he added.

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