By Cameron Berube
In the wake of Citizens United, political spending in the 2016 elections already have reached dizzying heights. And since most companies refuse to disclose their political spending, it’s hard to know who’s backing who.
According to a new report from the Center for Political Activity (which benchmarks the political disclosure and accountability policies and practices of mutual funds), major mutual funds like Vanguard, which manages more retirement funds than any other firm in America, are doing next to nothing to encourage companies they hold large shares of to disclose how they use our money to influence policy.
So what are public companies doing with your money? Deregulating Wall Street? Gutting Medicare?
Americans are fed up with being drowned out by corporate interests. According to a 2015 poll, 88 percent of both Democratic and Republican primary voters agree that “the Securities and Exchange Commission should require corporations to disclose their political spending.”
We think so too, which is why Public Citizen and others in the Corporate Reform Coalition are calling on the SEC to pass a rule requiring corporations to disclose their political spending so that Americans can vote for themselves.
This is something that individual investors have been asking companies to do, one at a time, for years —with great success. Mutual funds vote in favor of disclosure 42 percent of the time on average , but the number would be higher if mutual funds like Vanguard voted their shares in the best interests of the millions of retail investors putting money into their retirement funds. Vanguard controls a huge portion of the stock market, yet consistently abstains from voting their proxies when shareholder resolutions involving political spending are put to the companies they invest in.
Secret political spending is not only detrimental to the democratic process – it can also be bad for business. As the rightful owners of publicly traded corporations, shareholders deserve to know where their money is being spent. Secret spending can lead to high-risk, short-term gambles and policies that don’t align with the best interests of investors. If shareholders know where the money is going, they can hold corporations accountable to sustainable, long-term growth strategies that make sense.
We need the big dogs like Vanguard and other major mutual funds to stand for policies that represent the best interests of the families they serve. With their support, companies will be more likely to get majority support for shareholder resolutions calling for political disclosure, and the SEC will have one less excuse for delaying the rule requiring transparent reporting of all corporate political spending.
That’s where you come in. Tell Vanguard to vote its shares the right way.
After all, if the companies they entrust with their clients’ retirements are playing by the rules, they should have nothing to hide.
Cameron Berube is the Democracy Associate for Public Citizen’s Congress Watch division