One hundred and five years ago, Theodore Roosevelt declared in his State of the Union speech, “All contributions by corporations to any political committee or for any political purpose should be forbidden by law; directors should not be permitted to use stockholders’ money for such purposes.”
Those words bear even greater relevance today as our nation faces a watershed moment in the history of our democratic process. Two weeks ago, the United States Supreme Court struck down crucial campaign finance reforms, eliminating limits on how much corporations can spend in elections. The Supreme Court’s decision opens the floodgates for millions of corporate dollars that could have a significant impact on our democratic process and, by extension, on our public policies.
For the first time in years, the American people face an expansion of corporate influence in elections with no limits or controls. It is critical that the people seize every opportunity to fight back against a Court decision that increased power for those who are already too powerful.
This defining moment calls for decisive action. Legislative proposals have already been announced that would restore many of the reforms the Court rolled back. But we cannot just wait for new legislation. We need to find new ways to stem the growing tide of corporate influence. One path that is open to us here and now is to institute reforms from within corporations themselves. It is time to organize shareholders to demand more accountability and transparency from the corporations in which they invest.
Starting right now, even before Congress acts, institutional investors should make use of all the tools they have at their disposal to hold corporations accountable. As New York City’s Public Advocate, I serve as a trustee of the New York City Employees’ Retirement System (NYCERS), the largest pension fund in New York City. Last year, NYCERS filed shareholder resolutions calling for disclosure of political spending by twelve corporations in which they are invested. This week, I called for institutional investors nationwide to join in support of these resolutions, the first step in creating a larger grassroots movement among shareholders across the country.
Institutional investors have a responsibility as fiduciaries to hold companies accountable for their political spending. A study by economists at the University of Minnesota revealed a correlation between high levels of political spending and falling corporate governance standards and returns. In addition, a recent report from the International Monetary Fund found that there can be a negative relationship between spending on lobbying and performance among lending institutions. The problem is clear–without restrictions and without shareholder disclosure around campaign expenditures, companies, and by extension their shareholders, suffer.
My office will work with the investor community, particularly through entities like the Council of Institutional Investors, to build a national shareholder movement behind full corporate disclosure. But this is just the beginning. Going forward we will also seek to give shareholders a greater say in whether or not companies they invest in should engage in political spending, especially if it has no limits. We will support and applaud corporations that voluntarily empower shareholders by giving them greater access to and authority over campaign spending. And we will continue to shine a light on companies that resist these reforms.
In the face of a Supreme Court decision that eliminates crucial checks on corporate political spending nationwide, our goal must be to create greater accountability and transparency around how corporations spend money in elections across the country.
Right now we are in an ideal position to stand up for shareholders and ensure that their voices are heard, both by corporations and by Congress. In doing this, we will be standing up for the values of our democracy. We will be fighting against a radical court decision that rolled back crucial reforms, protecting shareholders and the public against the rising tide of corporate political spending. And we will be demanding that our elections be determined first, last and always by the will of the American people.