There’s “a yawning disclosure black hole” around corporate lobbying at the state level, according to a new report by the Sustainable Investments Institute shared exclusively with The Hill.
Commissioned by Public Citizen, the report found 98 percent of S&P 500 companies do not provide their investors with state-specific lobbying totals, and 97 percent do not provide their investors with state lobbying spending totals.
“Since so much lobbying activity happens in statehouses across the country, we commissioned this report to examine how much of companies’ state-level lobbying is disclosed. Unfortunately, the answer is almost none,” Jon Golinger, democracy advocate at Public Citizen, told The Hill.
“That ‘black hole’ of information leaves investors and the public in the dark about companies’ influential lobbying to shape state laws and regulations,” Golinger added.
Last month, Sens. Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio), Jon Tester (D-Mont.), Tina Smith (D-Minn.) and John Fetterman (D-Pa.) sent a letter to the Securities and Exchange Commission (SEC) asking the agency to mandate more robust disclosure of “any lobbying strategy, the aggregate amount of direct or indirect contributions to registered state and federal lobbyists, and any material risks related to or arising from the registrant’s lobbying strategy and expenditures.”
Since 2010, investors have filed 576 shareholder resolutions requesting more details on how much companies spend on lobbying activities and oversight of those activities, the report found.
The only S&P 500 company the report found disclosed material risk connected to lobbying on its annual report to investors was the utility company FirstEnergy, which was wrapped up in a recent scandal that thrust this issue into the spotlight.
This spring, former Ohio state House Speaker Larry Householder and former Ohio Republican Party Chair Matt Borges were convicted on racketeering conspiracy charges related to their role in a $61 million corruption scheme to ensure the passage of a billion-dollar bailout for FirstEnergy. FirstEnergy also paid a $230 million fine and fired some of its executives.
“Shareholders and the public deserve to know how corporations use company funds to influence politicians. Lobbying activities may benefit CEOs, but also can raise costs for investors and consumers or increase investment risks,” Golinger said.
Support for fuller corporate lobbying disclosure has grown amid gaps in public disclosure of lobbying across states.
At the federal level, lobbyists file quarterly disclosures detailing the total amount their client spent on lobbying, the specific issues they lobbied on and the lobbyists working on the account, including former government positions they held.
But different states have different rules for the public disclosure of lobbying activities, with varying degrees of transparency.
“The Lobbying Disclosure Act gives you a sense, you know, at least a discussable amount of what’s out there, but on the state level, it’s just completely the Wild West,” Sustainable Investments Institute Executive Director Heidi Welsh, who co-authored the report along with the nonprofit’s Research Director Robin Young, told The Hill.
Welsh and Young relied on corporate governance data from company and state government websites, as well as state-level lobbying data aggregated by OpenSecrets to compile the report.
After looking at lobbying data in 15 states that have passed legislation against environmental, social and governance investing as of June, they ultimately concluded it was not possible to determine how much money companies spent on lobbying and what specific issues they lobbied on from public records alone, due to an inconsistent corporate identification, lack of disclosure of lobbying activity and little or no lobbying expenditure data available for download.
These challenges reflect a broader issue: “It is simply not possible to determine how much companies spend in the aggregate to influence statehouse legislation or state policy more generally in half the country (28 states),” the report found.
Updated at 10:12 a.m.