Covington has recently learned that, for the first time ever, the CPA-Zicklin Index, which ranks companies’ political disclosure practices, plans to issue rankings for all 500 companies in the S&P 500 Index.  This is a significant expansion of the Index, which will impact many public companies that have not previously been subject to intense scrutiny by political disclosure activists.

The annual CPA-Zicklin index is a report jointly issued by the Center for Political Accountability—a non-profit group promoting corporate political spending disclosure—and the Zicklin Center for Business Ethics Research at the Wharton School of the University of Pennsylvania.  The report ranks companies based on political spending scores, according to a metric created by CPA and the Zicklin Center.  Companies receive up to 70 “points” for disclosing, on their corporate websites, their political spending practices and itemizing political expenditures, such as payments to trade associations and 501(c)(4) social welfare organizations.  Companies with low scores on the CPA-Zicklin Index have found themselves the targets of shareholder resolutions, lawsuits, and media scrutiny.  The jump from 300 companies surveyed in 2014 to the full S&P 500 will sweep in 200 new companies, many of which may have given little thought to corporate political disclosures that are not mandated by law.

As described in our recent guide for in-house counsel, now updated to account for the expected expansion of the Index, companies should carefully weigh how they respond to these and other disclosure initiatives.  Companies can receive points on the CPA-Zicklin Index scoring indicators in many different ways, and some are less intrusive and less invasive than others.  Covington, which maintains a database cataloguing the different approaches companies have taken to earn points, regularly advises public companies regarding corporate political disclosure issues, including strategies for responding to shareholder groups and other corporate political disclosure activists.