Market Trends 2024/25: Disclosure on Political Contributions

This practice note explores the evolving trends and practices surrounding the disclosure of political contributions by public companies, particularly in the context of environmental, social, and governance (ESG) issues. It highlights the increasing calls from legal academics, investors, and activist shareholders for the Securities and Exchange Commission (SEC) to mandate disclosures on corporate political spending. This note highlights growing shareholder activism and the SEC’s focus on transparency in political contributions, citing speeches and statements from former SEC officials. It also examines the inconsistencies between companies’ political spending and their ESG policies. This note reviews the impact of political contributions on companies’ reputations and the associated risks, including regulatory and legal risks, corporate social responsibility risks, and the influence of political activities on business operations. It provides examples of political contribution disclosures in various sections of periodic reports, such as the Management’s Discussion and Analysis (MD&A), Risk Factors, and Business sections. This note concludes with recommendations for enhancing political contributions disclosures, emphasizing the importance of transparency and the need for companies to disclose their political spending, the decision-making process behind such contributions, and the potential business risks and impacts associated with political activities.

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