Last year Walden increased its focus on company political spending. While political action committee (PAC) contributions by company employees are publicly disclosed and scrutinized, corporate “soft money” donations to political committees or front organizations and corporate political spending through trade associations are still obscured. This spending is beginning to cause headaches for companies when it is brought to light.

Consider the following: Over the past two years, PepsiCo, Union Pacific, Bellsouth, and Pfizer were hit with reports that some of their soft money had ended up going to groups and candidates with positions that directly conflicted with their publicly stated policies. These included the Traditional Values Coalition, Kansans for Life, the Christian Coalition’s Kansas affiliate, and legislative candidates in Texas, all of which opposed same-sex partner and other benefits that the companies provided for their employees.

In October 2005, companies that had contributed to events at the 2000 Republican presidential convention got a jolt when the Associated Press revealed that their money was diverted to purposes they knew nothing about. These included gifts to a charity associated with an elected official, payments to a consulting firm that employed the official’s wife, hefty donations to the campaign of another politician’s son, and laundered contributions to other political committees. The problem, however, does not revolve around a single party. It is pervasive within our political system.

Embarrassing disclosures can bring legal risks and harm a company’s reputation. Often, problems result from a simple lack of internal controls and the absence of management and board oversight. Because current law doesn’t require companies to fully report or account for their political spending, companies may fail to put in place procedures that would guard against acts of overzealous employees.

Walden has joined a broad coalition of investors—trade unions, foundations, religious investors, social investment managers and mutual funds—working with the Center for Political Accountability to urge companies to adopt full disclosure of political contributions and to encourage board oversight. A number of companies have stepped up their disclosure and oversight, some of them discovering in the process that the review provides control over decentralized practices that had resulted in contributions that top management knew little about. Quiet behind-the-scenes conversations and publicly sponsored shareholder resolutions (more than 50 were filed for the 2006 proxy season) have intensified the focus on corporate political giving.

—T. Smith, with the assistance of Bruce Freed, Center for Political Accountability

For more information, visit the Center for Political Accountability website at www.politicalaccountability.net.