Campaign finance reform, corporate style

From: POLITICO's The Long Game - Tuesday Nov 30,2021 05:03 pm

Nov 30, 2021

By Lorraine Woellert and Catherine Boudreau

THE BIG IDEA

Capitol police on Jan. 6

Which side are corporations on? | Julio Cortez/AP Photo

PROGRESS — Campaign finance reform might be dead in Washington, but it’s making progress at the highest levels of corporate America.

The number of public companies that disclose or prohibit political spending hit a record this year and more corporations are assigning decision-making to directors amid an era of hyperpartisanship.

An annual ranking found that 370 companies, up from 332 last year, either ban or disclose political spending, including contributions to trade associations. On average, businesses are more transparent about their political activity than they were a year ago, according to the report from the nonprofit Center for Political Accountability and the Carol and Lawrence Zicklin Center for Business Ethics Research at the Wharton School.

Companies are under pressure these days . Shareholders, customers, employees and regulators, including Securities and Exchange Commission Chair Gary Gensler, want businesses to align their political influence with their stated values.

“These ideas have gone mainstream,” Center for Political Accountability President Bruce Freed said.

Companies in a core group tracked by the CPA-Zicklin Index are adopting disclosure policies at a rapid clip. The number that disclose or prohibit giving to tax-exempt groups has jumped 95 percent since 2015; the number that delegate decision-making authority to board members has more than doubled.

New high scores: Ford Motor Co., Cigna, Comcast Corp., FirstEnergy Corp., Hilton Worldwide Holdings Inc., Marriott International Inc., PayPal Holdings Inc., Yum! Brands and others.

AT&T Inc. notched a perfect score after it restricted payments to trade associations and tax-exempt groups. The company’s ranking jumped in 2019 when it adopted policies after making payments to a shell company controlled by Michael Cohen, a one-time lawyer to former President Donald Trump; Cohen later served time in federal prison.

Not-so-high scores: Netflix Inc., one of 27 companies that scored zero for the second year running. In June, nearly 81 percent of Netflix shareholders asked the company to disclose its political giving, including money directed to trade associations and tax-exempt groups. Netflix opposed the resolution.

Big stakes: Fundraising for the 2022 midterm elections is on track to break records, and millions of dollars from unidentified donors are flowing into dark-money groups.

Some companies that withheld contributions after the Jan. 6 riot have resumed giving to political action committees that finance the campaigns of lawmakers who voted against President Joe Biden’s electoral victory.

“The stakes today are much, much higher than in any election than perhaps since the Civil War,” Freed said. “Our democracy is under attack.”

Some context: Fourteen shareholder resolutions on political spending have gone to a vote this year. In addition to Netflix, measures won majority votes at Chemed Corp., Duke Energy (a 70 on the Zicklin scale), Omnicom Group (25.7), Royal Caribbean Cruises (24.3), and United Airlines Holdings (25.7), according to As You Sow.

Dig deeper: Lorraine has the details. For more on red and blue brands, check out these stories from POLITICO and the New York Times.

YOU TELL US

Do you make purchasing decisions based on a company’s politics? Tell us about it: lwoellert@politico.com and cboudreau@politico.com. Find us on Twitter @ceboudreau and @Woellert. FOMO? Sign up for The Long Game.

Thanks to Shayna Greene, Ben Lefebvre and Matthew Choi for their help this week.

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VERBATIM

United Airlines jets.

Flying the SAF skies. | Jeff Chiu/AP Photo

SAF TAKES FLIGHT — United Airlines Inc. will operate a Boeing 737 fully powered by sustainable aviation fuel. The first-of-its-kind flight will take off from Chicago O’Hare on Wednesday and land at Reagan National outside Washington. A similar flight took place in Houston in October — but with no passengers on board.

Lauren Riley, United’s managing director of global environmental affairs and sustainability, spoke to Catherine about the flight’s significance and the challenges of scaling SAF.

How is this flight a milestone? By demonstrating that using 100 percent SAF is safe, we can start removing barriers around testing and transportation that drive up costs.

The American Society for Testing & Materials standard sets a maximum 50 percent blend limit with conventional jet fuel because early generation SAF had technical issues. But it’s matured since then, and we are proving that those concerns are no longer relevant. SAF performs the same as conventional jet fuel, but reduces greenhouse gas emissions by as much as 85 percent.

This blend limit means that SAF has to be tested to make sure it meets certain requirements. Producers also have to truck SAF from their facilities to tanks at the airport because there isn’t access to fuel supply pipelines.

What portion of United’s fuel supply is SAF? We have an agreement with World Energy to purchase up to 10 million gallons of SAF. We’re at the halfway mark. But SAF accounts for far less than 0.1 percent of our total fuel supply in any given year.

What will drive demand? The blender’s tax credit for production of SAF that’s in the Build Back Better Act. It’s a nine-year credit that’s performance-based, so the greater reduction in carbon emissions the greater the credit, which is exactly what we want. It’s important we have a long-term signal that the transition to sustainable fuels is here to stay. That will help de-risk investment in the industry.

United also joined a couple of initiatives at COP26 earlier this month. The Sustainable Aviation Buyers Alliance launched its airline membership, and we were one of the founding members with Amazon, Alaska and JetBlue. This will allow collaboration with corporate customers and provide transparency around tracking carbon credits.

We also were part of the First Movers Coalition that identified hard-to-abate industries, including aviation, that pledged to replace at least 5 percent of their conventional jet fuel with SAF. That amount doesn’t exist today.

DATA DIVE

Check out the growing losses reported by insurers that cover cyberattacks. Data from the National Association of Insurance Commissioners shows that some companies actually lost money on their cyberthreat policies last year.

Cyber insurance loss ratios rose dramatically in 2020.

The data takes us only through 2020, which means it doesn’t reflect losses from this year’s ransomware attacks on Colonial Pipeline, meatpacker JBS International and other companies. The federal Financial Crimes Enforcement Network estimates that 2021 ransomware-related transactions could be larger than the previous 10 years combined.

Upshot: Premiums are rising and coverage could become harder to get. AXA in May said it would stop reimbursing ransomware payments in France amid concerns that the payments were encouraging crime. At about the same time, a subsidiary of the insurance giant was itself hit by an attack.

Footnote: Cyberthreat insurance is a tiny share — less than half a percent — of the $727 billion property and casualty market, so the data is volatile. But the sector is growing.

WASHINGTON WATCH

MAKING DRILLERS PAY — The Interior Department wants to charge companies more to drill for oil and gas on federal lands. If the idea takes root, it would be the first increase in royalty rates in a century. The long-standing royalty of 12.5 percent is well below what most states require companies to pay for output from their lands. An Interior report said the leasing program fails to provide a fair return to taxpayers even before factoring in climate-related costs.

CORPORATE PROMISES

Ninety-two percent of Sysco Corp. shareholders backed a say-on-climate measure at the company’s Nov. 19 annual meeting. The resolution filed by As You Sow asked the food service company to meet net-zero targets aligned with the Paris Climate Agreement. Sysco’s board had no opinion on the measure, saying it already has plans to report its greenhouse gas emissions targets and progress.

Sustainable Finance

ANOTHER LAWSUIT FOR THE SEC — A conservative-leaning group jumped into a legal fight with the SEC after regulators approved a Nasdaq rule that requires listed companies to improve board diversity — or explain why they haven’t. The National Center for Public Policy Research lawsuit calls the measure “social engineering” and questions the agency’s authority to approve it.

WHAT WE'RE CLICKING

— The price of electricity is about to jump in Pennsylvania. For some people, monthly bills could be 50 percent higher starting in December, the Inquirer reports.

— Amazon has doubled its U.S. fulfillment centers, according to the Wall Street Journal. The expansion has helped the e-commerce giant weather supply-chain slowdowns and rely less on third-party shippers.

— Research to mitigate crop damage is off and running. At the University of Maine, researchers are trying to produce a super potato that can withstand heavy rainfall. The Bangor Daily News has more.

— Women in Senegal who sell water in plastic bags are protesting a bag ban that takes effect Dec. 31, Bloomberg reports.

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