This practice note discusses market trends on how public companies disclose their political contributions, or “political spending,” as part of their environmental, social, and governance (ESG) issues. The note provides sample disclosures from recent periodic reports and analyzes the potential benefits and risks of political spending for public companies. The note also examines the increasing interest and demand from regulators, investors, and activist shareholders for more transparency and accountability on corporate political spending, and the challenges that public companies face in complying with the existing or proposed disclosure rules. The note concludes with recommendations on how to prepare and enhance political contributions disclosures in SEC-filed documents, such as disclosing the amounts, targets, objectives, and impacts of political spending, and the approval process and oversight for such activities.
