The U.S. Capitol riot on January 6 underscores the need for companies to disclose lobbying funded by dark money contributions, including all third party spending used to affect public policy. In the aftermath of the attack, many companies announced they would stop making political contributions in 2021 to lawmakers who voted to reject the election certification. But the question should be whether these emergency measures to repair reputational damage should become something more lasting.

Political contributions are rightly under scrutiny, but the central role dark money played in the protests underscores the need for lobbying disclosure, as well. For example, the Rule of Law Defense Fund, a social welfare group affiliated with the Republican Attorneys General Association, helped organize the rally before the riot.

Shareholder proposals on lobbying encompass disclosure of dark money spending where there are no limits on what a company can give, whether through the Chamber of Commerce or social welfare groups. While corporate donations to politicians and traditional PACs have strict limits, their payments to trade associations and 501(c)(4) social welfare nonprofits have no restrictions. Companies can give unlimited amounts to third party groups that spend millions on lobbying and often undisclosed grassroots activity.

Bribery Charges in Ohio Illuminate the Dangers of Dark Money

FirstEnergy is a poster child for why investors need disclosure to prevent reputational, regulatory, and financial damage. Federal law enforcement is investigating FirstEnergy for allegedly funneling $60 million in secret bribes in Ohio through a dark money 501(c)(4) group called Generation Now. In 2018, FirstEnergy had agreed to disclose its trade association lobbying but failed to include 501(c)(4)s, leaving a loophole the company used to make over $60 million in undisclosed payments.

Grassroots Loophole and Astroturfing

Payments to third party groups can be used for undisclosed grassroots lobbying. Grassroots lobbying does not get reported at the federal level under the Lobbying Disclosure Act, and disclosure is uneven or absent in states. This means companies like ExxonMobil and Dominion Energy can make payments to a controversial social welfare group like the Consumer Energy Alliance that has been involved in multiple grassroots campaigns to send fraudulent emails and letters using the names and addresses of people without their knowledge.

2021 Lobbying Disclosure Campaign

For 2021, the investor campaign continues to focus on undisclosed third-party dark money and the theme of corporate political responsibility. Approximately 30 proposals have been filed asking companies to disclose all federal and state lobbying, including all trade association and social welfare 501(c)(4) payments used for lobbying. The concern remains that companies indirectly lobby through third parties for policies that directly contradict their formal public position.

In addition to dark money, the 2021 proposals highlight many lobbying misalignments on issues including climate change, corporate responsibility, Covid-19 and worker safety, racial justice, drug pricing, immigration, tobacco, and workers’ rights in the gig economy. If companies are truly committed to political responsibility in the wake of the Capitol riot, they should disclose all contributions to all third-party groups that use that money to influence public policy.