SACRAMENTO, Calif. /California Newswire/ — Assemblymember Pedro Nava (D-Santa Barbara) and the California Public Interest Research Group (CalPIRG) announced today the introduction of the Corporate Political Expenditure Accountability Act. The measure will hold corporations accountable to shareholders for political expenditures by requiring an annual report to shareholders detailing the type, purpose, cost, and benefit of a company’s political activities and expenditures. Corporations will also be required to give their shareholders the ability to opt out of political expenditures for their proportionate corporate ownership amount.
“The Supreme Court’s decision in Citizens United v. FEC has opened the door for unlimited corporate political expenditures,” said Nava. “In this new environment, it is more important than ever to protect shareholders from potentially divisive political expenditures they would not support.”
According to the U.S. Supreme Court’s Ruling in Citizens United vs. FEC, “shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits.” However, shareholders really only have two options: 1) they can politicize corporate board elections and try and nominate people with views that align with their own; or 2) they can divest in the company. If shareholders were to sell all of their shares for every company whose politics they disagreed with, they might have to sell much of their holdings. Lack of portfolio diversification is not something that should be encouraged.
“A corporation’s treasury shouldn’t be used to bankroll the political agendas of a few members of the board,” said Pedro Morillas CALPIRG Consumer Advocate. “If a corporation wants to play politics that choice should reflect the wishes of the corporation’s owners, the shareholders.”
“Corporations make substantial political contributions and expenditures to support and oppose candidates, ballot measures, political parties, and political causes,” said Nava. “Yet corporations could be supporting issues and candidates that shareholders may or may not agree with. Unfortunately, under current law shareholders have little to no recourse.”