Today, CCP is releasing materials documenting the effort of some groups to engage in corporate democracy, a managed and directed attempt to convince corporations of the “economic risk” of engaging in political speech. The CCP Report on Activist Investing, as well as a supplemental report by George Mason University Law Professor J.W. Verret and an Issue Toolkit, represent our attempt to note the ideological slant of some of these groups and the dangers their efforts pose to free political speech.
In short, while there is no evidence that corporate political speech hurts shareholders, there is ample evidence that certain individuals and groups are opposed to corporate political involvement for ideological and partisan reasons. Politics is supposed to be hard. With a handful of exceptions, there is no unanimity on economic and social topics. In a democracy, we deal with these disagreements through persuasion: we choose our leaders and enact our ballot measures only after a period of free debate and discussion, only after a campaign.
But some people want to take a shortcut. They’ve realized it’s easier to persuade voters if you drive your opponent from the public square.
CCP believes that is always wrong, regardless of who is being silenced. All viewpoints should be expressed and debated. That includes those of individuals, disfavored groups, unions — and corporations. As the Supreme Court has noted, “[p]olitical speech is indispensable to decisionmaking in a democracy, and this is no less true because the speech comes from a corporation rather than an individual.”
“The rationale behind Citizens United is that corporate speech is important to the debate. Not only do corporations have a right to speak out about the interest of their shareholders, but the public has a right to hear those views. Corporations should be encouraged, rather than discouraged, from participating in public affairs,” notes CCP Founder and Former FEC Chair Bradley Smith.
But having failed to silence businesses through either litigation or legislation, some proponents of campaign regulation are trying a different tack — corporate democracy. This effort has involved groups claiming to represent investors concerned about the “economic risks” posed to corporations whenever they engage in political speech. The materials released today document this effort. While there is no evidence that corporate political speech hurts shareholders, there is ample evidence that certain individuals and groups are opposed to corporate political involvement for ideological and partisan reasons. We believe that corporate boards should not let a few groups and individuals – groups that certainly do not have the best interest of the corporation at heart – bully them into giving up their constitutional rights.
“There is no serious evidence that stock prices are harmed by corporate political giving. The entire theory of corporate governance is based on the idea that management will act in best interest of shareholders, and there is no more reason for corporations to forego political participation than to forego support for the arts and other charities,” Smith notes. “Corporate management needs to think about how best to use the corporation’s newly vindicated First Amendment rights for the long term interests of the shareholders. It is hard to imagine that a blanket decision to forego political activism, leaving the field to self-styled ‘consumer advocates,’ unions, environmental extremists, and others with an anti-corporate agenda, will be in the best interest of shareholders.”
Having failed to silence businesses through either litigation or legislation, campaign regulation reformers continue to try new and different tacks, corporate democracy being the latest in a long line of attempts to control money in politics. CCP hopes the arguments contained in the materials released today will help spawn a serious national discussion concerning the role of businesses and their speech in our democracy. We believe that politics can return to its persuasive roots, evaluating fully-debated arguments on their merits rather than allowing partisan actors to win by default.
