Democratic state treasurers and social issue-focused investment funds are pressing 82 corporations to be transparent about donations to candidates and causes as contributions resume after a pause in the wake of the Jan. 6 attack on the Capitol.

More than 125 groups managing over $1.5 trillion in invested assets recently wrote to board members who oversee political spending at some of the largest U.S. public companies, including Walmart, Amazon and Exxon Mobil Corp., urging more disclosure of political spending. The message comes as shareholder proposals on the issue are gaining momentum and as spending by corporate political action committees picks up.

“We are facing an existential threat to the election system in the U.S. which poses substantial systemic risk to long-term investors’ portfolios,” the investors said in the June 16 letter led by the Service Employees International Union, a labor group that frequently presses companies through stock holdings, and Majority Action, a nonprofit that coordinates shareholder campaigns on environmental, social and governance issues.

The letter asks companies to provide public disclosure of the amount and recipient of every election-related expenditure, including those made through political action committees and third-party groups such as trade associations. It also calls on firms to make formal policy changes barring all direct and indirect contributions to those who voted not to certify the 2020 presidential election results or who sponsor state-level legislation that the Brennan Center for Justice or the Voting Rights Lab determine could restrict voting access.

The investors said they sent the letter because the companies are reportedly contributing to politicians who would be on these lists. Backing those lawmakers could threaten the stable democracy needed for sustainable long-term value creation, exacerbate racial wealth gaps that cost the economy, and pose reputational risk by alienating customers or employees, they said.

Other groups behind the message include the California State Controller’s office; trustees of the California Public Employees’ Retirement System; treasurers of Connecticut, Rhode Island, Delaware, Maine and Vermont; foundations; socially responsible funds; and religious organizations such as church funds.

In addition to Walmart, Amazon and Exxon, recipients include CVS Health Corp., Berkshire Hathaway, AT&T, Wells Fargo & Co., Verizon Communications, Google parent Alphabet and Facebook.

Among those absent from the list is the largest U.S. bank, JPMorgan Chase, which said in an internal memo that the company would resume political giving with a restriction barring contributions to lawmakers who voted against certification in January, Reuters reported this month.

The letter is the latest move by investors to press companies on political spending in the wake of the Jan. 6 attack. Majority Action coordinated another letter in February pressuring asset managers to change their practices and their voting on other companies’ policies. The Interfaith Center on Corporate Responsibility, a coalition of ESG-conscious investors, shifted from encouraging companies to be transparent to urging them to consider halting political spending permanently.

‘Serious consequences’

ESG investors and liberal activists have pressed companies in recent months to oppose a Georgia voting law, saying it would restrict access and disproportionately affect Black voters in the state. Senate Minority Leader Mitch McConnell responded in a statement in early April, saying some businesses were “dabbling in behaving like a woke parallel government.”

“Corporations will invite serious consequences if they become a vehicle for far-left mobs to hijack our country from outside the constitutional order,” the Kentucky Republican said.

Investors have shown a growing appetite for more transparency from companies on their political activities. Among the 250 largest U.S. public companies, three shareholder proposals on political spending have won majority support in 2021 so far, while only one passed each full year in 2020 and 2019, according to Proxy Monitor, a tracking website run by the conservative Manhattan Institute.

The world’s largest asset manager, BlackRock, said that in 2021 it would seek confirmation that companies’ political spending was consistent with public statements on material or strategic policy issues. The manager of $9 trillion added that it would expect companies to monitor trade associations’ position for consistency. The firm also vowed to back more shareholder proposals, particularly on environmental and social matters.

The investor letter comes as corporate PACs are beginning to spend more, including in donations to the 147 Republicans who voted against certifying some results of the 2020 election, according to an analysis by CQ Roll Call. Business PACs were top donors to these lawmakers as of early June.

PACs for industries or individual companies say they’re expecting a greater return to spending through the rest of the year, especially as in-person events return after the COVID-19 pandemic halted such gatherings.

Democrats and shareholder activists alike are seeking more transparency on spending. The House passed an ESG disclosure package last week that would require public companies to report quarterly and annually on their contributions. The disclosure would apply to direct giving and money sent through trade associations, and reporting would include the contribution amount, date, party and candidate.

“Investors deserve transparency when it comes to the political spending of the companies they invest their hard-earned money in,” Illinois Democrat Bill Foster, who was behind the political spending portion of the bill, said in a statement after it passed 215-214. “The political contributions of publicly-held companies should not be a secret.”

The package faces a challenge in the narrowly divided Senate. All House Republicans who voted last week opposed the bill, while four Democrats joined them in opposition.

SEC rules

Regulators could still act on ESG, though political spending is more fraught. A budget provision has prevented the Securities and Exchange Commission from finalizing rules for disclosure on political spending in recent years. Democrats proposed Wednesday in the fiscal 2022 Financial Services spending bill to scrap that restriction. The agency is considering proposing other ESG mandates, including rules related to climate risk, board diversity and human capital management, according to its spring agenda.

Democrats’ movement on ESG is attracting opposition from Republicans and corporate lobbyists. The U.S. Chamber of Commerce hosted the first in a series of events on ESG this week, in which leaders of the business group spoke against the type of strict disclosure rules Democrats are considering.

The influence of corporate dollars in politics has become a key issue for Democrats. The party’s voting and ethics overhaul, known as HR 1 in the House and S 1 in the Senate, includes provisions that would repeal the restriction on use of SEC funding to finalize rules related to political spending; mandate that public companies poll shareholders on their preferences before engaging in political spending; and direct the Federal Election Commission to analyze donors and governance of corporate PACs.

The bill failed to gain enough support to move forward in the Senate this week. The 50-50 procedural vote along party lines fell short of the 60 votes needed to overcome a Republican filibuster.

Some Democrats have homed in on the power of corporations in certain arenas. Rhode Island Sen. Sheldon Whitehouse is pressing to draw attention to the influence of companies in the U.S. court system. He says “dark money” from corporations sent through private groups that don’t have to reveal their donors is funneling millions to promote conservative judicial nominees.

Kate Ackley contributed to this report.