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Political Spending Should Be Part of ESG Regime, SEC’s Lee Says

March 15, 2021, 7:28 PM

Corporate political spending is “inextricably linked” to environmental, social, and governance issues and deserves attention from lawmakers and regulators, Acting SEC Chair Allison Lee said.

Investors are increasingly calling on companies to make political spending disclosures, but the Securities and Exchange Commission can’t mandate disclosures without authorization from Congress, Lee said in a speech Monday to the Center for American Progress.

The Democratic commissioner’s remarks came after some companies altered their political spending practices following last year’s racial justice protests and the Capitol riot in January. Investors can’t properly assess whether companies upheld their pledges in areas such as social justice or climate change without political spending reporting, Lee said.

“Political spending disclosure is key to any discussion of sustainability,” Lee said.

“Consider for instance research showing that many companies that have made carbon neutral pledges, or otherwise state they support climate-friendly initiatives, have donated substantial sums to candidates with climate voting records inconsistent with those statements,” she added.

The SEC has faced pressure to mandate political spending disclosures for years. The commission has received more than 1.2 million comments after a 2011 petition urged the agency to require the reporting.

But the SEC is limited in what it can do. Congress has used legislation that funds the agency to prohibit it from working on the matter, though Senate Banking Committee Chairman Sherrod Brown (D-Ohio) has expressed a desire for the commission to act.

Business leaders should call on Congress and the agency to allow political spending reporting, Democratic SEC Commissioner Caroline Crenshaw said Monday in an opinion piece, which she co-wrote with Harvard Business School professor Michael Porter.

“With our nation’s financial watchdog sidelined, American investors have no way to determine whether and how their money is spent on corporations’ preferred political causes,” Crenshaw and Porter said. “It doesn’t have to be this way.”

To contact the reporter on this story: Andrew Ramonas in Washington at

To contact the editors responsible for this story: Michael Ferullo at, Melissa B. Robinson at