A new study shows more publicly held companies are adopting stronger measures to disclose their spending on political campaigns.

The authors of the ninth annual CPA-Zicklin Index report attribute the trend to corporations not wanting to be burned in today's "incendiary political climate." The index is a joint project between the Center for Political Accountability in Washington, D.C., and the Zicklin Center for Business Ethics Research at the Wharton School of the University of Pennsylvania.

While the number of companies disclosing their political spending has been steadily rising, this year's figures show the largest ever year-to-year increase. Some 73 companies scored in the top tier for transparency, up from 57 last year, the report says.

In addition, the number disclosing some or all of their political spending with corporate funds increased to 316 this year from 294 last year as companies make disclosure part of their corporate governance practice.

Bruce Freed, president of the nonprofit, nonpartisan Center for Political Accountability, told Corporate Counsel that today's toxic political environment "kept coming up in conversations we had with companies on shareholder resolutions. They are concerned about contributions becoming controversial or getting caught up in political toxicity."

Such contributions can be especially damaging when they are made in secret but leaked to the public.

Freed said he saw a difference this time in the tenor of those annual conversations. "They are taking disclosure very seriously now. It's a sea change," he explained.

Freed said companies voiced concern about political fallout, including consumers shifting their spending to competitors and employees unhappy with candidates the company supports. Businesses are also worried about how third-party groups use their money to support unpopular issues.

In a foreword to the report, Chief Justice Leo Strine Jr. of the Delaware Supreme Court pinpoints the problem.

Strine, who has announced his retirement this fall, wrote, "Companies themselves face heightened risks from the Wild West environment that now surrounds political spending. Contributions that conflict with their core values and positions endanger their reputations, their relationship with consumers and employees and their bottom lines."

The research looked at companies listed in the S&P 500. It shows four companies scored 100% on the survey: Becton, Dickinson and Co.; Edwards Lifesciences Corp.; HP Inc. and Northrop Grumman Corp.

Some 229 companies scored in the top two tiers, an increase of 30% over 2015. In contrast, 59 companies scored zero in the survey.

In a statement, William Laufer, director of the Zicklin Center at Wharton, said, "The 2019 Index continues to chip away at unbridled corporate spending practices that now seem dated, risky, and out-of-touch. Competition over spending transparency and accountability incentivizes companies to adopt best practices, while encouraging firms to do good for the sake of goodness."

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