Corporate spending on political campaigns is expansive and well-documented—a quick search through the Federal Election Commission’s website will turn up a slew of donations to politicians of both local and national ilk, and it makes news when a company opts out of the process, like many did after the January riots on the Capitol Building. 

But there is a part of the affair that is still quite secretive: money spent by corporate PACs to exert influence on elections and political movements. Through PACs, companies give money to a number of interest groups like the U.S. Chamber of Commerce, which opposes a $15 minimum wage, and other “dark money” organizations like the Koch brothers’ Americans for Prosperity or the League of Conservation Voters.

About $750 million in dark money contributions poured into the 2020 elections. 

Now, a growing group of shareholders are looking to bring those donations to light and make the process more opaque. 

As companies like Walmart, Amazon, Pfizer, Home Depot, and JP Morgan hold their shareholder meetings in the coming weeks, activists plan to introduce resolutions that would require organizations to disclose indirect spending and create reports outlining their political philosophies and agendas. While the resolutions are technically nonbinding, if they receive support from 50% of shareholders, companies will have to strongly consider them. 

Another rising source of tension for these companies, who largely oppose the proposals, comes from fund managers BlackRock and Vanguard, groups which hold considerable financial stakes and together manage about two-thirds of U.S. GDP. 

BlackRock’s 2021 investment stewardship expectations state that they will “now seek confirmation from companies, through engagement or disclosure, that their corporate political activities are consistent with their public statements on material and strategic policy issues.” 

Vanguard, meanwhile, has taken a similar, though not quite as overt, stance. “When gaps in disclosure or disconnects with longterm strategy are found, Vanguard funds may vote in favor of proposals calling for greater disclosure and oversight,” they wrote in their 2021 investment stewardship insights. 

Both BlackRock and Vanguard have backed resolutions in the past to require the disclosure of dark money activity. In October, BlackRock supported a resolution that required Cintas to disclose all of its electoral spending. In February, VanGuard supported a shareholder proposal to require Tysons Food to increase disclosures of lobbying payments and policy. 

The Biden administration has also indicated that it will rally behind more disclosure and tighter standards, especially around ESG (environmental, social, and governance) issues.

The Securities and Exchange Commission (SEC) has said that it is planning some sort of action around ESG for publicly traded companies and is currently asking for comments from the public on the topic. “Investors have repeatedly requested information on political spending — last year, shareholders voted in favor of greater disclosure 80% of the time that question was on a corporate ballot,” wrote SEC Commissioner Caroline Crenshaw last month. 

On March 4, the SEC announced a new Climate and ESG Task Force, which will examine publicly traded companies’ honesty around climate change risks and evaluate “disclosure and compliance issues.” Gary Gensler, chair of the Securities and Exchange Commission, told the Senate during his confirmation hearing last month that he believed the SEC should consider more stringent rules requiring public companies to disclose their political spending activities. 

The political environment and backing from fund managers make it likely that ESG disclosures will soon become the norm. But it could happen more quickly than expected, if investors are encouraged to get ahead of regulation and vote for measures that would hold corporate boards to tighter regulations this spring.