Jon

This text is an excerpt from a Voluntary Submission to Wells Fargo Company Shareholders urging them to vote FOR Item 12 at the Shareholder Meeting on April 30, 2024:  (read the full original shareholder notice here)

To Wells Fargo Shareholders:

I urge shareholders to vote FOR Item 12 at the shareholder meeting.

The proposal asks Wells Fargo to prepare an annual report on its lobbying.

The proposal is part of an ongoing investor campaign for greater corporate political spending and lobbying disclosure.¹ Transparency and accountability in corporate spending to influence public policy are in the best interests of Wells Fargo shareholders. Without a clear system ensuring accountability, corporate assets can be used to promote public policy objectives which can pose risks to Wells Fargo’s reputation and shareholder value.

Wells Fargo should commit to corporate political responsibility by increasing its transparency by disclosing all of its third-party spending to influence public policy. In this letter, I will show support for this proposal is warranted because:

1. Reputation is an important component of shareholder value;
2. Wells Fargo’s current disclosures are inadequate;
3. Dark money spending through trade associations and social welfare groups presents unknown risks; and
4. Wells Fargo could easily provide details of its lobbying in an annual report to investors.

Read the full original shareholder notice here

This piece originally appeared on the Proxy Preview website. You can view the original piece here.

by Heidi Welsh & Robin Young

This piece originally appeared on the Proxy Preview website. You can view the original piece here.

by John Keenan

For 2024, more than 30 shareholder proposals have been filed asking for lobbying disclosure reports that include federal and state lobbying amounts, payments to trade associations and 501(c)(4) social welfare groups used for lobbying and payments to tax-exempt organizations that write and endorse model legislation.

State Lobbying Disclosure “Black Hole”

A new study found almost no major U.S. companies provide their investors with state lobbying disclosure, with 98 percent of the S&P 500 failing to disclose state-specific lobbying totals to shareholders. While federal lobbying data are easy to find, company disclosure of state lobbying remains a key need for investors as the data are scattered among a byzantine system of different disclosure regimes.

Senators Ask SEC to Mandate Lobbying Disclosure

The investor demand for lobbying disclosure recently attracted political support, with Senate Banking Committee Democrats writing a letter to the SEC urging it to issue a rulemaking to require companies to disclose their lobbying to shareholders. The senators noted that investors are largely kept in the dark regarding the policy campaigns they are indirectly funding.

Unlimited Undisclosed Spending Presents Risk

In addition to state spending, investors often face a blind regarding third-party lobbying. Undisclosed, unlimited company payments to trade associations and social welfare groups present risks, including reputational damage for lobbying that contradicts company positions and financial fines and regulatory sanctions for illegal payments. FirstEnergy was fined $230 million for funneling $60 million through a social welfare group in an Ohio bribery scandal that also resulted in indictments of company executives.

Train Safety under the Microscope

Norfolk Southern’s lobbying in Ohio has come under scrutiny after the train accident in East Palestine. A recent report found its federal lobbying spending increased 30 percent in the year since the accident. Investors are left wondering whether lobbying against safety rules has been in the company’s best interest.

Ongoing Demand for Tech Companies to Disclose

Investors refiled proposals at Alphabet, Amazon and Meta, which together list more than 1,000 trade associations, social welfare groups and non-profits receiving support but fail to disclose their payments and amounts used for lobbying to controversial groups like the Federalist Society attacking environmental, social and governance investing, the climate denialist think tank Competitive Enterprise Institute and the “anti-trans fear mongering” Independent Women’s Forum.

2024 Lobbying Disclosure Campaign – Misalignments Abound

In addition to dark money risks, lobbying misalignments remain a concern for investors when company lobbying contradicts company public positions. The 2024 proposals highlight lobbying misalignments on issues including climate, workers’ rights, rail safety, drug pricing, corporate taxation, antitrust, public health and voting rights. Banks, manufacturing, pharmaceutical, tech, telecom and utilities are among the industries receiving proposals.

John Keenan
Corporate Governance Analyst, AFSCME Capital Strategies

This piece originally appeared on Public Citizen’s website. You can view the original piece here.

This piece originally appeared on Public Citizen’s website. You can view the original piece here.

Washington, D.C. – A new report from Sustainable Investments Institute commissioned by Public Citizen reveals the extent to which corporate lobbying at the state level – on everything from environmental regulations to tax policy – goes undisclosed, despite strong investor desire for more transparency.

The report, “The Corporate State Lobbying Black Hole,” examined companies in the S&P 500 between 2015 and 2021 and found that, while state lawmakers and regulators nationwide have faced influence efforts backed by billions of dollars of expenditures, almost no major U.S. companies provide their investors with information about how much they spent to lobby state governments: 98 percent of S&P 500 firms do not disclose state-specific lobbying totals, while 97 percent of the same companies do not report a combined or aggregate spending total for state lobbying.

The report also found that investors have shown strong, sustained support for more disclosure about corporate lobbying expenditures. Since 2010, investors have filed nearly 600 shareholder resolutions asking companies to provide more information about how they oversee lobbying activities directed at federal, state and local government, and how much they spend.

“Shareholders and the public deserve to know how and where corporations are using company funds to influence politicians and impact government actions,” said Jon Golinger, Democracy Advocate at Public Citizen. “As weak as federal corporate lobbying disclosure is, this report reveals that state-level corporate lobbying disclosure is even worse. This lack of transparency means that investors may be deprived of critical information about a company’s behind-closed-doors lobbying activities that could run contrary to a company’s publicly stated positions and create reputational harm or pose other investment risks.”

Yet current legal mandates are a black hole. The report looked at requirements affecting companies in a subset of states—the 15 that have passed anti-ESG legislation as of June 2023–and found a patchwork of information regarding how corporations and issues are identified and classified, making it difficult to collect lobbying information in a format that enables researchers to aggregate and analyze it.

“Companies have taken some baby steps to beef up lobbying oversight but we still just don’t know what they spend,” said Heidi Welsh, Sustainable Investments Institute’s executive director. “It’s a giant ‘known unknown.”

A key group of influential U.S. Senators have asked the Securities and Exchange Commission (SEC) to mandate fuller disclosure of corporate issuers’ approach to political influence by way of lobbying. Senate Banking Committee Chair Sherrod Brown (D-Ohio) and Senators Elizabeth Warren (D-Mass.), John Fetterman (D-Pa.), Tina Smith (D-Minn.), and Jon Tester (D-Mont.) sent a letter to SEC Chair Gary Gensler on November 15 urging the SEC to use its authority to require reporting to investors on issuers’ lobbying strategy, how much they spend on lobbying, and any material risks related to lobbying strategy and spending. “In the absence of strong lobbying disclosure rules,” wrote the senators, “investors are largely kept in the dark regarding the policy campaigns they are indirectly funding.”

In fact, since just before Christmas in 2015, a corporate-funded cabal of Republican Congressmembers have successfully blocked all federal regulatory action to enact a corporate political spending disclosure rule.  Year after year, they’ve been able to use backroom maneuvers to attach a poison pill policy “rider” to the annual funding bill for the Securities Exchange Commission (SEC), the agency charged with enacting sensible corporate disclosure rules.

Yet again in 2023, House Republicans have succeeded in slapping another secret money poison pill rider onto the SEC appropriations bill that would block corporate political spending disclosure for another year.  But a bright ray of hope was offered by Representative Jason Crow, Democrat from Colorado, and Representative Seth Magaziner, Democrat from Rhode Island. Both of them stepped up to sponsor amendments to strip the SEC spending bill of this secret money rider and finally let the corporate political spending disclosure rule move forward.

“Our democracy is not for sale – we need more transparency, not less,” said Representative Jason Crow.  “Sunshine is the best disinfectant.  My amendment would help put an end to corrupt influence, increase transparency, and restore public trust in government.”

“Voters deserve full transparency about who is spending money to try to influence elections,” said Representative Seth Magaziner. “We must ensure the American people know where their money is going and whether it is fueling political activities including election denialism, environment degradation, or draconian abortion restrictions.”

House Republican leaders refused to even let either of these sunlight amendments be voted on.

While, year-after-year, some Congressmembers keep rewriting the rules to block that common-sense disclosure, we will continue to organize, advocate, and shine light on the need to strike the secret money policy riders and bring corporate political spending out of the shadows.

With 80% of Americans overwhelmingly on the side of sunlight, this is a cause worth fighting for.  A fight that, with enough persistence and follow-through, we will – eventually – win.

Jon Golinger is the Democracy Advocate with Public Citizen

This piece originally appeared on Public Citizen’s website. You can view the original piece here.

By Jon Golinger

Following the Supreme Court’s disastrous 2010 decision in Citizens United, overturning a century of law and giving corporations free rein to spend unlimited amounts on elections, Public Citizen helped form the Corporate Reform Coalition to bring together a broad collection of investors, academics, securities experts, labor, and national and state-based public interest groups to address the overwhelming influence of corporations on elections. Public Citizen plays a leading role in the Corporate Reform Coalition’s work, providing key staffing and organizational support. Since Citizens United, the coalition’s focus on the need for corporate political disclosure and the demand from shareholders for this information has provided an effective framework within the Court’s legal constraints to work to mitigate the massive damage caused by the flood of secret money corporations are spending to shape American politics.

A recently released report by a right-wing think tank affiliated with indicted former Trump Chief of Staff Mark Meadows signals just how effective corporate lobbyists themselves think our work has been. Naming and Shaming, a report by the right-wing American Accountability Foundation, listed the Corporate Reform Coalition and Public Citizen first in a list of groups that have successfully championed transparency and backed corporate shareholder resolutions to persuade companies to disclose their political and lobbying spending to their investors. The report asserts that the movement to get companies to disclose their political and lobbying spending to investors is “a real, tangible threat” that could even put corporate lobbyists “out of business.” Tax filings show that the group behind this report is closely related to Mark Meadows’ Conservative Partnership Institute in Washington, D.C.

If the point of this report is to show that Public Citizen and our allies are working hard every day to shine a spotlight on the massive amount of secret money corporations spend to bend American politics and policy to serve their agendas instead of the public interest – we completely agree. In fact, our work to push for regulations and legislation to require political spending transparency for investors has made a significant impact in the fight for corporate accountability.

It’s a badge of honor to be labeled enemy #1 of secret money influence spending by corporations, one we will wear with pride.

In the critical months ahead for our fragile democracy, the Corporate Reform Coalition and Public Citizen will continue to champion regulatory, legislative, and corporate governance solutions to strengthen the voices of shareholders and provide them the information they deserve about how their investments are used to influence American politics and policy.

As former Supreme Court Justice Louis Brandeis famously wrote: “Sunlight is said to be the best of disinfectants.” Now, more than ever, we need to let the sun shine in on corporate secret money and influence spending.

Jon Golinger is the Democracy Advocate with Public Citizen

As 2021 Lobbying Proposals Are on an Early Roll, BlackRock and Vanguard Hold the Key to Dark Money Transparency at Walt Disney

In the wake of the January 6 riot, shareholder proposals for lobbying disclosure have received increased support in 2021. The first proposal at Tyson Foods filed by the Teamsters and cofiler Oxfam received over 80% support of outside shareholders. For the first time at Tyson, Blackrock and Vanguard both supported the proposal. Additionally, the proposal at AECOM filed by John Chevedden passed with 54.6% support.

On March 9, the third lobbying disclosure shareholder proposal for 2021 will be going to vote at Disney. Last year, the same proposal seeking lobbying disclosure received 33.7% support of shareholders. But if Vanguard and BlackRock had voted their combined 198,686,536 shares for the proposal instead of voting against, it would have received a majority of votes for and against. Multiple studies have shown if these two managers vote for lobbying disclosure proposals, it is likely many of these proposals will pass.

As shareholders vote on the 2021 proposal, Vanguard and BlackRock again appear to hold the balance of proxy voting power, with 246,843,283 shares and 13.6% of outstanding shares. Will they repeat their support for lobbying disclosure?

Blackrock and Vanguard Have Business Ties with Disney

One issue noted in Disney’s 2021 proxy statement is the fact that Vanguard and Blackrock both manage funds on behalf of Disney for defined contribution plans. Blackrock also manages investment portfolios for the company’s pension funds. Vanguard and Blackrock received fees of approximately $1 million and $15 million. Multiple studies have shown that business ties significantly influence pro-management voting and that pension- related business ties influence fund families to vote with management at all firms. As Jack Bogle, founder of Vanguard, explained: “Votes against management may jeopardize the retention of clients of 401(k) and pension accounts.”

Investors Need Dark Money Lobbying Disclosure

Lobbying is important to Disney. An exempt solicitation by lead filer Mercy Investment Services is filled with numerous examples for why investors should support the proposal, including:

• Disney’s federal lobbying efforts have been described as “so effective that the United States changed its copyright law twice, in 1976 and in 1998.” Disney’s lobbying in Florida has been described as “the 800-pound mouse protecting its cheese in the backrooms of city hall and state government.”
• Shareholders face a dark money blind spot on Disney’s contributions to third-party groups that use that money to influence policy. Disney fails to disclose a closed top limit for its trade association payments and fails to disclose its contributions to social welfare organizations (501(c)(4) organizations), which can also lobby. For example, the Rule of Law Defense Fund is a social welfare group that helped organize the protest before the Jan. 6th riots and is an arm of the Republican Attorneys General Association. Yet, shareholders have no way to know if Disney made contributions to the Rule of Law Defense Fund.
• Disney’s involvement in trade associations like the Chamber of Commerce, which undermined the Paris climate accord, could pose reputational risks. Groups like Change the Chamber are calling on Chamber members like Disney to change the Chamber’s position against science-based climate legislation.
• Disney’s major trade associations, the National Association of Broadcasters (NCTA), the  Internet & Television Association, and the Motion Picture Association; support controversial groups like the Competitive Enterprise Institute , a 501(c)(4) social welfare group. CEI is controversial for promoting climate denial.

Additionally, a Public Citizen analysis found that “Disney backed 96% of the Republican lawmakers in Florida who, in a pair of party-line votes, passed legislation to sabotage a popular voting rights ballot initiative that restored former felons’ voting rights.”

Proxy Advisor Support

Institutional Shareholder Services has recommended in support for the proposal, in part noting that Disney fails to:

• specify management or board oversight related to the company’s trade association memberships or indirect lobbying activities;
• discuss how it reconciles reputational risks when its trade associations’ lobbying activities contradict the company’s public positions;
• provide the exact amount of payments to trade associations and therefore the portions used for lobbying activities are not clear; and
• provide its federal and state level direct lobbying expenditures on its website, where it can be easily accessed.[1]

If you own shares directly in Disney, you should vote in favor of Proposal 4, which asks the company to prepare an annual report on its lobbying activity so that shareholders- the true owners of the company- can assess the associated risk.

If you don’t own stock directly in Disney –or any other company where these shareholder resolutions are filed this year — but are worried about undisclosed political spending by corporations that is being used to influence our democracy, chances are you can have an impact through your 401(k) instead.

If you invest your retirement with Vanguard, BlackRock, Fidelity, or State Street, tell them to change the way they vote so that progress on disclosure can move forward.

[1] ISS 2021 Walt Disney Proxy Analysis, February 17, 2021, p. 29.

This post was updated on March 9th, 2021 to include the Public Citizen analysis of Disney’s spending in Florida.

Contradicting responses to the Coronavirus come as companies face questions at their annual meetings about their lobbying through trade associations

As the COVID-19 pandemic exposes critical medical equipment shortages within our health system, the American Hospital Association, the American Medical Association and the American Nurses Association have called for the White House to immediately use of the Defense Production Act (DPA) to produce and distribute much needed Personal Protection Equipment (PPE) and ventilators. Yet the U.S. Chamber of Commerce, the largest lobbying spender in the country and trade association of many leading companies, has inexplicably lobbied the White House against the administration’s use of the DPA, which would enable the government to quickly accelerate the production of necessary medical equipment.

In response to the current COVID-19 pandemic, many companies are taking actions to meet these dangerous equipment shortages. Yet, many of these same companies belong to the Chamber and give it millions in payments that the Chamber then uses to lobby, as it has done here, against actively and comprehensively utilizing the DPA. Investors are asking many of these companies for expanded lobbying disclosure and highlighting reputational risks when the lobbying of trade associations contradicts company public positions at upcoming shareholder meetings, including Abbott Laboratories, AbbVie, Boeing, Citigroup, Honeywell and Pfizer.

The Chamber’s recent actions have received negative press scrutiny:

Trump is bending to big business during a pandemic, and Americans are worse off for it.
– Now This

Trump has refused to invoke the act because big business doesn’t want him to.
– New York Magazine

If enough member companies spoke out against the Chamber’s lobbying, it would have to stop… Google is also an active member of the Chamber, and the Chamber is blocking action that could marshal the resources of numerous companies to produce this equipment. If Google spoke out against the Chamber’s lobbying, it would create enormous pressure on the Chamber to shift course.
– Popular Information

Senators have called for “the Chamber to cease their lobbying efforts against measures to address the COVID-19 pandemic and place the economic and public health needs of hundreds of millions of American families above its members.” Additionally, major unions have condemned the Chamber’s actions. Finally, a report released by unions and advocacy groups calls on companies that are members of the Chamber to publicly call for the full use of the Defense Production Act.

Why is the Chamber, one of the most powerful lobbyists in Washington D.C., lobbying against the use of an act that gives broad authority to increase the manufacturing output of lifesaving equipment in a national emergency? While we wait for a definitive answer on their lobbying against the DPA, the Chamber has a long track record of lobbying against the broader interests of many of its corporate members.

For example, many of the Chambers corporate members individually support efforts to combat climate change and the Paris Climate Accord, yet the Chamber, on behalf of its members, has consistently lobbied against effective climate change regulations. A similar schism occurs on the issue of tobacco and public health, where many Chamber companies are committed to advancing patient health and well-being, yet the Chamber has worked to block global anti-smoking laws. On the issue of a minimum wage the Chamber appears to be out of sync with its members again. The Chamber claims to represent the interests of more than 3 million businesses and yet, while 80 percent of small business support raising the minimum wage, the Chamber is opposed to raising it.

These are just three examples where the Chamber has pushed for a harmful, deregulatory corporate agenda that goes against the public positions of many of its members and appears to be aligned only with the small number of companies that are its largest contributors. Do Chamber member companies really oppose the use of a law that is needed to address the acute shortage of personal protection equipment and ventilators that hospitals and front-line workers are facing? With the impact of the pandemic reaching every corner of America and across the globe, it’s incomprehensible that anyone — including corporate lobbyists for the Chamber — would block the use of employing every tool available to fight the disease and save as many lives as possible.

Investors Seek Disclosure of Lobbying at Citigroup, Pfizer, Abbott, Honeywell, Boeing and AbbVie, Highlighting Chamber Pandemic Lobbying Misalignment

Amidst this focus on the Chamber’s ongoing opposition to the DPA, shareholder proposals asking for lobbying disclosure will be going to vote at upcoming shareholder meetings at many companies that belong to the Chamber or sit on its board. These proposals at Citigroup, Pfizer, Abbott, Honeywell, Boeing and AbbVie ask the companies to disclose board oversight for lobbying and all federal and state lobbying expenditures, including disclosing all payments used by the Chamber for lobbying.

A major concern for investors is when indirect company lobbying through a company’s trade associations directly contradicts the company’s public positions.

On the one hand, these companies are working to speed production of ventilators and respirators to respond to COVID-19. Yet on the other, their trade association is blocking effective use of the DPA that is sorely needed to address the pandemic.

Exempt solicitations filed in support of the resolutions specifically highlight this contradiction and the reputational risk for companies from these types of trade association lobbying misalignments.

April 21 – Citigroup

Citigroup is providing $15 million in COVID-19 related relief efforts and supports “efforts to act swiftly, proactively and aggressively to mitigate the impacts of this situation.” The shareholder proposal filed by the New Economy Project notes that Citigroup supported the Paris Agreement on climate change, but the Chamber has worked to undermine it. The exempt solicitation states that “by funding a trade association’s lobbying, Citigroup is effectively endorsing its lobbying positions,” while also highlighting the pandemic as “another disturbing example of the conflict between Citigroup’s stated commitments and the U.S. Chamber of Commerce’s lobbying.”

April 23 – Pfizer

Pfizer is calling on the biopharmaceutical industry to join it in committing to unprecedented collaboration to combat COVID-19. The shareholder proposal filed by Oxfam notes that Pfizer sits on the boards of both the Chamber and the Pharmaceutical Research and Manufacturers of America (PhRMA), which together have spent over $1.9 billion on lobbying since 1998, yet fails to disclose how much of its Chamber and PhRMA payments are used for lobbying. Oxfam’s exempt solicitation notes that Pfizer believes in addressing climate change, but the Chamber undermined the Paris climate accord, thereby creating important misalignments on one of the defining issues of our time. It further notes a similar misalignment in the Chamber’s responses to the COVID-19 pandemic.

April 24 – Abbott Laboratories

Abbott is producing and distributing rapid point-of-care COVID-19 tests and “working 24/7 to make as many tests as we can and create the next round of needed tests.” However, it also serves on the Chamber board of directors. The shareholder proposal filed by the Unitarian Universalist Association (UUA) notes that Abbott believes in addressing climate change and supports good health, yet the Chamber undermined the Paris climate accord and has worked to block global antismoking laws. UUA’s exempt solicitation also notes that Abbott signed the Business Roundtable Statement (BRT) on the Purpose of the Corporation to be socially responsible, yet the BRT is lobbying to limit the right of shareholders to file resolutions.

April 27 – Honeywell

Honeywell has committed to increasing production of N95 respirators and other personal protection equipment in response to the current COVID-19 pandemic, yet also serves on the Chamber board of directors. The shareholder proposal filed by Mercy Investment Services notes that Honeywell is committed to reducing global greenhouse gases and signed an agreement to work with United Nations Environment to combat climate change, yet the Chamber undermined the Paris climate accord. Mercy’s exempt solicitation highlights the Chamber COVID-19 misalignment and points out that shareholders “face a trade association blind spot as Honeywell fails to disclose its trade association memberships.”

April 27 – Boeing

Boeing is assisting COVID-19 recovery and relief efforts, including manufacturing much needed face shields, yet is a member of the Chamber. The shareholder proposal filed by the Province of Saint Joseph of the Capuchin Order notes that “in the wake of the two 737 Max jet crashes, questions have been raised whether Boeing’s lobbying led to relaxed Federal Aviation Administration oversight, including ‘long-standing concerns about industry capture of the FAA, from lobbying by the aerospace industry—Boeing spends millions lobbying Congress and federal agencies each year—to the revolving door between the FAA and Boeing and other companies and lobbying groups in the industry.’” The exempt shareholder solicitation states that “Boeing needs to repair its tarnished reputation and can show its commitment to rehabilitating its image and culture by more fully disclosing its lobbying activities.”

May 8 – AbbVie

AbbVie is “collaborating with select health authorities and institutions globally on clinical research” and is donating $25 million to help support underserved communities and healthcare systems. The shareholder proposal filed by Zevin Asset Management notes that AbbVie is a member of the Chamber of Commerce, which has spent over $1.5 billion on lobbying since 1998, and sits on the board of the Pharmaceutical Research and Manufacturers of America (PhRMA), which spends millions lobbying against drug pricing measures. The exempt shareholder solicitation states that “AbbVie’s disclosure lags many of its peer group members which disclose the portion of trade association payments that are used for lobbying.”

Tell Corporate America to end the hypocrisy 

If you own shares directly in these companies, you should vote in favor of these proposals, which asks the company to prepare an annual report on its lobbying activity so that shareholders- the true owners of the company- can assess the associated risk.

If you don’t own stock directly in these companies –or any other company where these shareholder resolutions are filed this year — but are worried about undisclosed political spending by corporations that is being used to influence our democracy, chances are you can have an impact through your 401(k) instead.

If you invest your retirement through BlackRock, State Street, Dimensional, Fidelity or Vanguard, you can vote with your dollars and tell the funds to support disclosure.

Image credit: Elizabeth Thomsen/Flickr

This post was updated on 4/20/20 to include the report Unmasked: Report shows major corporations back campaign to block federally coordinated medical supplies.

BlackRock and Vanguard Hold the Keys to the Magic Kingdom

On March 11, Disney shareholders will vote on a proposal asking the company to provide a report on its board oversight procedures for lobbying and its federal and state lobbying expenditures, including indirect funding of lobbying through trade associations.

Last year, the same proposal seeking lobbying disclosure received more than 39% support from shareholders. Analysis shows that the two largest holders of Disney, Vanguard and BlackRock, together held the power to give the proposal majority support, but that each voted against the proposal. As shareholders vote on the 2020 proposal, Vanguard and BlackRock again hold the balance of proxy voting power.

Lobbying is important to Disney. Its federal lobbying efforts have been described as “so effective that the United States changed its copyright law twice, in 1976 and in 1998.” Reputation is also very important for Disney, which ranked 4th in reputation of the 100 most visible companies in the United States for 2019, and notes in its filings with the Securities and Exchange Commission (SEC) that damage to its reputation may negatively impact its business. Companies with a high reputation rank perform better financially than lower ranked companies, and executives find it is much harder to recover from a reputational failure than to build and maintain reputation.[1]

Since 2010, Disney has spent over $38.6 million on federal lobbying on issues like intellectual property, copyright, corporate tax reform, digital taxes, NAFTA and the Trans-Pacific Partnership Agreement. At the state level it’s much harder to know exactly how much Disney spends because state disclosure requirements are uneven and data is hard to digest. Disney’s state-level lobbying spending is likely significant. For example, Disney spent over $3.6 million on lobbying in California from 2010 – 2019, and Disney’s lobbying in Florida has been described as “the 800-pound mouse protecting its cheese in the backrooms of city hall and state government.” Disney also lobbies abroad, reportedly spending between €700,000 – €799,000 on lobbying in Europe for 2019.

Disney shareholders also face a trade association lobbying blind spot, as Disney fails to fully disclose its trade association payments used for lobbying. Disney serves on the board of the National Association of Broadcasters, which spent $14.2 million on federal lobbying in 2018, and is a member of NCTA – The Internet & Television Association, which spent $13.2 million on federal lobbying in 2018. Disney also belongs to the Chamber of Commerce which has spent nearly $1.6 billion on lobbying since 1998.

Investors believe Disney’s trade association payments used for lobbying could pose reputational risks. Trade associations often actively lobby for issues that are contrary to a company’s public statements and values or take controversial public stands. For example, Disney signed an agreement to work with United Nations Environment to combat and raise awareness around climate change, yet the Chamber undermined the Paris climate accord. A 2018 report looking at political engagement transparency rated Disney an “F” on responsible lobbying.

With approximately 11% of the voting power at Disney, the large mutual fund companies Vanguard and BlackRock are in a position to determine whether the shareholder proposal passes or fails. As the largest managers of retirement savings, mutual funds control significant voting shares in America’s most powerful companies. According to the 2020 Disney proxy statement, Vanguard beneficially owned 105,895,590 shares (5.9%), and BlackRock owned 92,760,946 shares (5.1%). Yet, Vanguard and BlackRock consistently vote against shareholder proposals that attempt to bring corporate political activity into the light.

Last Year’s Proposal Would Have Passed with Blackrock and Vanguard Support

In 2019, BlackRock and Vanguard each voted against the shareholder proposal asking Disney to disclose its lobbying to shareholders. If these two mutual funds had instead voted their combined 194,593,987 shares in favor of the 2019 proposal, it would have received a clear majority out of the votes cast for and against.[2]

A recent report by Morningstar found that Vanguard voted against every lobbying proposal in 2019, while BlackRock supported one out of 24. The report also found that the vote by one large asset manager could often tip a resolution’s outcome to a majority. For instance, lobbying disclosure at Exxon Mobil, which earned 37% support, would have passed if both BlackRock and Vanguard had supported it.

Proxy advisor Institutional Shareholder Services has recommended that shareholders vote for the proposal, noting that Disney does not disclose how it reconciles reputational risks when its trade associations’ lobbying activities contradict the company’s public positions and the portions of Disney’s trade association payments used for lobbying are not clear.[3]

Disney is required to report its state lobbying and already has this information, so it could easily provide this information to shareholders, as investors are asking for in the shareholder resolution up for vote. Deficiencies in the law means that Disney is not required to disclose its trade association payments, but if the company is internally tracking those payments- as responsible corporate governance would assume- then the company should have no problem sharing those details with investors.

The proposal is part of an ongoing ten-year investor campaign for greater corporate lobbying disclosure, which has seen investors increasingly supporting this type of disclosure.

Take Action

If you own shares directly in Disney, you should vote in favor of Item 5, which asks the company to prepare an annual report on its lobbying activity so that shareholders- the true owners of the company- can assess the associated risk.

If you don’t own stock directly in Disney –or any other company where these shareholder resolutions are filed this year — but are worried about undisclosed political spending by corporations that is being used to influence our democracy, chances are you can have an impact through your 401(k) instead.

If you invest your retirement through Vanguard, tell the company to change the way it votes so that progress on disclosure can move forward. If you invest through BlackRock, State Street, Dimensional, Fidelity or Vanguard, you can vote with your dollars and tell the funds to support disclosure.

Check out the shareholder advisory from Seventh Generation Interfaith Inc., on behalf of the lobbying disclosure resolution filed by the Congregation of Sisters of St. Agnes and co-filers Walden Asset Management, Mercy Investment Services, Congregation of St. Joseph, Daughters of Charity, Fresh Pond Capital, Missionary Oblates of Mary Immaculate, Greater Manchester Pension Fund and Franciscan Sisters of Perpetual Adoration.

[1] “Reputation Risk,” The Conference Board, 2007, p. 6.

[2] The 2019 shareholder proposal for lobbying disclosure received 404,451,360 votes for, 625,294,989 votes against and 8,326,501 votes that were abstentions.

[3] ISS 2020 Walt Disney Proxy Analysis, February 14, 2020, p. 32.

By: Ciara Torres-Spelliscy

The people running SoulCycle and Equinox’s gym franchises woke up to a serious headache in early August when the owner of their parent company Stephen Ross decided to throw a $250,000 a person fundraiser for President Trump’s re-election in the Hamptons. Ross also owns the Miami Dolphins football team. As soon as the public noticed this fundraiser, many on social media started calling for boycotts of SoulCycle and Equinox. Calls to boycott Dolphins were decidedly more rare, but there were some like one from Fred Guttenberg, a father of young woman killed at Parkland, Florida in 2018.

Celebrities like Chrissy Teigen announced that they had cancelled their gym memberships since there are other over-priced gyms one could join that don’t financially support Trump or his agenda. For example, TV legal commentator Maya Wiley tweeted she was quitting Soul Cycle writing, “I love #SoulCycle. I support #SteveRoss #Trump fundraiser. I support his right to his views. Since he uses his $ to support child separation, hatred, division & animosity for the rule of law, he can’t have anymore of mine. My butt won’t be on his bike.” And as comedian Billy Eichner tweeted, “Never thought I’d have to ask this but …. Do Nazis own Crunch?”

American boycotts to reject something politically abhorrent has a long and proud history. As I detailed in my new book Political Brands, many founding fathers and mothers led political boycotts, especially against British tea. The Boston Tea Party was a more destructive manifestation of the same anger that led women from Massachusetts to the Carolinas to refuse to steep tea from the British East India Company, and turn to home grown tea as an alternative. This practice is sometimes known as a “buycott.” As disgruntled gym members learned in real time last week, as they boycotted “Equinox,” they could buycott “Crunch” or other gyms.

SoulCycle and Equinox put out a statement trying to distance themselves from Ross and the political fundraiser controversy since Ross’s company Related Companies only “passively” invests in them and other brands like Pure Yoga, &pizza, Bluestone Lane Coffee and Momofuku. You can listen to the women who started SoulCycle on NPR’s “How I Built This” explaining how they sold it to Equinox. And to be fair, I seriously doubt the original women who founded SoulCycle (Elizabeth Cutler and Julie Rice) would touch a Trump fundraiser with a ten foot poll. But right about now, I bet there are a lot of SoulCycle gym members who wish they still owned SoulCycle instead of Ross and Related Companies.

Mr. Ross, if press reports were accurate, was “freaked out” over the commercial boycotts of his money-making gym brands, but President Trump convinced him that the furor would blow over. The pro-Trump fundraiser happened as planned. Ross has financial investments in Trump beyond this fundraiser including interest in Trump Tower in Manhattan.

Since the boycott didn’t stop the Trump fundraiser, the question can be fairly asked: do boycotts ever work? So this all depends on how one defines “working.” If the point of a boycott is getting a particular action done by a corporation, then they often fail. Corporations often are as hardheaded as people. When pushed, they will often dig in. But boycotts can change corporate behavior from the price of goods (when the price was what boycotters hated) to ending racial segregation—just think of the super effective Montgomery bus boycott.

Sometimes what boycotting prompts isn’t the exact demand boycotters requested, but a related reform is adopted. For example when Target was boycotted for its political spending in 2010 in support of a homophobic Republican candidate, it did not stop politicking, but it did institute more internal controls for its political spending. And then there’s the ripple effect on other businesses, since no one who sells directly to the public wants a boycott, or to be targeted like Target was, other businesses can learn from Target’s experiences and be more thoughtful about their political stances.

If you want to know more about the politics behind the brands you buy, there is an app for that: Goods Unite Us. What will be interesting to see is whether the rejection of the SoulCycle and Equinox brands blows over as Trump predicted or whether this one of times when there is lasting negative halo on SoulCycle and Equinox throughout the 2020 election. And it will be captivating to watch how other companies navigate this political season, especially the publicly traded ones like Target, which also has shareholders they could alienate as well.

Ciara Torres-Spelliscy is a professor at Stetson Law, a fellow at the Brennan Center and the author of Political Brands.

Contributions by guests represent their opinions and not necessarily those of all coalition members.

Image courtesy of tedeytan/ Flickr (CC BY-SA 2.0)

By Lane Hagar

This piece originally appeared on Public Citizen’s website. You can view the original piece here. 

Following the United States Supreme Court decision in Citizens United v. FEC, unprecedented amounts of corporate money flooded the political landscape. Political spending, both campaign and lobby spending, poses a risk for companies because they may attach themselves to a candidate or an issue that is generally unpopular and that might cause consumers to stop purchasing their products. In fact, it has been shown that a company’s reputation with the public correlates directly with its financial success.

Because of the risk to companies’ bottom lines from supporting hot-button issues, investors have a real interest in knowing who and what companies are supporting with their political spending. That’s why investors for years have been bringing shareholder resolutions calling for access to lobbying and campaign expenditures from companies, to guarantee they have the information they need to make wise investments.

When it comes to political spending shareholder resolutions, mutual fund companies are problematic because they tend to own a large portion of the common stock in major corporations and they have generally voted against or abstained from voting for shareholder resolutions calling for this increased transparency. These votes make a big difference. A recent study from fiscal year 2016 showed that “64% of political spending disclosure resolutions at companies where mutual funds owned more than 5% of the stock would have garnered a majority had these companies voted their shares in support of the resolutions.”

BlackRock is the largest mutual fund company in the world holding north of $6.4 trillion in assets. In its company investment guidelines, BlackRock states it does not generally believe it is the “role of shareholders to suggest or approve corporate political activities.” Based on the size of BlackRock and its company investment guidelines, it naturally follows that BlackRock plays a large role in whether these shareholder resolutions succeed or fail.

On May 23, 2019, BlackRock had its own shareholder resolution from investors who want to know more about what their money is funding when it comes to risky political spending. The resolution called for an annual report disclosing the company’s trade association and lobbying expenditures. The proposed annual report would also elaborate on BlackRock’s procedures and guidelines for determining lobbying communications and payments. The exact language of the resolution can be found here.

Though the resolution lost, garnering 21.7 percent of shareholder votes, it was the highest level of support the proposal has received at the company, rising from 20.8 percent in 2018, and less than 20 percent in 2017. While a support level of almost 22 percent might seem low, these numbers can be deceptive. Notably, a significant amount of BlackRock’s voting shares are held by company insiders and large stockholders like the national bank, PNC. It’s often the case that these large stockholders vote with management on shareholder proposals and therefore make it appear as if outside shareholders don’t care about an issue like lobbying disclosure. In reality, 21.7 percent support is quite strong.

While the resolution may have technically failed to garner majority support, the investors and the public are still clamoring for lobbying information to be disclosed by BlackRock. Led by BlackRock’s Big Problem, a group devoted to exposing BlackRock’s role in the global climate crisis, many people protested outside of the shareholder meeting and several protestors were even barred from attending the shareholder meeting, despite having the appropriate paperwork.

BlackRock’s Big Problem has identified several ways in which BlackRock is contributing to the global climate crisis. For example, BlackRock is the number 1 owner of new coal investments worldwide. They also own a significant portion of shares in oil companies looking to drill in nature reserves in Canada and Alaska, like ExxonMobil and ConocoPhillips. Moreover, they own stock in companies working to promote the deforestation of the Amazon and parts of Indonesia. Given the climate crisis and the growing public pressure for our nation’s leaders to take bold action to reverse it, BlackRock potentially lobbying in favor of environmentally unfriendly policies could very well come back to harm the company and reduce the viability of investing in the fund. So, it’s very likely shareholders at BlackRock continue to bring proposals to tackle the lack of information at next year’s meeting as well.

In the meantime, although the shareholder resolution lost at BlackRock, there is still a need to make sure the mutual fund does the right thing in the future and votes in favor of similar shareholder resolutions proposed at companies they hold stock in. Groups such as the Corporate Reform Coalition are devoted to promoting shareholder resolutions that increase transparency on the part of companies and help to give investors the information they need to make sound choices with their hard-earned money.

Learn more at:

https://corporatereformcoalition.org/

Less than two months after the Ethiopian Airlines crash of the Boeing 737 MAX that killed 157 people, Boeing will face its shareholders at its annual meeting on April 29 at the Field Museum in Chicago. One question on shareholders’ minds is whether Boeing’s significant influence over aviation regulators in Washington led to the tragic plane crashes in Ethiopia and Indonesia that killed a total of 346 people and has left Boeing embroiled in a legal and reputational fiasco.

Following the second crash, it was reported that the Federal Aviation Administration (F.A.A.) delegates much of the safety inspections of Boeing’s planes to Boeing engineers. This allowed Boeing to bring planes to market faster, an apparent win for cost savings and the company’s bottom line. However, the flipside is that, without thorough independent oversight, a company like Boeing can cut corners, compromise air safety and ultimately find itself facing the aftermath of two fatal plane crashes.

Boeing’s own shareholders have been asking for oversight and disclosure about the company’s government influence, filing shareholder proposals at the last five annual meetings asking Boeing’s board to disclose the company’s federal and state lobbying expenditures, including all payments to trade association used to lobby. Boeing will face this proposal again at its annual shareholder meeting Monday. Will the board take the sixth request for lobbying disclosure any more seriously in the wake of the recent fatal crashes that wiped out some $27 billion in market value?

While companies are required by law to report their federal lobbying, this information fails to capture many arenas where corporations also lobby. At the state level, it’s nearly impossible to get a full picture of a company’s lobbying activity because the 50 different state disclosure requirements are uneven and the data is hard to digest. Additionally, corporations contribute millions annually to trade associations and social welfare organizations that lobby indirectly on their behalf, and shareholders have zero access to this information unless companies voluntarily disclose it.

The largest lobbying trade association in the U.S. is the Chamber of Commerce, whose immense lobbying influence is directly funded by its member companies. The Chamber spent $95 million on federal lobbying in 2018 and has spent more than $1.5 billion since 1998.  The Chamber pushes a controversial agenda including its consistent opposition to climate change regulation. Boeing is listed as participating in the U.S. Chamber of Commerce Foundation, which is the Chamber of Commerce’s charitable group, but shareholders have no idea if Boeing belongs to the Chamber. They want to know if the company is making payments to the Chamber which are used to lobby on its behalf.

This is not the first time Boeing has faced scrutiny for its lobbying activity. In 2006, Boeing was fined $615 million, the largest known fine of its kind at the time, after the company hired a top Air Force official right after she had helped Boeing secure a deal to build tanker aircraft and lease them to the Air Force. The Air Force official and Boeing’s Chief Financial Officer at the time went to prison, and Boeing’s CEO resigned following the scandal.

Now, 13 years later, shareholders are calling on the company to disclose its procedures and policies for overseeing its lobbying activity as part of the shareholder proposal up for a vote at the annual meeting. It’s unclear at this point whether the proposal will receive a majority support of shareholders. With a more than 19% ownership stake in Boeing Vanguard, BlackRock, and T. Rowe Price are in a position to move the needle on this issue. These mutual fund companies consistently vote against this type of disclosure proposal despite the fact that without transparency, corporate lobbying can present reputational risk that harms shareholder value.

Both the Ethiopian Airlines crash and the Lion Air plane crash in Indonesia are devastating tragedies that illustrate the grave consequences of a reckless regulatory environment where corporations can court government officials to loosen oversight of their activities in pursuit of profit. At a macro level, one could argue it’s time to strengthen the regulatory environment through disclosure, corporate accountability, and regulatory reforms. But at the company level, Boeing needs to begin the hard work of rebuilding its reputation and earning back shareholder trust. Boeing and its board can start this path by embracing accountability and being fully transparent with shareholders, including disclosing its lobbying. Lives have been lost, and Boeing’s reputation is on the line.

On April 29^th, Boeing shareholders will vote on a proposal asking the company to provide a report on its board oversight procedures for lobbying and its federal and state lobbying expenditures, including indirect funding of lobbying through trade associations. Boeing is currently embroiled in a legal and reputational crisis in the wake of the two tragic, fatal crashes of the 737 Max 8 aircraft. With a poll finding 53% of Americans would not want to fly on a 737 Max even after the FAA clears the aircraft for service, it is clear that Boeing’s reputation is damaged and underscores the need for Boeing to embrace accountability and be fully transparent with shareholders, including disclosing its lobbying activity. Companies with a high reputation rank perform better financially than lower ranked companies, and executives find it is much harder to recover from a reputational failure than to build and maintain reputation. [1]

Since 2010, Boeing has spent over $152 million on federal lobbying on issues like aviation safety, FAA funding, bomber programs, tax reform and Iran issues. In 2018, Boeing was the third-highest corporate spender on federal lobbying, spending more than $15 million with nearly 100 lobbyists. At the state level it’s much harder to know exactly how much Boeing spends because state disclosure requirements are uneven and data is hard to digest. To alleviate that problem, Boeing should make this information readily available to its shareholders, which is what investors are asking for in a shareholder resolution that is up for a vote. The proposal is part of an ongoing investor campaign for greater corporate lobbying disclosure.

Boeing sits on the boards of the Business Roundtable and National Association of Manufacturers, which together spent over $32 million on federal lobbying in 2018. Boeing also participates in the U.S. Chamber of Commerce Foundation, which is the Chamber of Commerce’s charitable group, and Chamber events, yet shareholders have no way of knowing if Boeing currently belongs to the Chamber of Commerce. The Chamber spent $94.8 million on federal lobbying in 2018 alone. As a member of at least two of these groups, Boeing should disclose to shareholders exactly how much it pays the trade associations to lobby on its behalf, as involvement with trade associations can pose risks to a company’s reputation.

With more than 19% of the voting power at Boeing, the large mutual fund companies Vanguard, BlackRock and T. Rowe Price are in a position to move the needle on this issue. As the largest managers of retirement savings, mutual funds control significant voting shares in America’s most powerful companies. According to the 2019 Boeing proxy statement, Vanguard beneficially owned 42,082,493 shares (7.4%), T. Rowe Price 33,505,636 shares (5.9%) and BlackRock 32,920,554 shares (5.8%). Yet, Vanguard, T. Rowe Price and BlackRock consistently vote against shareholder proposals that attempt to bring corporate political activity into the light.

In 2018, Vanguard, T. Rowe Price and BlackRock all voted against the shareholder proposal asking Boeing to disclose its lobbying to shareholders. If these three mutual funds had instead voted their combined 105,090,283 shares [2] in favor of the 2018 proposal, it would have received a majority out of the votes cast for and against. [3] A 2017 Public Citizen report illustrates just how detrimental the mutual fund companies’ failure to support political spending disclosure is. In 2016, 64% of political spending disclosure shareholder resolutions at companies where mutual funds own more than 5% of common stock would have received majority support if those mutual funds had voted their shares in support of the resolutions.

Proxy advisor Institutional Shareholder Services has recommended that shareholders vote for the proposal, noting that Boeing “is currently involved in a significant controversy over the FAA’s approval process for its 737 Max 8 aircraft in the wake of two deadly airplane crashes. As a result, the company’s relationship with the FAA and its lobbying efforts will come under closer scrutiny.” [4]

If you own shares directly in Boeing, you should vote in favor of Proposal 4, which asks the company to prepare an annual report on its lobbying activity so that shareholders- the true owners of the company- can assess the associated risk.

If you don’t own stock directly in Boeing –or any other company where these shareholder resolutions are filed this year– but are worried about undisclosed political spending by corporations that is being used to influence our democracy, chances are you can have an impact through your 401(k) instead. If you invest your retirement with Vanguard, BlackRock, Fidelity, or State Street, tell them to change the way they vote so that progress on disclosure can move forward.

Click here to read a shareholder advisory from The Province of Saint Joseph of the Capuchin Order, who filed the lobbying disclosure resolution.

[1] “Reputation Risk,” The Conference Board, 2007, p. 6.

[2] Vanguard and BlackRock ownership figures taken from Boeing 2018 proxy, T. Rowe Price figures from T. Rowe Price 13F for period ended 12/31/17.

[3] The 2018 shareholder proposal for lobbying disclosure received 96,831,907 votes for, 300,353,428 votes against and 11,558,179 votes that were abstentions.

[4] ISS 2019 Boeing Proxy Analysis, April 2, 2019, p. 26.

Last week the investing world lost a giant. John “Jack” Bogle, founder of the Vanguard Group, passed away at the age of 89. He left behind a legacy that changed the way Main Street Americans invest and was never shy about speaking out against excessive Wall Street greed and reckless corporate management.  

In 2016, Bloomberg estimated that Bogle had saved investors more than $500 trillion in fees and trading costs since he founded Vanguard. In addition to re-inventing the way Americans save for retirement with his index fund, Bogle was always outspoken about shareholder rights, putting investors first, and out- of- control Wall Street greed. He railed against corporate CEO’s who make excessively more than their employees and managers who won’t disclose basic things like how the company is planning for climate change or spending its shareholders’ money to influence politics. Bogle went so far as to submit a public comment to the Securities and Exchange Commission (SEC) on the petition for a rulemaking asking the SEC to require corporations to disclose their political spending. He graciously shared his time with the Corporate Reform Coalition to talk about his belief that shareholders should be served first and that if they want disclosure, they should get it.  

Now, coalition partners share their thoughts and reflections on the father of the index fund: 

Jack Bogle’s wisdom, grit, and boldness will be greatly missed. You can read more about his life and work in the Philadelphia Enquirer and watch the interview he did with this coalition on corporate responsibility below. Our thoughts are with his family and friends at this time. 

The Declaration for American Democracy, a broad coalition of 100 national advocacy groups, officially launched last week to kick off its work to respond to the public’s calls for a democracy in which everyone can participate and every voice is heard. The new coalition’s efforts will focus on passing voting rights, ethics, and money- in- politics reforms that voters have been calling for throughout the 2018 midterm election cycle.

This new coalition expands past the organizations that have historically focused on money-in-politics and voting rights issues to include groups like National Security Action, Service Employees International Union (SEIU), NARAL Pro- Choice America, The National LGBTQ Task Force, the National Immigrant Justice Center, and Planned Parenthood. It’s clear why these groups have joined the campaign: the outsize influence of “big money” campaign spenders impacts Congress’ ability to make progress on most issues like safe access to abortion, LGBTQ+ equality, labor rights, immigration reform, health care, climate justice, and gun violence prevention reform.

Americans are witnessing the devastating effects of a presidential administration staffed almost exclusively by corporate insiders. The actions of Trump’s administration are the culmination of the president’s belief that corporations do not need to play by the same rules as regular Americans. If a regular American donates over $200 to a candidate, that information is available on the Federal Election Commission’s website for anyone to find. However, since the Supreme Court’s 2010 decision in Citizens United v. FEC corporations can secretly funnel large amounts of money through groups that don’t disclose their donors without their shareholders, customers, or the public ever knowing.

One reason spending large sums on elections is appealing to wealthy special interests is that it is a way to get their foot in the door with future lawmakers.  By supporting a candidate’s run for office these donors are more likely to build a relationship that leads to better lobbying access down the road. Since regular citizens can’t come close to matching the large donations of corporate interests or super wealthy individuals this leads to lawmakers giving preference to big businesses and the richest “one- percent,” often at the expense of what is best for the voters.

The problem of money in politics is just getting worse. The 2018 midterms are on track to be the most expensive midterm election in history, with more than $1 billion coming from outside sources– meaning entities that are not directly coordinated with the candidates running for office. A particularly problematic subset of these outside spenders are organizations, mostly political nonprofits, that can receive unlimited corporate contributions, spend that money to influence the outcome of the election, while not being required to disclose their donors. Among the reforms being pushed by the Declaration for American Democracy are measures that would shine light on this secret money that is flooding our politics and require corporations to be honest about the money they spend to rig our democracy in their favor.

Playing in politics and policy making—particularly secretly—is not without its consequences for corporations. For example, AT&T came under public scrutiny after it was revealed that the company paid Trump’s attorney Michael Cohen, who has since pleaded guilty to multiple counts of fraud, $600,000 to consult on policy matters without disclosing that information to shareholders. Another example of a company facing public outcry for its political activity was when gun violence prevention advocates from Parkland, Florida staged “die- in” protests at two Publix supermarkets following reports that the company had made political contributions to Florida gubernatorial candidate Adam Putnam, who is an outspoken supporter of the National Rifle Association. Publix released a statement and halted its donations to Putnam following the protests. Although this activity was fully disclosed by Publix, this example illustrates the challenge companies currently face to ensure that their political engagement lines up with their stated corporate values and customer expectations.

The revelation of AT&T’s payments to Michael Cohen followed 5 years of calls from its shareholders to disclose the full extent of the company’s lobbying activity including payments for direct and indirect lobbying and oversight policies. And, shareholders have been calling on other major companies to disclose their political activity for years as well. Shareholder proposals about corporate political activity are one of the most frequently filed proposals every year, with 80 filed in 2018. In response to calls from their shareholders to be more transparent, many companies are voluntarily adopting accountability and transparency policies. Currently, more than half of the S&P 100 companies are disclosing some or all of their election- related contributions with corporate money. If a company chooses to engage in the policy making process for the sake of their business there should be no reason why they would want to hide that critical information from their shareholders and customers. However, these voluntary steps are not enough, these disclosures must be mandatory so that investors can understand potential risks to the company down the road—something called for by the Declaration for American Democracy.

Starting tomorrow, the coalition will begin a new campaign to ensure that Congress prioritizes democracy reforms in 2019. Increasing transparency around corporate engagement in politics is just one part of the Declaration’s plan to restore the balance to our democracy, which will also include protecting the right to vote, empowering small dollar campaign donors, and reducing the influence of wealthy special interests in our elections. While Americans are calling for policies that create an economy that is built for working people, address the impacts of climate change, establish affordable healthcare, and rebuild our infrastructure and schools, the “big money” campaign donor grip on our democracy stymies progress on all of these issues. Therefore, before we can solve the most pressing challenges facing the nation, we must ensure that our democracy works for all.

You can support the work of the Declaration for American Democracy by following it on Facebook and Twitter or check out the campaign website for all the latest updates.

This week, the Supreme Court affirmed a lower court’s decision that certain nonprofit groups that spend money to support or oppose political candidates need to disclose their donors.

The decision comes as negotiators in Congress decide whether to keep a provision in the federal budget that protects corporations that spend secret money in politics from having to be honest about their spending. Last week, the Corporate Reform Coalition sent a letter urging conferees to remove language from the final appropriations deal that stops the Securities and Exchange Commission (SEC) from finalizing a rule requiring public companies to disclose their political spending to shareholders and the public.

Since the U.S. Supreme Court’s decision in Citizens United v. FEC came down in 2010, corporations have been allowed to spend unlimited undisclosed amounts of money to influence American elections and in turn affect policy outcomes. Noting the danger of “dark money” for both American democracy and the shareholders of the companies that are spending in secret, a strong coalition of diverse allies has been working together since the decision to bring corporate spending in politics into the light.

The members of the Corporate Reform Coalition believe the SEC should be allowed to and encouraged to move forward with the rulemaking that would require public companies to disclose to their shareholders and the public how they spend money in politics. This information is material to investors- the constituency the SEC is responsible for protecting.

The Supreme Court’s decision to give corporations the right under the First Amendment to spend unlimited funds from their corporate treasuries to support or attack candidates is troubling for several reasons, and investors concerned about the value of their investments and citizens concerned about the future of American democracy are looking to the SEC to take the action that so many investors have demanded and require disclosure of political spending.

Without direction from the SEC, there are no rules or procedures established in the United States to ensure that shareholders – those who actually own the wealth of corporations – are informed of, or have the right to approve, decisions on spending their money on politics. Investors want more disclosure in order to make sound investment decisions. That is why 1.2 million comments- the most in the agency’s history- have come into the SEC on this rulemaking petition from diverse stakeholders including the founder of Vanguard, John Bogle, five state treasurers, a bi- partisan group of former SEC chairs and commissioners, and investment professionals representing $690 billion in assets.

The rider blocking the SEC from making progress on this rulemaking was inappropriately included in the appropriations process, and the budget should be free of any partisan, poison pill policy riders. Disclosure of a corporation’s political spending is good for business and good for our democracy. Congress should not stop the SEC from finalizing this important disclosure rule.

The Corporate Reform Coalition commends ExxonMobil for announcing today its decision to discontinue its membership in the American Legislative Exchange Council (ALEC).

ALEC is controversial for promoting bills that undermine regulations on climate change, raising the minimum wage and workplace safety, and Exxon’s ALEC membership has drawn media focus in the past. In December, Exxon opposed an ALEC proposal to pressure the Environmental Protection Agency to rescind a federal finding that greenhouse gases are harmful.

Shareholders have been raising concerns about ALEC for years. Since 2011, a coalition of investors have filed more than 300 shareholder proposals asking companies to disclose their federal and state lobbying, trade association payments and support for ALEC. Coalition members have also engaged more than 70 companies that have left ALEC.

At this year’s 2018 Exxon shareholder meeting, the United Steelworkers and 25 co-filers had filed a proposal asking Exxon to disclose its federal and state lobbying, trade association payments and membership in and contributions to ALEC. This was the sixth year in a row that the lobbying disclosure proposal had come to vote at Exxon.

Companies face real risks when their membership in and lobbying through third-parties conflicts with a company’s core values. Corporate reputation is an important component of shareholder value. Without transparency, corporate lobbying involving controversial political positions can harm a company’s reputation and hurt shareholder value.

More and more companies are evaluating the risks of controversial third-party involvement against their commitments to sustainability and corporate responsibility. For example, in 2014, Microsoft ended its ALEC membership, stating that ALEC’s position on climate change “conflicted directly with Microsoft’s values.”  Google also cut its ALEC ties the same year, with Chair Eric Schmidt noting ALEC was “literally lying” about climate change.

Exxon’s decision to leave ALEC underscores the need for companies to monitor their third-party memberships and to provide political spending disclosure and transparency for investors. With the announcement, Exxon joins more than 100 companies that have withdrawn membership and funding for ALEC. Ultimately, the U.S. Securities and Exchange Commission (SEC) should require broad disclosure of companies’ political activity, including payments to organizations like ALEC, through a rulemaking. Unfortunately, Congress has inserted a poison pill rider into the budget that stops the SEC from finalizing a corporate political spending disclosure rulemaking, despite the fact that the petition for this rulemaking has received 1.2 million comments— the most in the agency’s history.

This piece originally appeared on Boston Common Asset Management’s website. You can view the original piece here. 

This proxy season Boston Common joined 74 other investors in filing lobbying disclosure resolutions at 50 companies in the US. We were lead filers on resolutions at American Water Works (40.3%) and Verizon Communications (36.3%) which in May received strong support from shareholders. We filed this resolution because unlike some of its peers including Alliant Energy, Ameren and Atmos Energy, American Water Works is a member of ALEC (American Legislative Exchange Council) which is controversial for promoting bills that undermine regulations to address issues like climate change, workplace safety and workers’ rights. More importantly, the company does not disclose its memberships in and payments to trade associations and other organizations nor its related policies and oversight mechanisms.  In the case of Verizon Communications, we had similar concerns with their membership in ALEC- from which Sprint and T-Mobile have left. Without transparency and accountability, corporate assets can be used to lobby for public policy objectives that can pose reputational risks and could be used to indirectly support positions that are opposed to those of its corporate position.

Boston Common has been part of a coalition of investors since 2011 that has filed over 350 shareholder proposals asking companies to disclose their federal and state lobbying expenditures, trade association payments and payments to tax exempt organizations that write and endorse model legislation. In 2013 Boston Common took this global by engaging half of the FTSE 100 on UK company influence in US politics through their trade associations.  Through Boston Common’s C-Suite engagement with GlaxoSmithKline, we were instrumental in getting the company to revise their oversight and due diligence process for vetting trade associations and ultimately leaving ALEC as more than 100 companies have now done.

During the last two years, we have moved our focus to encouraging companies to promote progressive climate policies through their public policy engagement and trade association memberships. In May, Lauren Compere, Director of Shareowner Engagement spoke at two PRI Climate Forums in Toronto and Montreal to highlight the work we have done on climate lobbying practices in the US and globally.  As part of these events PRI launched a new publication, Converging on Climate Lobbying:  Aligning Corporate Practice with Investor Expectations which features Boston Common’s case study on lobbying engagement with the banking sector under our Banking on a Low Carbon Future initiative. This case study concluded that banks fall short in encouraging trade associations and industry groups to advocate for progressive climate policies, at least in line with their own policies. By not actively engaging with their own trade associations, banks could undermine prospects for business opportunities linked to progressive market regulations and subsidies to support the low-carbon transition.  We do hope, however, to raise the level of progressive climate lobbying by banks across the globe and we aim to enable the market mechanisms and regulations to accelerate the transition to a low-carbon economy.

AT&T is currently embroiled in a legal and reputational fiasco of its own making through the now disclosed $600,000 in payments to President Trump’s personal attorney, Michael Cohen. But shareholders that asked AT&T to improve its lobbying disclosure can only wonder if AT&T’s lack of transparency, disclosure and oversight were the major factors that contributed to this public relations and regulatory nightmare.

Just two weeks ago, on April 27^th, AT&T shareholders actually voted on a proposal asking the company to provide a report on its federal and state lobbying, including board and management oversight. Walden Asset Management and Zevin Asset Management were lead filers of a proposal that also included numerous co-filers.[1]

AT&T Lobbying Disclosure Shareholder Proposal

The proposal asked AT&T to prepare a report, to be updated annually, disclosing:

1. AT&T’s policies and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications
2. the Company’s payments for direct and indirect lobbying, or grassroots lobbying communications, including amounts and recipients
3. disclosure of AT&T’s membership in and payments to tax-exempt organizations that write and endorse model legislation
4. the management’s and Board’s decision making process and oversight for making such lobbying payments.

In its opposition to providing greater transparency and oversight of its lobbying, AT&T made the following claims:

• AT&T “actively participates in the legislative processes in order to protect and further stockholders’ interests by contributing prudently to lobbying organizations that constructively advocate positions which advance the Company’s business objectives and stockholders’ interests.”
• “AT&T is committed to adhering to the highest ethical standards when engaging in any political activities.”
• “The Board is confident that the Company’s lobbying activities are aligned with its stockholders’ long-term interests.”

Despite the AT&T board’s opposition, the proposal received 34.26% of the votes cast. This was the fifth year in a row that the shareholder proposal for lobbying disclosure and oversight had come to vote. AT&T cannot claim it was unaware that many of its shareholders were concerned with the risks from its lobbying. With the disclosure of the Michael Cohen payments, AT&T’s commitment to the highest ethical standards apparently failed.

Failure of the Public Policy and Corporate Reputation Committee?

According to its corporate governance documents, the Public Policy and Corporate Reputation Committee was responsible for oversight. Where was the oversight of this spending? Was the Public Policy and Corporate Reputation Committee asleep on the job?

According to its charter, the Public Policy and Corporate Reputation Committee “shall have the authority to review the corporate policies and practices in furtherance of AT&T’s corporate social responsibility, including public policy issues affecting AT&T, its shareholders, employees, customers and the communities in which it operates; to determine how Company practices impact public expectations; and to provide guidance and perspective to the Board and management on these issues” and “shall have the authority to review AT&T’s management of its brands to ensure that the value and reputation of the Company’s brand names is maintained and enhanced.”

Was the committee doing its job? Public Policy and Corporate Reputation Committee Chair Laura D’Andrea Tyson and committee members Samuel Di Piazza, Jr., Glenn Hutchins, William Kennard, and Cynthia Taylor will likely have some explaining to do to AT&T shareholders as to why their committee oversight failed to catch or prevent this.

Reputation Matters

Corporate reputation is an important component of shareholder value. Companies with a high reputation rank perform better financially than lower ranked companies, and executives find it is much harder to recover from a reputational failure than to build and maintain reputation. Without transparency, corporate lobbying can present reputational risk that harms shareholder value. In the case of AT&T and its hidden payments, AT&T management is getting a crash course in reputational crisis management and AT&T shareholders are getting a close-up view of what happens when a system of proper board oversight and lobbying spending transparency are not in place.  For the proponents of lobbying disclosure, they are left to wonder why AT&T and its board were so opposed disclosure that could have mitigated this unfolding disaster.

[1] Proposal cofilers included: the Benedictine Sisters of Mount St. Scholastica, Dana Investment Advisors, the Grand Rapids Dominicans, the Max and Anna Levinson Foundation, Monasterio De San Benito, the Needmor Fund and the Sisters of the Holy Family, CA.

Following the massive data breach last fall at Equifax that exposed the personal data of as many as 147 million Americans, Equifax’s consumers affected by the breach are still recovering from having their personal information exposed to identity thieves. As the company holds its first annual shareholder meeting since the breach, all eyes are on how the company will clean up its act and be more accountable to its investors and the public. One arena where the company refuses to be held accountable is disclosing its political spending, which is why shareholders have filed a resolution asking for more details about how the company attempts to influence elections.

In 2017, Equifax spent more than $1 million lobbying the federal government, and while it’s important to track a company’s lobbying activity to determine how it may be attempting to directly influence politicians, lobbying is only one side of the influence coin. The other side is election spending, which is often used as a foot in the door for companies or special interests looking to curry favor with a politician. By supporting a candidate’s run for office wealthy special interests are more likely to build a relationship that leads to better lobbying access down the road.

Just last week, Mick Mulvaney, who was formerly a member of Congress and who is now head of the Office of Management and Budget (OMB) and acting director of the Consumer Financial Protection Bureau (CFPB), illustrated this pay- to- play dynamic in American politics. Mulvaney said to a room full of attendees at the American Bankers Association conference what America knows in its gut, but that politicians have been careful to avoid admitting directly: “If you’re a lobbyist who never gave us money I didn’t talk to you. If you’re a lobbyist who gave us money I might talk to you.”

Given these remarks indicating that access to Mulvaney’s office was essentially for sale, and the hot water that Equifax is in, it’s important to note thatEquifax had previously donated to Mulvaney’s campaign for Congress.  Since ascending to the role of CFPB acting director, the former South Carolina Congressman has been attempting to dismantle the protections put in place for consumers when the agency was created in the aftermath of the 2008 financial crash. One resource that Mulvaney has been particularly keen on eliminating is the consumer complaint database, which tallies how many complaints have come in on a particular financial company. The company with the most complaints in this database is Equifax.

While many of the complaints have come in since the data breach, Equifax has been lobbying on the database since 2014. In that year, the CFPB proposed publishing the consumer narratives that correspond with the complaints and Equifax began lobbying against that proposal. In 2016, while still in Congress, Representative Mulvaney introduced a bill that would restrict the CFBP’s efforts to make the consumer complaint narratives public. That year, records show that Equifax lobbied the CFPB on the database and the U.S. House of Representatives on Mulvaney’s bill (of which he was the sole sponsor). Since Mulvaney left Congress and took up his duel posts at the CFPB and OMB, Equifax has lobbied both agencies.

One could dismiss the story of Equifax and Mulvaney as one of circumstantial evidence, but the story of corruption in America is not typically one of direct bribes, but one of webs of influence spun between companies, trade associations, and their lobbyists where financial links are hard to trace and conversations impossible to prove. What is sure is that corporate executives are getting what they want out of the process- higher profits and less accountability.

Given the power that election spending has to get your foot in the door with elected officials, it’s an affront to our democracy that a lot of election spending is secret. Because of the lobbying disclosure laws that are already on the books we have some picture of how companies attempt to influence policy, but election spending can be much harder to track, especially when it goes through secretive conduits like the trade associations or politically active nonprofits. Companies and special interests can donate to trade associations or politically active nonprofits that spend money to influence elections and those donations do not need to be disclosed. Equifax in particular claims that it fully discloses, but will not share whether it makes payments to trade associations or politically active nonprofits to influence elections on the company’s behalf. It’s time for the company to take responsibility and support shareholders calling for increased transparency and accountability. If you are a shareholder in Equifax, take action and vote in favor of the political spending disclosure proposal. If you’re a consumer, it’s critically important to raise your voice and call on Equifax to be transparent. Even more importantly, in order for American democracy to survive, the cycle of secret influence and pay- to- play politics must come to an end.

Learn more about Mick Mulvaney and the companies at the top of the CFPB consumer complaint database from coalition partner, Public Citizen. Read the full report here. 

Last week, the drug company giant Pfizer faced a challenge from its shareholders to the company’s method of wielding secret influence over public policy. Shareholders filed a resolution that went up for a vote at the company’s annual meeting on Thursday calling for a full report on all of Pfizer’s lobbying activity, including payments to trade associations that lobby on the company’s behalf. Preliminary reports indicate that the proposal received 33.3 percent support from shareholders, which is up from 30.7 percent in 2016 when this same proposal was last on the ballot. This is a strong showing of support given that the major mutual fund companies who control a significant number of voting shares typically don’t support these proposals.

As the opioid crisis in America has been building over the last two decades, the pharmaceutical industry has been profiting off of the epidemic and spending millions of dollars to maintain its power. Fed up with companies like Pfizer acting without accountability, shareholders are calling for the company to be fully honest about how it engages in politics.

Taking the fight straight to the company is an approach that has been gaining attention under the Trump administration, as consumers express their dissatisfaction with corporate greed through boycotts and social media campaigns. This builds on efforts by shareholders at major companies who have been calling for increased transparency and disclosure from public companies for years.

The lobbying disclosure proposal is part of an ongoing investor campaign for greater corporate political spending disclosure. In 2018, investors filed proposals at 50 companies asking for lobbying reports that include federal and state lobbying payments, payments to trade associations used for lobbying, and payments to any tax-exempt organization that writes and endorses model legislation, such as the American Legislative Exchange Council (ALEC).

Shareholders are seeking a full picture of Pfizer’s lobbying activity because it’s impossible to know the full extent of the company’s influence without complete disclosure. However, what we do know about the company’s engagement in politics is staggering. Pfizer regularly ranks as a top lobbying spender among drug makers in Washington. In 2016, Pfizer had as many as 284 lobbyists registered to lobby in 48 states. According to a recent study that measured state lobbying by intensity (normalized by calculating expenditures per $1 million of revenue), Pfizer came in as the second highest spender.

The lack of disclosure around Pfizer’s state lobbying is particularly troubling given its ability to influence drug pricing ballot measures, such as those in California and Ohio. In 2016, Pfizer spent more than $9 million to defeat a drug pricing ballot measure in California that would have made drugs more affordable and accessible in the state. In Ohio, industry crushed an almost identical ballot measure, and hid the donations by funneling them through a limited liability corporation (LLC). If Pfizer disclosed all of its lobbying activity directly to shareholders they would have been able to see whether the company spent the same or more to defeat the ballot measure in Ohio.

Pfizer’s shareholders are also seeking disclosure of the payments that the company makes to trade associations like Pharmaceutical Research and Manufacturers of America (PhRMA), the U.S. Chamber of Commerce, and other tax-exempt organizations, such as ALEC. Despite claiming to be non-partisan, both ALEC and the Chamber work to advance a corporate-friendly agenda designed to appeal to members of the Republican Party who receive far more campaign contributions from industry than Democrats.

Of Pfizer’s non-disclosing trade associations, the Healthcare Distribution Alliance (HDA) has been featured in press reports for its role in helping to pass legislation that weakened the Drug Enforcement Agency’s ability to stop suspicious drug shipments by distributors, thereby exacerbating the opioid crisis. While Pfizer does not disclose its membership in HDA directly, we know they are engaged from a quick search of HDA’s website that reveals Pfizer as “manufacturer” member.

Pfizer’s shareholders and the public deserve to have a full picture of the company’s attempts to maintain the damaging status quo and the opportunity to assess what risks that poses to both the corporation’s value and public health. Americans deserve to fully understand what policy is secretly being written by the drug industry.

If Pfizer didn’t want to keep its role in the opioid epidemic and the money it has spent to maintain the status quo secret, then it would disclose its payments to shareholders. Given what’s we already understand about Pfizer’s significant influence over policy decisions and its role in the national opioid epidemic, it’s time for Pfizer to fully disclose to give us the rest of the picture.

Learn more from experts at coalition partner, Public Citizen

By Craig Sandler, Program Associate for Public Citizen’s Congress Watch division

Corporations seeking to change the public policy landscape to benefit their own bottom lines is nothing new. But since Citizens United opened the door to unlimited spending to influence elections, corporate power over our democracy has been amplified to unprecedented levels. Because non-profits and trade associations are able to spend freely to influence campaigns but are not required to disclose their donors, we have witnessed extensive clandestine political lobbying activity and spending of undisclosed sums of secret money to influence our democracy.

Corporations are confident that by doing the one-two step of donating to an organization that will in turn influence elections, it allows them to cloak their spending under the cover of shadows. That way, the public cannot see their attempts to influence public policy and they will face no consequences for those efforts if they are supporting candidates and issues that do not resonate with their customers.

For the health of our democracy, it’s time we dispel those shadows that hide who is influencing our elections and otherwise affecting policy decisions. Despite the more than 1.2 million public comments that have been submitted to the U.S. Securities and Exchange Commission (SEC) calling for a requirement to be disclosed, there currently exists a provision blocking the SEC from finalizing such a rule that could only be removed by Congress. Because this extremely corporate-friendly administration is unlikely to make companies list where they are pouring money to influence elections and policy outcomes, and because corporations are not exactly known for their selflessness, the best way to pressure corporations into disclosing their political spending and lobbying is for their own shareholders to use their collective power to make disclosure a reality.

Public Citizen and the Corporate Reform Coalition (CRC), a partnership of dozens of national advocacy groups, investors, and unions, work to ensure that the public understands the many ways corporations are attempting to influence policy and elections. By encouraging shareholders at S&P 500 corporations to vote for proposals that call for more disclosure of election spending and lobbying, we are closer to our goal of ensuring that public is informed about how corporations’ spending impacts elections and the legislative process.

Each year, publically traded companies are required by federal law to hold a meeting for all of their investors. At these meetings, shareholders can vote on changes to companies’ corporate governance, self-created rules that outline how the company should behave, including those related to disclosure of political spending and lobbying efforts. By encouraging shareholders to vote in favor of disclosure resolutions at these meetings, we can ensure that particular corporations’ influence in our democracy is brought out into the open for the public to see. The work of the CRC builds on efforts by shareholders at major companies who have been calling for increased transparency and disclosure from public companies for years.

Though political and lobby spending disclosure resolutions will be voted on by shareholders at a number of annual meetings, the CRC has chosen to highlight resolutions brought by shareholders of four major corporations: Pfizer, Equifax, ExxonMobil, and Facebook. All of these companies have significant incentives to increase their disclosure policies to give their investors and customers a better idea of where their money will be spent.

Pfizer, Equifax, and Facebook were all recently named among the most hated companies that Americans have to deal with every day. Each has its reputation on the line as it wrestles with a major scandal: Pfizer’s role in the national opioid epidemic; Equifax’s massive data breach; and Facebook’s shady practices of collecting and selling users’ personal data to advertisers. ExxonMobil, likewise, deals with the constant PR liability of representing Big Oil and the fossil fuel industry’s anti-environment agenda, and a number of high-profile oil spills from recent years. In short, all of these companies could stand to benefit from reestablishing the public’s trust in their brand.

Not only is increased transparency good for attempting to repair these companies’ public image, it can be good for their bottom lines too. For one, American consumers are paying increasing attention to the ethical behavior of the companies they patronize. A number of recent high-profile boycotts and social media campaigns continue to make headlines and have negatively impacted profits. Corporations can avoid taking these hits to their bottom lines by being upfront about their political activity, so that they do not risk a backlash when secret political efforts are discovered. These customer boycotts and other bad press are important considerations for investors, and are a main point raised by shareholders in support of increased transparency resolutions.

One roadblock to increased transparency at the company level are mutual fund companies like Vanguard and BlackRock. These mutual fund companies hold significant ownership stakes in public companies and therefore wield incredible voting power over company policy changes. However, Vanguard in particular almost always votes against or abstains from voting for shareholder proposals calling for increased political spending and lobbying disclosure. Especially since it characterizes itself as looking out for its clients first and foremost, Vanguard has a responsibility to the families whose retirement savings it manages to ensure that the corporations where their money is invested are practicing sound corporate governance and risk management. If Vanguard were to change its voting habits, we would see a dramatic increase in overall support for these proposals.

Corporations are not going to open themselves up to public scrutiny out of the goodness of their hearts. The SEC could finalize a rule requiring corporate disclosure of political activity, but only after Congress has removed the current provision blocking the SEC from finalizing such a rule. Both of these possibilities are extremely unlikely under the current Congress and the Trump administration. Until the winds have shifted in D.C., the best way to tackle the excessive power corporations have over our democracy is for shareholders to force transparency and accountability on a company-by-company basis. Even if you’re not a shareholder at one of these companies, with your help, we can win the fight for more transparency of corporate political activity. Find ways you can participate in the campaign here.

Cross-posted on CitizenVox

For most companies, picking a side in a partisan fight is perilous because it can alienate customers in the process. When businessman Donald J. Trump entered the presidential race in 2015, no one knew how his political career would impact his commercial brand. The results so far, one year into his presidency, have been mixed.

On one hand, the presidential campaign and the presidency have offered multiple opportunities for product placement and free advertising for the Trump commercial brand. Notably, on nearly a weekly basis, the President visits one of his Trump-branded properties, typically to golf.[1] This brings reminders of his golf courses, resorts and condominiums to a world-wide audience of potential customers.

On the other hand, Mr. Trump’s candidacy and presidency have been marred with controversy including an on-going criminal probe into his 2016 campaign, which could expand into his business dealings, his family, and his associates.  Already, Special Counsel Robert Mueller has indicted President Trump’s campaign manager Paul Manafort and received a guilty plea from President Trump’s National Security Adviser Michael Flynn for lying to the FBI.[2]

Another source of controversy for the new administration has been the President’s perceived racial insensitivities, including most famously, his reaction to neo-Nazis marching in Charlottesville, Virginia, in the late summer of 2017. This bizarre episode led many business leaders to resign from White House business councils in protest.[3]

And meanwhile, the strength of the Trump commercial brand seems to be largely on the decline. There are several ways to document this decline. First, the brand is the subject of a large and on- going boycott. Moreover, former business partners of the Trump Organization have severed ties. There are efforts to remove Trump’s name from buildings around the world. And there have been rebranding efforts to move away from the Trump name by the Trump Organization itself. Further evidence of the brand’s diminishment includes the fact that the Trump Organization tumbled to 40 on Crain’s New York’s list of the largest privately held companies in 2017 from number 3 in 2016.[4]

But the story is complicated. For one, Trump branding is on everything from water, to ties, to wine, to golf resorts. While the consumer goods may be particularly vulnerable to boycotts, other Trump services like hotel rooms may still fetch a premium. For example, brand tracking in late 2017 found the Trump hotels and golf courses doing well while at the same time Trump branded ties, watches and clothing were losing ground.[5] And without more transparency from the Trump Organization, it is impossible for an outsider to tell for sure whether the Trump commercial brand overall is doing better or worse now than the day before he declared his candidacy in 2015.

But there are interesting lessons to learn from the two-year presidential campaign and the first year of the Trump Presidency.  First, Trump’s commercial brand is an on-going Achilles heel for Trump the man because those who are disenchanted with his politics can focus that rage at his commercial interests. Second, while the limelight that follows the presidency does give his commercial brand a large platform, that attention can also bring damning criticism.  And with an eponymous brand, critiques of the man may end up devaluing the associated commercial brand as well.

Finally, a reason that the Trump commercial brand is such an easy target for boycotts (and other forms of rejection) is that the Trumps have not hidden their commercial role in promoting Mr. Trump’s political ambitions. This is dissimilar from many companies’ approaches to political involvement, which tends to be more circumspect and even purposefully hidden. However, as counter-intuitive this may seem, from an accountability standpoint, the brazenness of the Trumps makes it easier for voters and consumers to react to their behavior. This is actually preferable to the trend of companies’ hiding their political actions through opaque front groups, which leave the public without a means of objecting.  If businesses are going to get involved in politics, they should at least be honest about the behavior so that their constituencies can take their politicking into account.

This post was pulled from the new report ‘Boycotting the President’s Brand: Commercial Reactions to Trump’ by Professor Ciara Torres- Spelliscy. To read the full report, click here or view it on our Reports page. 

[1] Jessica Estepa, President Trump has visited a Trump property on 34 out of his 45 weekends in office, USA Today (Updated Nov. 22, 2017 6:27 p.m.) (“The president has visited at least one of his properties on 34 out of his 45 weekends in office (including this one).”).

[2] Jeremy Herb, Katelyn Polantz, Evan Perez & Marshall Cohen, Flynn pleads guilty to lying to FBI, is cooperating with Mueller, CNN (Updated Dec. 1, 2017).

[3] Ben Jacobs, Trump disbands business councils as CEOs flee after Charlottesville remarks, The Guardian (Aug. 16, 2017).

[4] Aaron Elstein, The Trump Organization sees fortunes fall, Why the firm saw itself drop on our list of the largest privately held companies, Crain’s New York (Updated Dec. 15, 2017).

[5] Cory Schouten, The Trump brand’s shrinking power, MoneyWatch (Oct. 5, 2017, 5:30 AM).

By: Rachel Curley, Democracy Associate at Public Citizen’s Congress Watch division

At its recent meeting of shareholders, Vanguard heard from Americans concerned about the mutual fund giant’s role in enabling secret corporate spending in our elections.

This was the first Vanguard shareholder meeting since the Supreme Court’s 2011 Citizens United decision that cracked open companies’ abilities to secretly pour money into our politics. This, therefore, was a very important moment to tell Vanguard that it has a critical role to play in bringing transparency to our democracy on top of the responsibility it has to thoughtfully manage its clients’ investments.

Vanguard caught wind of the petition in the press so they knew that we would be delivering it at the shareholder meeting. When I arrived at the meeting in Scottsdale I was taken to meet with the Assistant Secretary of the funds in a small conference room away from the main meeting space. I handed over the printed petitions and explained why so many Americans, including Vanguard clients, are calling on the company to support disclosure. Vanguard assured me that the petitions would be delivered to the investment stewardship team who handles the company’s corporate voting.

In response to a shareholder who asked about Vanguard’s proxy voting record on climate risk disclosure during the meeting, Vanguard CEO Bill McNabb highlighted the company’s Investment Stewardship Report that was released this summer as well as Vanguard’s increased engagements with companies on ESG issues. This acknowledgement from the company’s CEO at the meeting, in addition to the company’s willingness to receive our petition is an encouraging sign that it takes its responsibility to engage with the companies where its clients’ money is invested seriously. However, in his response to the presentation by the proponent for the shareholder proposal on divesting from companies that enable genocide McNabb argued that it is not Vanguard’s role to attempt to change the companies where it is invested. This is counter to the movement on investment stewardship and to Vanguard’s motto of “do the right thing,” and the company needs to realize that it cannot sit passively by on any issue. Calls for Vanguard to change the way it votes its proxies on climate risk disclosure, political spending and lobbying disclosure, and all other ESG issues were echoed by Walden Asset Management at the very end of the meeting.

The more than 27,500 petitions calling on Vanguard to support political spending and lobbying disclosure were collected by Corporate Reform Coalition partners the Sierra Club and Public Citizen, among others.

“In order to ensure every American has access to clean air, clean water, and a safe community, we must have a clean democracy free of secret money polluting our elections, said Courtney Hight, the Director of the Democracy Program at the Sierra Club. “The Sierra Club calls on Vanguard and will continue to call on any group that refuses to free our democracy from the stranglehold of corporate influence.”

“What Vanguard needs to realize is that with great power comes great responsibility,” said Lisa Gilbert, Vice President of Legislative Affairs at Public Citizen. “The mutual fund company has a responsibility to its clients to ensure that public companies it invest in are not using company money to influence politics without making that information available to shareholders.”

Since the detrimental Citizens United decision, which opened up the flood gates for corporations to pour secret money into our elections, shareholders have been putting forth resolutions at major companies asking their companies to be honest about money they spend to influence politics. While more than half of the S&P 100 companies have moved to disclose because of this pressure the resolutions themselves rarely get majority votes. This is because major mutual fund companies like Vanguard control a large percent of voting shares and choose not to use them to support this kind of disclosure.

Vanguard’s voting record on political spending and lobbying disclosure proposals is abysmal. It almost always votes against or abstains from voting for these proposals. A recent Public Citizen report found that if Vanguard alone had changed its voting in 2016 to support the political spending disclosure proposals, overall support for the proposals would have increased 2.48 to 13.68 percentage points and proposals at NextEra Energy Inc. and NRG Energy Inc. would have reached majority support.

Vanguard claims to act solely in its clients’ best interest and to be guided by a simple statement: “Do the right thing.” The recent shareholder meeting was a chance for the company to hear from its investors: the Americans who trust Vanguard with their retirement savings and who are also the company’s shareholders. Vanguard should listen to the over 27,500 petition signers plus the 65,000 Americans who have written to the company in the past and change the way they vote. As the second largest mutual fund in the country and an entity responsible for the retirement savings of so many Americans, Vanguard should “do the right thing” and support political spending and lobbying disclosure.

To read more about the Coalition’s Vanguard work, including an interview supporting political spending disclosure at public companies with Vanguard’s founder, Jack Bogle, visit our campaigns page: www.corporatereformcoalition.org/campaigns

Monday, FedEx is holding its annual shareholder meeting. Since 2010, FedEx has spent over $106 million on federal lobbying on issues like corporate taxes, postal reform, trade agreements and trucking regulations. At the state level it’s much harder to know exactly how much FedEx spends because disclosure requirements at the state level are uneven and data is hard to digest. To alleviate that problem, the company should make this information readily available to its shareholders, which is what investors are asking for in a shareholder resolution that is up for a vote. The proposal is part of an ongoing investor campaign for greater corporate political spending disclosure

FedEx sits on the board of the U.S. Chamber of Commerce. The Chamber spent over $100 million on federal lobbying in 2016 alone. As a member of the Chamber, FedEx should disclose to shareholders exactly how much it pays the trade association to lobby on the company’s behalf, as association with the Chamber can pose a risk to the company’s reputation. For example, FedEx notes its commitment to environmental sustainability on its website and its awards and recognitions for greenest companies, commercial solar power users, eco-airlines and climate innovation index, yet the Chamber has sued to block the EPA Clean Power Plan to address climate change.

If you own shares directly in FedEx you should vote in favor of stockholder proposal #7, which asks the company to prepare an annual report on its lobbying activity so that shareholders- the true owners of the company- can assess the associated risk.

If you don’t own stock directly in FedEx, (or any other company where these types of shareholder resolutions are filed this year), but are worried about the secret way corporations are attempting to influence our democracy, chances are you can have an impact through your 401(k) instead.

Vanguard, BlackRock and the other large mutual fund companies are in a position to move the needle on this issue. As the largest managers of retirement savings these mutual fund giants control significant voting shares in America’s most powerful companies. Vanguard, for example, controls 17,997,225 shares, or 6.73% of FedEx, and BlackRock controls 14,823,307 shares, or 5.54% of FedEx. Yet, Vanguard and BlackRock consistently vote against shareholder proposals that attempt to bring corporate political activity into the light. In 2016, Vanguard abstained on the shareholder proposal asking FedEx to disclose its lobbying to shareholders, which counted as a vote against, and BlackRock voted against. A recent Public Citizen report illustrates just how detrimental the mutual fund companies’ decisions to support corporate executives on these issues are. In 2016, 64% of political spending disclosure shareholder resolutions at companies where mutual funds own more than 5% of common stock would have received majority support if those mutual funds had voted their shares in support of the resolutions. If you invest your retirement through Vanguard, tell the company to change the way it votes so that progress on disclosure can move forward.

Click here to read more from the Teamsters, who filed the lobbying disclosure resolution at FedEx this year.

Click here to read the full investor case for disclosure.

Click here to read the exempt solicitation.

Re-posted from the Center for Political Accountability

With prospects for action nil by Congress and the Trump administration, going outside the political system through a process known as “private ordering” is the only route to campaign finance reform and reining in the power and influence of corporate political money. That’s the takeaway from a forthcoming article — “Campaign Finance Reform without Law?” —  by Robert Yablon, a University of Wisconsin Law professor, in the Iowa Law Review.

Prof. Yablon lays out an alternative approach that, he says, is having an impact. Indeed, it is making political disclosure and accountability the norm for S&P 500 companies. This is important because corporations are the dominant funders of congressional and down-ballot races.

Yablon challenges reliance on legislation and regulation to address big money in elections. “The presumption that reform requires government action overlooks potential private correctives,” he writes. “Whether the aim is to reduce big money, dilute big money’s influence, or counter abuses associated with big money, this Article suggests that private ordering has an important role to play.” Indeed, he says later in the paper, “… if government action is not forthcoming, then private reform may be the only game in town.”

The paper mentions “Advocacy groups like the Center for Political Accountability, for example, [that] have led a coordinated push for greater transparency and accountability in corporate political spending through shareholder activism.”

While Yablon acknowledges the constraints faced by private ordering, he concludes, “Private interventions are already having at least a modest ameliorative effect on big money’s electoral influence and entrepreneurial reformers could be well positioned to make further headway.”

Yablon brings expert credentials to the debate. He studied as a Rhodes Scholar, and he clerked for U.S. Supreme Court Justices Sonia Sotomayor and Ruth Bader Ginsburg.

This post will be updated with a link to Professor Yablon’s full article when it becomes available. 

With the political deck stacked in favor of big business interests it’s important to use what corporate levers we can.

By: Ron Freund, CFS
Director, Corporate Responsibility, Social Equity Group

Current Political Climate

Jay Clayton’s confirmation as SEC Chair is just the latest in the list of Trump appointments designed to undermine the very agency they will head. He follows in the wake of Betsy Devos, Tom Price and Scott Pruitt. It’s important to hold members of Congress who supported his confirmation accountable for putting a Wall Street insider in charge of regulating Wall Street.

With the battle over the Supreme Court confirmation over, Americans now have a government in which all 3 branches are controlled by right or far right forces- sharing similar ideological beliefs and corporate backing. And, in 2018, the country faces another challenge as many progressive allies will be vulnerable to losing their seats in the Senate. All 3 branches could thus be dominated by a rightist agenda by early 2019. A major assault on regulation and legislation protecting the environment, civil and voting rights, the workplace, the First Amendment, and campaign reform is in place. Without a strategy that has some chance of success, we will drift into a one party state.

Strategies of Opposition and Advocacy

• Work with Congress on disclosure goals. It is important to continue working closely with members of Congress on both sides of the aisle who share the goal of greater disclosure of corporate political spending and lobbying.
• Reach across the aisle to those Republican members of Congress who either share the goal of greater disclosure of corporate political spending and lobbying, or who feel vulnerable to challenges from Democrats in upcoming elections. We only need 3 Red Senators if Democrats are united on any given issue.
• Forge stronger alliances with progressive corporations and investor groups. The old paradigm of democratic Capitalism whereby government acts as a check on corporate power has been upended. It is now up to progressive financial forces to act as a check on Government. This means increasing engagement with corporations that have demonstrated a commitment to to a progressive agenda. This includes those that have opposed the Trump agenda on climate change, human rights, and political spending/lobbying disclosure.
• Replace and influence the current power structure at the Chamber of Commerce. As one of the largest lobbying entities in the country, the Chamber uses its power to push policies which contradict the views of many of its largest members. We need to work with companies willing to challenge the current leadership. We should look at the model of how the NRA was taken over by the “pro-gun” lobby in the 1970s, completely transforming that organization. We could do the same but this will require a long game and a new strategy.
• Enlist corporate and investor allies to continue direct pressure on other corporations through dialogue and shareholder action to disclose and adopt strong limits on political contributions.
• Continue to strengthen the work at the state and local level in blue and red states. Utilizing grassroots capacity within coalitions and local-national partnerships is important to activate Americans across the country to speak out about the importance of corporate political spending disclosure and hold their members of Congress accountable on the issue.

In this challenging political climate it is critical to use our limited energy to focus on strategies which can be effective and lasting. It is more urgent than ever to strengthen our democratic process and protect the planet from damaging  long term consequences.

By: Grace Aylmer & Rachel Curley

Re-posted from Daily Kos. 

As President Trump pulls America out of the Paris climate agreement and Congress threatens to take health care away from 22 million people, it is becoming more and more clear that conservatives are making policy choices intended to scratch the backs of big companies and the wealthy few rather than protect regular Americans. Beyond the usual pandering to corporate interests, some conservatives are taking this a step further and using the critical federal budget process to push dangerous policy, sneaking in additional “poison pill riders” to this must pass funding legislation.

Recently, the House Appropriations subcommittee on Financial Services and General Government released its budget draft, which includes a harmful policy rider that stops the Securities and Exchange Commission (SEC) from working on or finalizing a rule that would require corporations to tell shareholders (the owners of their companies) how they spend money to influence politics.

Corporate attempts to influence our politics are nothing new, but since the Supreme Court’s decision in Citizens United corporations are allowed to spend unlimited amounts of money to influence the outcomes of our elections. One way they do this is through trade associations like the National Restaurant Association, the Business Roundtable, and the U.S. Chamber of Commerce. Many of the country’s largest companies do not disclose what they pay to their trade associations that both spend money directly on elections, and spend money lobbying on behalf of their corporate members.

The use of this secret channel is particularly troublesome because these trade associations oftentimes have a smoke and mirrors approach to policy. The Chamber, the nation’s largest business lobby, claims to work in the interests of small businesses when in reality it the Chamber uses its $275 million budget to push the biggest corporate agendas on issues almost every issue from the environment to worker safety to financial regulation to healthcare. Similarly, the Chamber claims to be bipartisan and yet it spent $29 million in election spending exclusively benefiting Republican candidates in 2016.

Many of the companies funding the Chamber take public stances in opposition to the Chamber’s, but the lack of information about the Chamber’s monetary gifts provides those companies with political cover. Disney, for instance, has committed to fighting climate change by pledging to reduce its net greenhouse gas emissions by 50 percent by 2020. It signed the American Business Act on Climate Pledge in support of the Paris climate agreement and took the Caring for Climate pledge as part of the United Nations Global Compact. Unfortunately, however, Disney also funds the Chamber, which actively lobbies against climate-friendly policies and funded the very study that President Trump cited in his rational for exiting the Paris Agreement. This secret Chamber funding led shareholders to file a resolution at Disney this spring asking the company to disclose its payments to the Chamber in addition to any other money it spends on lobbying.

Unfortunately, Disney isn’t the only company whose alleged corporate values are at odds with the aggressive work of the Chamber. Shareholders also filed the same lobbying disclosure resolution at UnitedHealth Group this year citing the company’s undisclosed funding of the Chamber. In just 15 months between 2009 and 2010, the Chamber spent more than $102 million dollars opposing the ACA. This money was funneled to the Chamber by the big health insurers. Among the companies to supplythe funding was UnitedHealth, who unlike its peers, Aetna, Anthem, CIGNA and Humana, does not disclose trade association memberships.

In Citizens United the Supreme Court made the assumption that disclosure would be the norm, allowing shareholders and customers to “hold corporations and elected officials accountable for their positions and supporters.” In reality, many companies still spend money on elections and on lobbying in secret, and shareholders deserve to access to details about this spending. In an era where corporate donors dominate our elections and our President is overly amenable to the Chamber’s corporate agenda, shareholders and the American public need all the transparency they can get. If Republicans have their way, investors will be kept in the dark and trade associations will continue to push for Big Business policies at the expense of everyday Americans.

Grace Aylmer is Campaign Coordinator for Public Citizen’s U.S. Chamber Watch and Rachel Curley is Democracy Associate with Public Citizen’s Congress Watch.