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 With the announcement, Exxon joins more than 100 companies that have withdrawn membership and funding for ALEC.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.