Even in a pandemic, shareholders are laser focused on shining a light on corporations engaging in politics
By: Zachary Brown
Federal response to the COVID-19 crisis has been temperamental to say the least (read: any piece of news in the last three months). While millions of Americans have lost their jobs during the pandemic, Congress has continued to use taxpayer funds to bailout the largest corporations in America. Adding more fuel to the fire, these no strings attached federal bailouts allow companies to not only profit from the pandemic, but also to engage in all of their same favorite pre-COVID behaviors: allowing corporations across America to escape economic failure but continue ethical bankruptcy.
Since the Supreme Court’s decision in Citizens United, companies have been able to influence our politics behind the scenes without any real substantial check on their activities. With corporations being given unchecked access to our political system, it should come as no surprise that it’s become even more difficult to hold government officials accountable. Businesses have effectively paid off the babysitter and eat as much candy as they want—operating free from restraint or meaningful oversight. Even worse, corporations are not even required to disclose their political activity to their own shareholders. And somehow even worse than that, the Securities and Exchange Commission has recently put forth measures to make it more difficult for investors to increase the political activity disclosure of their companies, silencing people from exercising any type of progressive influence over the corporations they choose to invest in. Not exactly a seat at the table, right?
However, new recent trends of shareholder engagement have provided hope for the future. Every year, shareholders submit resolutions for a vote at a corporation’s annual shareholder meeting, signaling that shareholders want to have an active role in the reformation of a corporation’s policies, actions, and structure to be more equitable and transparent. If the vote tally on a shareholder resolution reaches majority, a corporation is more likely to reform their policies and procedures to appease their shareholders (yes, these corporations have to be told to do the right thing).
Even in the midst of a news cycle that seemingly won’t stop, 2020 was quite the year for shareholder meetings. While the interests expressed in shareholder resolutions can run the wide gambit from executive compensation all the way to human rights and climate issues, it is highly encouraging that disclosure of corporate political activity was one of the most frequently filed shareholder proposals this year, with over 80 proposals filed. And the results are even better! This year, there were majority votes on election spending and lobbying disclosure proposals at Alaska Air, Chevron, Centene, Illumina, JB Hunt Transport Services, and Western Union. While corporations would love to keep their political spending a tight-lipped secret, they cannot ignore the growing calls from investors to change their actions. These shareholder votes show that the people are ready to act on this issue and want to see more transparency from our corporations, turning a bright light on some of the dark activities that companies have been engaged in for decades.
The tension between what some corporate managers want to keep hidden and the honesty shareholders seek reaches a new stress point when considering the clear hypocrisy a corporation’s actions can reveal during the COVID-19 crisis. Let’s use our imaginations. Picture Company X, skipping gleefully along with their fresh corporate bailout funds. Company X says all the right things about “coming together during these unprecedented times” and “building a new America together as a family” — all with a grin able to be seen from space. But where is Company X bouncing towards with their treasure chest of taxpayer dollars? The U.S. Chamber of Commerce. While you may not have many specific gripes with your local Chamber of Commerce, the U.S. Chamber of Commerce is far more openly toxic — actively pushing an agenda that is dangerous for workers, consumers, and the environment. That’s right everyone, Company X is actively supporting the very same organization that lobbies against hazard pay and wants to make it impossible to sue your employer if you contract COVID on the job (ridiculous!) Allowing corporations to smile in our faces one second while stabbing us in the back with their political spending the next is inexcusable whether we are dealing with a national pandemic or not.
While the progress made through this last proxy voting season has been significant, in order to truly alleviate this issue, the Securities and Exchange Commission must create and enforce a new disclosure model that requires companies to inform their investors of the full extent of their spending—a change the Corporate Reform Coalition will continue to tirelessly advocate for. If publicly traded companies want to sell pieces of ownership in their company, true ownership should mean true transparency is non-negotiable. In 2020, shareholders and investors did their part to create transformational change across the corporate landscape, it’s time for our federal government to do their part as well.
Zachary Brown is Administrative Assistant for Public Citizen’s Congress Watch division.