ExxonMobil, Chevron, Target Pressed to Stop Political Spending

Leading social investment firms are stepping up campaigns to press companies to completely refrain from making political contributions, after unprecedented spending in the 2012 elections.

One of the benefits of holding shares in social/ environmental mutual funds or working with an advisor to manage your portfolio is that many of them actively pursue shareholder advocacy.  

While some large American companies voluntarily strengthened disclosure of political spending in the last election, seven shareholder proposals call for a halt to all political spending from general treasury funds, both direct and indirect.

The two biggest areas for shareholder activism in 2012 were corporate political spending and climate change. 

"The value of corporate political spending to shareholders is highly questionable, even as the risk it poses to our democracy is self-evident. It’s time for companies to reverse course and simply exit this activity," says Shelley Alpern, Director of Social Research and Advocacy at Clean Yield Asset Management.

The proposals filed are with:

  • EQT Corporation, which is involved in natural gas fracking, and 3M – filed by Clean Yield
  • Chevron, filed by Green Century Capital Management
  • ExxonMobil, filed by Zevin Asset Management
  • Starbucks, filed by Harrington Investments
  • Target Corporation and Bank of America, filed by individual shareholders affiliated with Responsible Wealth, a project of the nonprofit organization United for A Fair Economy.

"In 2012, Chevron gave $2.5 million dollars of company funds to a Super PAC – the single largest corporate donation to a Super PAC ever," says Leslie Samuelrich, Senior Vice President of Green Century Capital. "Shareholders don’t want to pay for Chevron’s political preferences or contribute to the untamed spending unleashed by the Citizens United ruling.  It’s time for Chevron to listen to its shareholders and stop throwing millions of dollars into the wind."

"The 500 members of Responsible Wealth recognize that corporate money is corrupting our democracy and drowning out the voice of citizens, who are the real stakeholders in our federal, state and local government.  The richest 10% of households own over 80% of all stock, so Responsible Wealth members have a particular opportunity and responsibility to ask companies like Bank of America and Target to cease their political giving," says Director, Mike Lapham.

So-called "independent" or outside spending in federal elections – increased nearly fivefold in 2012 after the Citizens United decision, from nearly $300 million in 2010 to $1.3 billion in 2012, according to the Center for Responsive Politics.

Billion-Dollar Democracy," a report released this week from Demos and the U.S. PIRG Education Fund, estimates that for-profit corporations were responsible for at least $101 million in political spending in 2012 elections, although the actual amount could be up to four times that amount because of vagaries in reporting requirements.

In October 2012, between 80-90% respondents in a Bannon Communications poll agreed, across party lines, with the following statements: there is "too much money in politics"; corporate political spending "drowns out the voices of average Americans"; corporations and corporate CEOs have "too much political power and influence"; and corporate political spending has made federal and state politics more negative and corrupt.

And several academic studies show that corporate campaign contributions divert resources that could stunt long-term growth of the company.

Companies that contributed to PACs and other outside political groups between 1991-2004 grew more slowly than other firms, invested less and spent less on R&D, and were linked to poor corporate governance, according to a 2012 University of Minnesota study.

"Regardless of how much is being contributed, companies simply should not be able to take investors’ dollars and use them to sway political campaigns. The mere fact that this is allowed is atrocious. Companies who step up and become transparent about not retaining the option to do so will become leaders and set an example to their peers," says Dale Wannen, Portfolio Manager and Director of ESG Research at Harrington Investments.

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