Procter & Gamble – Political Contributions
RESOLVED
that the shareholders of Procter & Gamble (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:
- Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds.
- Monetary and non-monetary political contributions and expenditures not deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including but not limited to contributions to or expenditures on behalf of political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution if made directly by the corporation would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The report shall include the following:
- An accounting of the Company’s funds that are used for political contributions or expenditures as described above;
- Identification of the person or persons in the Company who participated in making the decisions to make the political contribution or expenditure; and
- The internal guidelines or policies, if any, governing the Company’s political contributions and expenditures.
The report shall be presented to the board of directors’ audit committee or other relevant oversight committee and posted on the company’s website to reduce costs to shareholders.
SUPPORTING STATEMENT
As long-term shareholders of Procter & Gamble, we support transparency and accountability in corporate spending on political activities. These activities include direct and indirect political contributions to candidates, political parties or political organizations; independent expenditures; or electioneering communications on behalf of a federal, state or local candidate.
Disclosure is consistent with public policy, in the best interest of the company and its shareholders, and critical for compliance with recent federal ethics legislation. Absent a system of accountability, company assets can be used for policy objectives that may be inimical to the long-term interests of and may pose risks to the company and its shareholders.
Procter & Gamble contributed about $673,000 in corporate funds since the 2002 election cycle. (CQ’s PoliticalMoneyLine: http://moneyline.cq.com/pml/home.do and National Institute on Money in State Politics: http://www.followthemoney.org/index.phtml.)
However, relying on publicly available data does not provide a complete picture of the Company’s political expenditures. For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. In many cases, even management does not know how trade associations use their company’s money politically. The proposal asks the Company to disclose all of its political contributions, including payments to trade associations and other tax exempt organizations. This would bring our Company in line with a growing number of leading companies, including Pfizer, Aetna and American Electric Power that support political disclosure and accountability and present this information on their websites.
The Company’s Board and its shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support for this critical governance reform.
Still “Impactful” After All These Years
Jonas Kron, JD
In the Winter 2011 issue of Investing For A Better World, our colleague Farnum Brown described shareholder advocacy as version 2.0 on SRI’s (socially responsible investment’s) travels towards 3.0, and discussed the importance of directly pressing companies to improve their environmental and social impacts. Similarly, Amy Domini of Domini Social Investments recently wrote passionately in the Huffington Post about the importance of shareholder advocacy as a meaningful way for investors to have a positive impact on the world. Both pieces touched upon the ongoing debate about what to call our field. What was once “socially responsible” or “ethical” investing is now “ESG” (environmental, social and governance) investing or “sustainability” investing. We welcome the newest arrival, “impact investing” into the lexicon as a term that encompasses the new types of enterprises being started by social entrepreneurs as well as one that describes what labor plans, religious shareholders and socially concerned investors been doing for three decades.
Both Farnum’s and Amy’s pieces also noted some examples of successful shareholder advocacy that speak to the impact of SRI/ESG investing. We thought it might be a useful contribution to the nomenclature discussions to devote some space to reviewing some of the most recent “impactful” shareholder campaigns from SRI/ESG firms (with apologies to language purists).
Toxic Chemical Phaseouts. Some of shareholder activists’ “greatest hits” have been in persuading companies to reduce or eliminate their use of toxic chemicals. They are found in virtually every ecosystem in the world, and up to 300 toxic chemicals have been found in humans. The following are examples of company actions taken following shareholder dialogues and/or proposals:
- General Mills announced that it would no longer use bisphenol A (BPA) in its Muir Glen brand tomatoes packaging (2010)
- Apple announced it would stop using brominated flame retardants in its computers (2007)
- Sears Holdings (Sears and K-Mart) began a multi-year process of phasing out PVC products and packaging (2007)
- Whole Foods announced that it would remove baby bottles and other products that contain BPA from its shelves (2006).
Political Spending Disclosures. The Citizens United Supreme Court case of 2010 renewed attention to the role of the corporate sector in politics and the public policymaking process. Shareholders have been working to lift the veil on corporate political spending since 2004. Assisted by the nonprofit Center for Political Accountability, shareholders have persuaded 52 major corporations (including 35 in the S&P 100) to disclose and require board oversight of their political spending with corporate funds, beyond what is required to comply with the laws.
Corporate Sustainability Reporting. Before SRI investors founded Ceres and the Global Reporting Initiative, standardized corporate sustainability reporting was virtually nonexistent, and where it did exist it was guided by trade association criteria that lacked public credibility. Today, thanks to persistent and diligent shareholder advocacy, about 1,800 companies produce reports based on the GRI guidelines, and demonstrating that “what gets measured gets managed.”
Lesbian, Gay, Bisexual and Transgender nondiscrimination policies. Shareholder advocates can rightly claim credit for persuading many of the nation’s most prominent corporations to adopt inclusive nondiscrimination policies. Activists have filed well over 200 resolutions that have led to better policies at 150-plus corporations – affecting the lives of millions of workers around the world. Many additional companies have changed policies simply in response to inquiries from shareholders.
Home Depot Wood Purchasing Policy. In the late 1990s a broad coalition of shareholders added their voices to the campaign demanding that the world’s largest retailer of lumber products stop selling wood products from endangered forests. Using the vehicle of a shareholder resolution and outreach to large institutional investors, the shareholders generated twice as much support as was typical for a resolution in the 1990s. The campaign resulted in a commitment to phase out sales of wood products from endangered forest areas within three years, and the company’s commitment to give preference to Forest Stewardship Council certified lumber wherever possible.
Target & Best Buy Announce New Policies on Political Spending
Target Corporation (NYSE: TGT) and Best Buy (NYSE: BBY) have revised their policies on political spending in the aftermath of the nationwide controversy that erupted following last summer’s contributions to MN Forward, an independent political committee that funneled money to a gubernatorial candidate known for his extreme opposition to lesbian and gay civil rights. The new policies culminate months of review by both companies.
Target and Best Buy made contributions of $150,000 and $100,000, respectively, to MN Forward. After the contributions were disclosed in state filings, Target in particular drew the ire of retail consumers, gay rights organizations, and those concerned with the proliferation of corporate political spending in the aftermath of the US Supreme Court’s Citizens United decision in 2010. A nationwide boycott ensued. Target’s CEO Gregg Steinhafel issued an apology, but the company did not ask for its funds to be returned.
The contributions also disturbed the company’s shareholders. Trillium Asset Management (“Trillium”), Walden Asset Management (“Walden”), the Calvert Group and Domini Social Investments, quickly filed shareholder proposals at Target, Best Buy and Pentair and 3M as well, two other companies that gave large donations to MN Forward. Numerous shareholders joined in co-filing the resolutions, including foundations, religious investors, additional investment firms and individuals.
Read the full press release
here
Ford Motor Company – Political Contributions
RESOLVED
The shareholders of Ford Motor (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:
- Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds.
- Monetary and non-monetary contributions and expenditures (direct and indirect) used to participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, and used in any attempt to influence the general public, or segments thereof, with respect to elections or referenda. The report shall include:
- An accounting through an itemized report that includes the identity of the recipient as well as the amount paid to each recipient of the Company’s funds that are used for political contributions or expenditures as described above; and
- The title(s) of the person(s) in the Company who participated in making the decisions to make the political contribution or expenditure.
The report shall be presented to the board of directors’ audit committee or other relevant oversight committee and posted on the Company’s website.
SUPPORTING STATEMENT
As long-term shareholders of Ford Motor, we support transparency and accountability in corporate spending on political activities. These include any activities considered intervention in any political campaign under the Internal Revenue Code, such as direct and indirect political contributions to candidates, political parties, or political organizations; independent expenditures; or electioneering communications on behalf of federal, state or local candidates. Disclosure is consistent with public policy, in the best interest of the company and its shareholders, and critical for compliance with federal ethics laws. Moreover, the Supreme Court’s Citizens United decision recognized the importance of political spending disclosure for shareholders when it said “[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.” Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value.
Ford Motor contributed at least $1,921,037 in corporate funds since the 2002 election cycle. (CQ: http://moneyline.cq.com/pml/home.do and National Institute on Money in State Politics: http://www.followthemoney.org/index.phtml.)
However, relying on publicly available data does not provide a complete picture of the Company’s political expenditures. For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. In many cases, even management does not know how trade associations use their company’s money politically. The proposal asks the Company to disclose all of its political spending, including payments to trade associations and other tax exempt organizations for political purposes. This would bring our Company in line with a growing number of leading companies, including Aetna, American Electric Power and Microsoft that support political disclosure and accountability and present this information on their websites.
The Company’s Board and its shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support for this critical governance reform.
Halliburton – Political Contribution
RESOLVED
The shareholders of Halliburton (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:
- Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds.
- Monetary and non-monetary contributions and expenditures (direct and indirect) used to participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, and used in any attempt to influence the general public, or segments thereof, with respect to elections or referenda. The report shall include:
- An accounting through an itemized report that includes the identity of the recipient as well as the amount paid to each recipient of the Company’s funds that are used for political contributions or expenditures as described above; and
- The title(s) of the person(s) in the Company who participated in making the decisions to make the political contribution or expenditure.
The report shall be presented to the board of directors’ audit committee or other relevant oversight committee and posted on the Company’s website.
SUPPORTING STATEMENT
As long-term shareholders of Halliburton, we support transparency and accountability in corporate spending on political activities. These include any activities considered intervention in any political campaign under the Internal Revenue Code, such as direct and indirect political contributions to candidates, political parties, or political organizations; independent expenditures; or electioneering communications on behalf of federal, state or local candidates.
Disclosure is consistent with public policy, in the best interest of the company and its shareholders, and critical for compliance with federal ethics laws. Moreover, the Supreme Court’s Citizens United decision recognized the importance of political spending disclosure for shareholders when it said “[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.” Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value.
Halliburton contributed at least $204,000 in corporate funds since the 2002 election cycle. (CQ: http://moneyline.cq.com/pml/home.do and National Institute on Money in State Politics: http://www.followthemoney.org/index.phtml.)
However, relying on publicly available data does not provide a complete picture of the Company’s political expenditures. For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. In many cases, even management does not know how trade associations use their company’s money politically. The proposal asks the Company to disclose all of its political spending, including payments to trade associations and other tax exempt organizations for political purposes. This would bring our Company in line with a growing number of leading companies, including Aetna, American Electric Power and Microsoft that support political disclosure and accountability and present this information on their websites.
The Company’s Board and its shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support for this critical governance reform.
Pentair – Political Contributions
SUPPORTING STATEMENT
The Supreme Court’s Citizens United decision in January 2010 legalized the use corporate funds to pay for ads supporting or opposing candidates directly and to contribute to state or local elections.
In July 2010 Pentair donated $100,000 to MN Forward, a group created in the wake of the Supreme Court decision to collect donations by corporations (Wall Street Journal (8/7/10) to influence the outcome of 2010 state races. MN Forward focuses on economic policies and appears to ignore a candidate’s other positions in making endorsements and contributions. MN Forward has made campaign contributions to a Minnesota gubernatorial candidate who is a vocal opponent of same-sex marriage and full parenting rights for same-sex households. This triggered demonstrations, petitions, boycotts and considerable negative publicity for Target and Best Buy, which also made significant contributions to MN Forward.
The shareholders believe this example illustrates the risks posed by corporate political expenditures, whether made directly or indirectly, and the serious reputational consequences that could negatively affect the company and shareholder value.
Corporate political spending is of increasing concern to investors and corporations. Over 75 S&P 500 companies now disclose political expenditures on their website, including half of the S&P 100. Shareholder resolutions urging such disclosure averaged more than 30% in favor of the resolution in 2010, indicating strong investor concern.
In the aftermath of Citizens United, we believe the Board should review Pentair’s policies and practices regarding political spending and report results to shareowners, with particular attention to the potential risk of such contributions to our company’s reputation and competitiveness. As long-term shareholders of Pentair, we support transparency and accountability regarding direct and indirect political contributions to candidates, political parties, political organizations or ballot referenda; independent expenditures; and electioneering communications on behalf of a federal, state or local candidate.
RESOLVED
The shareholders request that the independent members of the Board of Directors provide a comprehensive report on Pentair’s:
- Policies and procedures for political contributions and expenditures (direct and indirect) made with corporate funds, and the process for assessing their potential impacts on the company’s public image, sales and profitability;
- Monetary and non-monetary contributions and expenditures (direct and indirect) used to participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, and used in any attempt to influence the general public, or segments thereof, with respect to elections or referenda. The report shall include the following:
- An accounting through an itemized report that includes the identity of the recipient as well as the amount paid to each recipient of the Company’s funds that are used for political contributions or expenditures as described above; and
- The title of the person or persons in the Company who participated in making the decisions to make the political contribution or expenditure.
The report shall be disclosed to shareholders by Sept 2011.
State Street – Political Contributions
RESOLVED
The shareholders of State Street (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:
- Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds.
- Monetary and non-monetary contributions and expenditures (direct and indirect) used to participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, and used in any attempt to influence the general public, or segments thereof, with respect to elections or referenda. The report shall include:
- An accounting through an itemized report that includes the identity of the recipient as well as the amount paid to each recipient of the Company’s funds that are used for political contributions or expenditures as described above; and
- The title(s) of the person(s) in the Company who participated in making the decisions to make the political contribution or expenditure.
The report shall be presented to the board of directors’ audit committee or other relevant oversight committee and posted on the Company’s website.
SUPPORTING STATEMENT
As long-term shareholders of State Street, we support transparency and accountability in corporate spending on political activities. These include any activities considered intervention in any political campaign under the Internal Revenue Code, such as direct and indirect political contributions to candidates, political parties, or political organizations; independent expenditures; or electioneering communications on behalf of federal, state or local candidates.
Disclosure is consistent with public policy, in the best interest of the company and its shareholders, and critical for compliance with federal ethics laws. Moreover, the Supreme Court’s Citizens United decision recognized the importance of political spending disclosure for shareholders when it said “[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.” Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value.
State Street contributed at least $160,600 in corporate funds since the 2002 election cycle.
However, relying on publicly available data does not provide a complete picture of the Company’s political expenditures. For example, the Company’s payments to trade associations used for political activities are undisclosed and unknown. The proposal asks the Company to disclose all of its political spending, including payments to trade associations and other tax-exempt organizations for political purposes. This would bring our Company in line with a growing number of leading companies, including Prudential, US Bancorp and Capital One that support political disclosure and accountability and present this information on their websites.
This past year the Company reviewed its policies and we commend them for seriously considering these issues. However, the Company has not changed its policies and its Board and shareholders still need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support for this critical governance reform.
3M – Political Contributions
SUPPORTING STATEMENT
The Supreme Court’s Citizens United decision in January 2010 legalized the use of corporate funds to directly pay for ads supporting or opposing candidates and to contribute to state or local elections.
3M contributed at least $1.4 million in corporate funds since the 2002 election cycle. (CQ: http://moneyline.cq.com/pml/home.do and National Institute on Money in State Politics: http://www.followthemoney.org/index.phtml.)
In September 2010, 3M donated $100,000 to MN Forward, a group created in the wake of the Supreme Court decision to collect donations by corporations (Wall Street Journal (8/7/10) to influence the outcome of 2010 state races. MN Forward focuses on economic policies and appears to ignore a candidate’s other positions in making endorsements and contributions. MN Forward made campaign contributions to a Minnesota gubernatorial candidate who is a vocal opponent of same-sex marriage and full parenting rights for same-sex households. This triggered demonstrations, petitions, boycotts and considerable negative publicity for Target and Best Buy, which also made significant contributions to MN Forward.
The shareholders believe this example illustrates the risks posed by corporate political expenditures, whether made directly or indirectly, and the serious reputational consequences that could negatively affect the company and shareholder value.
Corporate political spending is of increasing concern to investors and corporations. Over 75 S&P 500 companies now disclose political expenditures on their website, including half of the S&P 100. Shareholder resolutions urging such disclosure averaged more than 30% in favor in 2010, indicating strong concern. As long-term shareholders of 3M, we support transparency and accountability regarding direct and indirect political contributions to candidates, political parties, political organizations or ballot referenda; independent expenditures; and electioneering communications on behalf of a federal, state or local candidate.
In the aftermath of Citizens United, we believe the Board should review 3M’s policies and practices regarding political spending and report results to shareowners, with particular attention to the potential risk of such contributions to our company’s reputation and competitiveness.
RESOLVED
The shareholders request that the independent members of the Board of Directors provide a comprehensive report on 3M’s:
- Policies and procedures for political contributions and expenditures (direct and indirect) made with corporate funds, and the process for assessing their potential impacts on the company’s public image, sales and profitability;
- Monetary and non-monetary contributions and expenditures (direct and indirect) used to participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office, and used in any attempt to influence the general public, or segments thereof, with respect to elections or referenda. The report shall include the following:
- An accounting through an itemized report that includes the identity of the recipient as well as the amount paid to each recipient of the Company’s funds that are used for political contributions or expenditures as described above; and
- The title of the person or persons in the Company who participated in making the decisions to make the political contribution or expenditure.
The report shall be disclosed to shareholders by Sept 2011.
IBM – Political Contributions
WHEREAS
Political spending by companies is increasingly controversial, heightened by the recent Citizens United Supreme Court decision, which allows companies to make independent expenditures in favor of or in opposition to, a candidate’s election campaign.
Corporate expenditures supporting a contentious 2010 ballot initiative suspending California’s Global Warming Solutions Act added fuel to the controversy, as did Target and Best Buy contributions for a controversial candidate for Governor in Minnesota.
Over the last five years, corporate political spending has become a major investor concern. Investors asked hundreds of companies to disclose their policies establish board oversight and disclose all direct and indirect expenditures for political purposes. More than seventy-five S&P 500 companies now disclose their political expenditures and policies on their website. Shareowner proposals urging such disclosure averaged more than 30 percent of votes in 2010, indicating strong investor support.
Many companies are updating their political spending policies. For example, Morgan Stanley stated it will not make direct or indirect independent political expenditures.
Left out of many company commitments, however, is transparency around payments to trade associations and other tax-exempt groups for political purposes.
IBM is on the board of the US Chamber of Commerce, which announced it will spend $75 million in political campaigns in 2010. The Chamber, allegedly on behalf of the business community, lobbies, speaks publicly and puts political dollars to work which effectively challenge IBM’s positions on environmental issues. IBM has strong environmental policies and urges companies in its supply chain to follow suit.
Yet as a Chamber board member, it is our understanding that IBM does not seek to influence or challenge the Chamber’s environmental positions.
IBM also has clear policies prohibiting political spending, but does not challenge the Chamber on its partisan political activities. These inconsistencies could be harmful to IBM’s reputation.
The Chamber’s website states: “Directors determine the U.S. Chamber’s policy positions on business issues and advise the U.S. Chamber on appropriate strategies to pursue. Through their participation in meetings and activities held across the nation, Directors help implement and promote U.S. Chamber policies and objectives.” As a Chamber board member IBM certainly may be perceived as supporting its policies.
RESOLVED
Shareholders request that the independent Board members institute a comprehensive review of IBM’s political spending policies and oversight processes, both direct and indirect, including through trade associations, and present a summary report by September 2011. The report may omit confidential information and limit costs. Items for review include:
- Review and disclosure of any direct and indirect expenditures supporting or opposing candidates, or for issue ads designed to affect political races, including dues and special payments made to trade associations, such as the U.S. Chamber of Commerce, or political and other organizations that can hide any contributions.
- Risks and responsibilities associated with serving on boards of and paying dues to trade organizations when positions of the trade association contradict the company’s own positions.
- Management and board oversight processes for all political spending, direct or indirect.
Target – Political Contributions
WHEREAS
The Target web site appears to have a thoughtful, transparent process for reviewing political spending, with its disclosure of oversight and 2008 contributions over $5,000.
The web site states “before any contribution is made, we determine that it is consistent with our business interests and under the circumstances, is an appropriate means of advancing our public policy position.”
However, in July 2010 Target donated $150,000 to a political group, Minnesota Forward, which actively supports a candidate for Governor who is a vocal opponent of same-sex marriage, as well as full parenting rights for same-sex couples.
Ironically, Target has been known for forward-looking policies and benefits for gay and lesbian employees, having an explicit policy that bans discrimination based on sexual orientation and offering domestic partner benefits.
The Minnesota Forward contribution resulted in a major national controversy with demonstrations, petitions, threatened boycotts and considerable publicity. Within one week Target CEO Gregg Steinhafel apologized in a letter to employees.
After the Supreme Court’s Citizens United decision, companies may now use corporate funds to pay for ads supporting or opposing candidates directly and to contribute to state or local elections. Previously this was illegal.
According to the Wall Street Journal (8/7/10), Minnesota Forward was created in the wake of the Supreme Court decision to collect donations by corporations. While Minnesota Forward focuses on candidates with tax and business policies it supports, it appears to ignore a candidate’s broader social or environmental positions in making endorsements and contributions.
Since Target management is using shareholder monies for this and other political contributions, we believe it would have been prudent to undertake a comprehensive review of the implications of such contributions for our company’s reputation and business competitiveness before donating $150,000. We are concerned that management may use the open door of the Citizens United decision to intervene in numerous controversial political contests that could harm the Target brand.
Therefore, in the aftermath of Citizens United, we believe the Board should re-evaluate Target’s policies and practices regarding political spending and disclose to shareowners what new policies will be instituted.
RESOLVED
The shareholders request that the independent members of the Board of Directors institute a comprehensive review of Target’s political contributions and spending processes including:
- The criteria used for such contributions and the broader impact contributions may have on the company’s reputation, public image with consumers and business sales and profitability, including how hoped-for benefits are balanced with the broader costs of endorsing a candidate whose policies may conflict with Target’s publicly expressed values;
- Direct or indirect contributions to candidates and issue ads aimed at affecting political races;
- Support for ballot initiatives at the state level;
- Contributions through trade associations such as the U.S. Chamber of Commerce, and tax exempt organizations (e.g. 501(c)4s and 527s) which can redistribute contributions for political purposes without having to disclose such transactions; and
- Oversight processes by management and the Board.
The report may omit confidential information and costs may be limited.
