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April 11, 2016
Walden Updates Shareowner Action on Lobbying
by Robert Kropp
Tim Smith of Walden Asset Management posts update on the 50 shareowner proposal addressing
corporate lobbying expenditures filed this proxy season.
For more than a decade, the Center
for Political Accountability (CPA) and its sustainable investor allies have advocated with
remarkable success for corporate disclosure of political expenditures. At last count, “More than
140 large companies—including more than half of companies in influential S&P 100—have struck
political disclosure agreements with CPA and/or its shareholder partners,” CPA reports.
But there are other ways in which corporations
use money to influence political processes; in fact, corporate lobbying expenditures far exceed the
amount of direct corporate political spending. In addition to lobbying at the state and federal
levels, corporations pay dues to politically active trade associations such as the US Chamber of
Commerce. Since 1998, Tim Smith of Walden
Asset Management observed recently, the Chamber has spent over $1.2 billion in lobbying.
And then there is the American Legislative Exchange Council (ALEC), a nonprofit organization
whose authorship of state-level model legislation such as the Stand Your Ground law in Florida and
elsewhere was met with outrage after the killing of 17-year-old Trayvon Martin. The potential
reputational risk of corporate membership in ALEC has led to 105 companies leaving the organization
in recent years.
Along with the American Federation of State, County and Municipal
Employees (AFSCME), Walden has organized a coalition of sustainable investors that have filed 50
shareowner resolutions with corporations this proxy season. The resolution filed with ExxonMobil,
for example, requested that the company prepare annual reports addressing the following:
Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying
2. Payments by ExxonMobil used for (a) direct or indirect lobbying or (b)
grassroots lobbying communications, in each case including the amount of the payment and the
3. ExxonMobil’s membership in and payments to any tax-exempt organization that
writes and endorses model legislation.
4. Description of management’s and the Board’s decision
making process and oversight for making payments described in sections 2 and 3 above.
Smith, who is Director of Environmental Social and Governance (ESG) Shareowner Engagement at
Walden, recently posted an update on the progress of the lobbying resolutions in this year's proxy
season. “This ongoing campaign,” Smith wrote, “has had a steady positive effect.”
year companies including Raytheon, CenterPoint and DuPont came to agreements with investors to
expand their lobbying disclosure,” he continued.
On the other hand, Smith further noted,
“Companies are listing the large trade associations they are part of but declining to provide any
details of financial support (dues and additional payments) and the amounts used for lobbying.”
“We commend companies for their responsiveness to the call for disclosure of political
expenditures related to elections,” he wrote, “while reminding them lobbying disclosure is a
coveted but separate topic and that 'good grades' in one doesn’t offset failing disclosure in
Shareowner resolutions filed at companies that fail to adequately disclose
payments to trade associations, Smith warned, will remain on proxy ballots, even if they receive
adequate scores from the CPA-Zicklin Index.
“We believe it is
important to have a basic set of standards for disclosure,” he concluded. “If a company responds
meaningfully, investors are pleased to withdraw the resolution in response.”
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