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November 29, 2010
Shareowners Launch Campaign Against Corporate Political Spending
    by Robert Kropp

Investors call for board oversight and disclosure of all political spending by corporations.

It is tempting to describe the first national election in the US since the Supreme Court's Citizens United decision opened the floodgates for corporate political spending as a defeat for the concerns of sustainable investors. The US Chamber of Commerce poured $75 million into this month's midterm elections, largely in support of Republican candidates who have vowed to repeal health care legislation and who are, for the most part, in denial about the reality of climate change.

Yet when have sustainable investors not faced an uphill battle in having their concerns addressed by legislators in the US? Their success in the face of such challenges can be observed in the increasing percentages of shareowner support for resolutions addressing environmental, social, and corporate governance (ESG) issues. This month, shareowner activists set their sites on the 2011 proxy season, submitting proposals addressing corporate political spending at four large corporations.

The resolutions, whose lead sponsors include Walden Asset Management, Domini Social Investments, and the Christopher Reynolds Foundation, challenge the companies, all of which are on the Board of the Chamber of Commerce, to "review their policies and oversight of political expenditures, especially through trade associations," according to a press release.

The four companies targeted thus far—Accenture, IBM, Pepsi, and Pfizer—have "strong corporate governance records," according to the sponsors. "Yet," Timothy Smith, Senior Vice President of Walden Asset Management, stated, "As Board members and major corporate contributors to the US Chamber of Commerce they play a passive and compliant role, remaining silent while the Chamber reportedly poured $75 million into the 2010 election."

Noting that "corporate political spending has become a major investor concern," the resolutions request disclosure of "direct and indirect expenditures supporting or opposing candidates," including payments made to trade associations such as the Chamber. The resolutions also request review of risks associated with payments to trade associations, as well as management and board oversight of all political spending.

The coalition, which currently includes 25 sustainable investors, expects to submit the resolution to several other companies on the Chamber's Board, which includes more than 100 corporations.

Adam Kanzer, General Counsel at Domini Social Investments, stated, "The Chamber of Commerce is an aggressively partisan organization that is standing in the way of solutions to our nation’s most pressing problems, from health care to climate change. We are asking why these companies would lend their good names—and their implicit endorsement—to the Chamber's agenda, which often runs contrary to their own, stated policies and practices."


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