BOSTON, MA – Investors today announced the filing of shareholder resolutions at 40 corporations for votes at 2012 shareholder meetings urging them to report on lobbying expenditures, including indirect funding of lobbying through trade associations.
The investors believe that shareholders have the right and need to understand how company resources are being spent in efforts to change both elections and public policy; hence, this lobbying disclosure initiative is a natural extension of an ongoing shareholder campaign encouraging greater political spending transparency and accountability. Specifically, the investors believe that enhanced lobbying disclosure will enable them to better evaluate business risk associated with their companies’ efforts to influence regulatory and legislative processes.
This position is consistent with that of U.S. Supreme Court Justice Anthony Kennedy, who, as author of the 5-4 majority decision in Citizens United v. Federal Election Commission stated that, if given prompt disclosure of political expenditures, “Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits…” While Justice Kennedy was speaking of corporate expenditures aimed to influence elections, his logic applies equally to the need for lobbying disclosure.
While Citizens United and the focus on political expenditures have attracted a great deal of media attention, corporate lobbying expenditures extend far beyond campaign contributions. A November 2011 study by Si2, funded by the IRRC Institute, entitled “Corporate Governance of Political Expenditures” found that in 2010, S&P 500 companies spent a total of $1.1 billion on political contributions and lobbying, with $979.3 million in federal lobbying expenditures making up 87 percent of this spending.
Moreover, lobbying by trade associations to which corporations contribute is substantial, and the corporate contributions are largely unreported. In 2010 the U.S. Chamber of Commerce spent more than $132 million lobbying, making it the country’s largest lobbying group. Yet the Si2 study found that only 14 percent of S&P 500 companies disclose the portion of their trade association dues used to fund lobbying.
Thomas DiNapoli, Comptroller of the State of New York stated, “As a fiduciary, it’s important that companies in which the New York State Common Retirement Fund invest are open, transparent and demonstrate high standards of governance.” Mr. DiNapoli’s office oversees the $133.8 billion state fund. “That’s why we’ve joined this year in filing resolutions urging companies to report to their investors about their lobbying priorities, oversight and corporate dollars spent.”
In fact, most companies do not provide even rudimentary disclosure on their lobbying expenditures and practices to investors. Out of the S&P 500, the IRRC study found 64 percent of companies make no mention of lobbying activities, policies or oversight. Furthermore, the study found that only 13 companies in the S&P 500 provide investors information on how much they spend on lobbying.