In more than a Decade of pushing Companies to Disclose their Political Spending, the New York State Common Retirement Fund has never had a year like this.
The nearly $250 Billion Pension Fund faced off, in early May, against Duke Energy Corp. (DUK), whose Board of Directors opposed the New York Fund’s Proposal asking the Company for more Detailed Disclosure of its Direct and Indirect Political Spending. Duke Shareholders were Tepid on the Pension Fund’s Political-Spending proposals in years past, Voting them down in 2019 and 2020. This time, the Proposal Passed with 52% of the Vote.
That Victory came on top of the Pension Fund’s successes, earlier this year, with Companies like Molson Coors Beverage Co. TAP, and FirstEnergy Corp. FE, hose Agreements to more Comprehensively Disclose Political Spending resulted in the Fund’s Withdrawing its Shareholder Resolutions. If the Fund can win Majority Shareholder Support for its Proposal at the Cruise Operator, Royal Caribbean Group RCL, early next month, it will have batted a Thousand in its Political Spending Disclosure push this Proxy Season.
Many Advocates of Political-Spending Disclosure have been focused on the Issue ever since the U.S. Supreme Court’s 2010 Citizens United Decision loosened Restrictions on Corporate Political Spending.
Advocates of Political Spending Disclosure aren’t accustomed to such Winning Streaks. Many, like the New York State Common Retirement Fund, have been focused on the Issue ever since the U.S. Supreme Court’s 2010 Citizens United Decision Loosened Restrictions on Corporate Political Spending, and they’ve had plenty of Proposals Fail along the way. But this year the New York Pension Fund isn’t the only Disclosure Proponent that’s on a roll. In 2021 through Mid-May, about 24% of Disclosure Resolutions concerning Political Spending and Lobbying put before Shareholders of U.S. Companies Won Majority support, a far Higher Proportion than in the Equivalent Period of any year going back to 2014, according to Data from Proxy Insight.
“Companies and investors are finally waking up to the fact that spending on politics is inherently risky,” says New York State Comptroller, Thomas P. DiNapoli, Trustee of the State’s Pension Fund. “The polarized political climate has greatly amplified how serious the consequences are.”
Whether a Company’s Lobbying Conflicts with its rhetoric on Climate Change or its Donations to Politicians Rewriting Voting Laws are Off-Putting to its Customer Base, Shareholders need to see the Details of Corporate Political Activity to understand the Risks to the Bottom Line, Transparency Advocates say. Based on a Company’s Political Spending, “consumers can shift their buying patterns, [and] employee morale can be affected,” says Bruce Freed, President of the Center for Political Accountability, a Nonprofit that Advocates for Better Disclosure. “These are material risks that companies face.”
Heavyweight Investors who haven’t traditionally been Big Supporters of Transparency are now in some Cases tipping the scales in Favor of Disclosure. Both BlackRock BLK and Vanguard, Two of the Largest Asset Managers, have in recent months laid out a more Fine-Tuned approach to Evaluating Political Spending and Lobbying at the Companies in which their Funds Invest.
Transparency Advocates are now taking the Fight to the Next Level, the Securities and Exchange Commission (SEC). Congressional Democrats want to Remove a Budget Rider that in recent years has Prevented the SEC from issuing a Rule requiring Public Companies to Disclose their Political Spending.
Business Groups have long Opposed such a Rule. The U.S. Chamber of Commerce and Dozens of other Business Groups, wrote in a 2013 letter to the SEC, that there is No Justification for requiring Public Companies to Reveal Details of Political Spending that don’t have to be Disclosed under generally Applicable Laws and that Disclosure would be Costly for Public Companies and their Shareholders.
A Disclosure Rule could have some Powerful Backers at the SEC. Commissioners Caroline Crenshaw and Allison Herren Lee, have spoken out in Favor of Corporate Political Spending Disclosure. The SEC’s Chairman, Gary Gensler, said during his Confirmation Hearing, in March, that the Commission should consider such Disclosure “in light of the strong investor interest”. John Coates, who as a Harvard Law Professor wrote in Favor of a Disclosure Rule, is now Acting Director of the SEC’s Division of Corporation Finance.
Some Lawmakers say they’ll also Press for SEC Action. As Chairman of a Senate Subcommittee with Oversight of the SEC, Sen. Robert Menendez (D-NJ), plans to “put pressure on the administration to start the process for an SEC political-spending disclosure rule,” says Spokesman Robert Julien, while also Pushing his Shareholder Protection Act, which would Require Shareholder Authorization of a Company’s Political Activities Budget, among other measures.
I have for a long time, been supporting the Concept: that each Shareholder should be able to Indicate they do Not want thier Share Value % to be used for Political Donations.
NYC Wins When Everyone Can Vote! Michael H. Drucker
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