Shareholders push back on corporate political donations that fuel the vote

Shareholders are pressuring some of America’s largest corporations to account for political spending that could contribute to voter suppression or election interference.

Since the US Capitol riot on January 6, 2021, shareholders of companies such as AT&T, Cignaand Home deposit introduced resolutions demanding that they explain how donations to politicians and groups supporting policies such as restricting voting hours and other rights align with company values. In the past, shareholder activism has focused primarily on corporate responsibility causes, such as environmental issues and gender pay equity, as well as governance such as executive compensation.

The most recent movement, dealing with threats to democracy, is gaining ground.

This year, for example, AT&T shareholders introduced a resolution noting that “in June 2021, AT&T or its PACs paid $132,500 to Texas state legislators who had supported bills raising issues voter suppression”. He called on the company to analyze “incongruous” political donations and to state “whether the company has made or plans to make any changes to contributions or communications with candidates as a result of identified incongruences.”

The resolution received 44% of the votes cast by shareholders. Although short-term, support at this level may be enough to spur a company to action. “Any vote over 30% is a strong vote,” said Jonas Kron, director of advocacy at Trillium Asset Management, a progressive Boston-based firm that manages $5.3 billion in assets. “Most companies find it extremely difficult to ignore a third of their shareholder base.”

Shareholder defense watchers note that corporate boards have in the past asked management to act on resolutions that have won 30% or more of the vote.

“When it was reported to shareholders that [AT&T’s] political contributions undermine their goals and values, shareholders are really starting to get the hang of it. They recognize it as a business risk,” said Shelley Alpern, head of corporate engagement for Rhia Ventures, which coordinates the efforts of shareholders interested in improving corporate policies around reproductive health and the treatment of women on American workplaces.

Shareholders have bolstered scrutiny by focusing on more than just disclosing political spending, or simply listing politicians and groups who receive money. Heidi Welsh, executive director of the non-profit Sustainable Investments Institute, which tracks shareholder proposals, said that now “it’s not just about saying what you do, but what your money does “.

At AT&T, it remains to be seen what action the board might take in response to the resolution. In an emailed statement, a spokeswoman said, “We cannot speculate on the future actions of the board” and referenced her statement urging shareholders to vote against the proposal.

The statement read, “We believe our core business goals and political donations are consistent with our values. When AT&T decides to intervene on specific legislation, we take positions consistent with the company’s previously stated values ​​and business priorities. »

AT&T was among the major corporations that condemned the Jan. 6, 2021 riot. Many corporations publicly announced that they would stop donating money to any riot-tolerant politicians and/or so-called Holocaust deniers.

On January 7, 2021, AT&T Chief Executive John Stankey said in a press release:

“We applaud all those who have stood up to thwart an appalling insurgency determined to block the peaceful transfer of power following free and fair elections. Freedom, democracy and the rule of law are the foundation of America and must never be usurped. Additionally, on January 11, AT&T declared that its federal political action committee would suspend contributions election deniers.

But AT&T and other companies quickly went back to giving to the very politicians they claimed were at odds with a democratic system. In April this year, the telecommunications giant was among the major corporate donors to U.S. Senators and Representatives who voted against certification of President Biden’s election.

Hence the new, tougher shareholder proposals. In addition to AT&T, similar proposals have been made to health insurer Cigna, Charter Communicationsdrug maker AbbVie Inc., UnitedHealth Group, and Home Depot.

A Cigna resolution claimed the company had failed to deliver on its promises to “cease supporting any election official who promotes or supports violence” and to support “gender equity in the workplace.”

In fact, the company, which is three-quarters female, did the opposite, according to the proposal submitted by shareholder and social investment firm Clean Yield Asset Management and its partner Rhia Ventures. “Cigna and its PAC employees have donated at least $3.4 million to politicians and political organizations working to weaken women’s access to reproductive health care,” he said.

The Cigna proposal received 46.3% shareholder votes. Cigna did not respond to requests for comment.

A proposal to Charter Communications called out the company for donating to organizations that support election restrictions. The proposal, filed by shareholder Handlery Hotels and its partner Rhia, received 30% shareholder votes. More importantly, State Street, a major investor who had voted against the Cigna resolution, backed it.

One case in which activists got results without winning a majority vote occurred at JPMorgan Chase’s annual shareholder meeting in May 2021, with a resolution criticizing the company’s donations to an organization opposing to the EPA’s Clean Power Plan, as well as politicians who have attacked LGBTQ equality and abortion rights.

The 2021 proposal, filed by Rhia on behalf of investor Jonathan Weinstock, received 30% of votes cast. Investor Educational Foundation of America with partner Rhia has tabled another similar proposal that will be put to a vote at this year’s annual meeting. But the Educational Foundation of America withdrew its proposal after reaching an agreement with JPMorgan, according to the company. In response, the company has strengthened its “Political commitment and public policiesto reflect the shareholders’ resolution:

“In the event that the Firm identifies a material misalignment in the values ​​and organizational priorities of the Company and the recipients of political contributions, it will disclose this information in our annual Political Engagement Report.”

Resolutions on environmental, social and governance issues have begun to win support from some of the biggest institutional investors, including BlackRock, State Street and Vanguard, according to the Policy Responsibility Center. Large asset managers, who invest and control trillions of dollars for pension funds, foundations, endowments and retail investors, recognize the potential negative financial impact on companies if they are seen as regressive on environmental, social and political issues. BlackRock has been at the forefront on these issues, but has backed off this year with its support, according to the asset management firm. July 25 report.

In September, for the second year in a row, FedEx is expected to face a shareholder proposal pushing the company to report any misalignment of its political spending with its corporate values. Clean Yield Asset Management, on behalf of shareholder Rachel Ann Hexter-Fried, filed a proposal noting:

“FedEx said, ‘We condemn the violence that occurred in Washington, DC, and fully support the US general election results.’ Yet FedEx later paid $58,500 to 27 members of Congress who challenged certification of the 2020 presidential results that day. »

The resolution also called out FedEx for its financial contribution to the Republican Attorney Generals Association, “whose two-thirds of the members signed a brief urging the Supreme Court to overturn the 2020 election results in four states.”

A similar proposal filed by Clean Yield Asset Management last year received 37% of votes. The proposal did not pass, but a separate proposal calling on FedEx to “disclose information about the company’s lobbying activities and expenditures” was approved with 62.2% of the vote. The lobbying disclosure proposal was submitted by International Brotherhood of Teamsters General Fund shareholder and co-filer As You Sow.

FedEx’s largest institutional investors, including State Streetvanguard and black rock, all voted in favor of the lobbying disclosure proposal; they did not vote in favor of Clean Yield Asset Management’s proposal. However, two of Vanguard’s external fund managers, DE Shaw and Lazard Asset Management, voted in favor of the Clean Yield proposal, according to Vanguard Proxy Portal.

In a October 2021 Report, Vanguard acknowledged “gaps” between Fed Ex’s public policy priorities and its corporate strategy and values, saying it “remains an area for improvement” for the company. In supporting the lobbying disclosure, Vanguard said it “presents a more immediate opportunity for FedEx.”

Asked if FedEx intends to respond to activist shareholder Clean Yield’s new proposal, a FedEx spokeswoman said in an emailed statement that it meets regularly with its major shareholders on business strategy and sustainability initiatives to “effectively address the priorities, perspectives and concerns of our shareholders”. ” FedEx referred Capital and main to his Politics on political contributions.

Activist shareholders, including large pension funds and independent asset managers, are expected to continue their momentum on social and environmental proposals next year.

Trillium asset manager Kron said that with government increasingly unable to meet society’s needs, shareholders want companies to do so.

“The government is not responsible for their needs. That’s not how it should be,” he said. “It drags companies into the democratic process and into the needs of society, whether they like it or not.”

This article is from Capital and main, an award-winning publication that reports on California economic, political and social issues. Copyright 2022 Capital & Main.