It's Time We Took a Look at Corporate Lobbying(A)
When the McCain-Feingold campaign finance reform became law last year, many business leaders breathed a cautious sigh of relief. Among other provisions, the law, formerly known as the Bipartisan Campaign Reform Act of 2001, banned contributions by corporations, labor unions and other groups to national political parties. Along with the rest of us, corporate executives hoped it would alleviate some of the worst aspects of the pay-to-play system they had come to resent, even though major loopholes in the bill assured that the parties will continue to shake down contributions through other means.
The sad irony is that campaign finance reform addresses only the tip of the iceberg of money in politics. Corporate lobbying expenditures dwarf election contributions by ten to one. In The Divine Right of Capital (2001), author Marjorie Kelly wrote:
Campaign finance reform doesn’t touch the issue of lobbying and may make it worse. If corporations stop donating to political parties — as some already pledged to do — they may well turn those same budgets over to legislative lobbying. So we may chase the fox out of the hen house only to find it in the pig pen.
Make that thousands of foxes – in 2000, General Electric alone employed 132 persons to lobby the federal government, according to the Center for Responsive Politics. On Capitol Hill, lobbyists go beyond representing their clients’ views; often they draft bills for overworked and lesser-informed legislative aides. According to the Center for Responsive Politics, at least $1.5 billion was spent on lobbying was spent in 2000 – all but 14% of it from corporate sources.
Today, American lobbyists are viewed as cowboys on the other side of the Pond. Writing recently in The American Prospect, journalist Samuel Loewenberg observed:
Lobbying…is looked upon with suspicion by most member states of the European Union. To be sure, there’s no lack of political schmoozing…[but] the bribery and corruption that have long plagued European politics are dwarfed by what is legal and accepted in Washington.
There was a time when the corporate foxes were better held in check. In 1907, a law was passed that actually banned corporate contributions to political campaigns. Until the late 19th century, corporations were not considered ‘persons’ in the eyes of the law, a status that endows corporations with surprising rights and privileges. In an even mistier time, corporate charters could, and were, revoked if the corporation failed to serve a public purpose in addition to making profit for its investors.
The geographical and global perspectives, then, afford some hope for the vision of a public policy making process dominated by citizens and their parties rather than private enterprise.
Corporations, as interested actors, will always attempt to influence the outcome of public policy deliberations. The corporate interest and the public interest don’t always have to clash; witness the recent outpouring of corporate support for affirmative action when the issue was before the Supreme Court. But far more often than not, corporations embrace positions designed only with short-term profit maximization in mind. This is antithetical to the long term planning and sometimes delayed gratification necessary for sustainable economies and ecologies.
Corporations are required to report publicly how much and to whom they are making contributions, but no law requires them to reveal which positions they are taking. This is where social investors can play a role. To date, the socially responsible investment community has engaged only sporadically on the question of corporate lobbying. We should insist upon our right to know exactly what bills and regulations our portfolio companies are pushing in Washington, and give consideration to them in our investment decisions. As Mallen Baker wrote recently in the corporate social responsibility newsletter Business Respect, “If ExxonMobil seeks to influence public policy one way or the other, and BP/Shell another — I can take that into account when rating those companies as corporate citizens and in deciding where to place my own business….Society must be able to know the face of all the players in the formation of public policy — and how to make their own opinions count.” Going forward, Trillium Asset Management will be exploring ways to promote greater transparency in lobbying among our holdings.