Steps to Political Accountability
Last week, as a result of a shareholder resolution led by the Sisters of Mercy of Detroit and co-filed by Trillium Asset Management, Eli Lilly agreed to disclose and have their directors oversee soft money political contributions made with corporate funds. This marks the second year Trillium Asset Management and other shareholders filed resolutions on the issue with Eli Lilly and other companies. The resolutions are part of a nationwide campaign to bring transparency and accountability to company political giving, coordinated by the Washington-based Center for Political Accountability (CPA). For the past two years, the CPA, a non-partisan, non-profit advocacy group, has been leading a shareholder campaign that includes Trillium Asset Management and 18 other institutional investors and allied groups, who are asking companies to agree to political disclosure and accountability. In the upcoming proxy season, members of the campaign are filing resolutions on the issue of political disclosure and accountability at more than 50 companies.
Responding to the agreement at Eli Lilly, CPA Co- Director Bruce Freed, said, “This is a tremendous breakthrough. The Center congratulates Eli Lilly for joining the growing number of companies that recognize their responsibility to make public and account for their political spending with shareholder money. Secrecy can no longer be the rule.”
Last year, Trillium Asset Management and members of the Interfaith Center on Corporate Responsibility helped the CPA achieve similar victories at Morgan Stanley and Johnson and Johnson. This year, Green Century Capital Management helped the CPA to persuade Coca-Cola and PepsiCo to adopt new oversight and disclosure policies for their political contributions. Under all these leadership policies, companies commit that all soft money political contributions will be reviewed at the Board level on an annual basis. In addition, each company will post a complete list of corporate political contributions on its website and disclose the guidelines and the rationale for their political giving.
Current campaign finance law allows corporations to make donations in many states and to political committees commonly known as 527s, but not to federal candidates. However, companies are not required to disclose political contributions made with corporate funds, leaving institutional investors and individual shareholders in the dark about the use of company resources for political activities. In the 2004 election cycle, companies contributed more than $75 million in soft money at the federal level. According to the CPA, some of the contributions have gone to political activities that conflict with a company’s publicly stated policies and practices or are unrelated to its core business, raising concerns for shareholders and for the democratic process.