There could not be a better time to start investing responsibly than now. Why do I say this? Corporate political contributions and lobbying, that’s why.
Ever since the Citizens United case in 2010 made it legal for corporations to give unlimited funds in support of political campaigns, the floodgates have been opened and the corporate dollars are flowing. According to a November 2011 report by the Investor Responsibility Research Center Institute, over $1 billion was spent by corporations in 2010 on efforts to influence the political process.
Best Buy and Target were the first companies to come under fire for directing funds toward an anti-gay gubernatorial candidate in Minnesota. Now, it’s the norm, rather than the exception.
One of the most important tenets of socially responsible investing (SRI) is shareholder advocacy, using your influence as a shareholder of a company to make positive change. This is done either through direct engagement or through shareholder resolutions. Typically, this activity happens through non-governmental organizations (NGOs,) large pension funds or investment managers and mutual funds. We use mutual funds that are focused only on responsible investing and that have a mandate to engage in shareholder advocacy.
We also team up with NGOs, such as As You Sow and the Interfaith Center for Corporate Responsibility (ICCR.) ICCR recently announced their 2012 Shareholder Resolutions Guide which details all of the efforts they are undertaking this year to make positive change with companies.
There are a broad range of issues they are tackling this year including fracking, climate change, gender equality, slavery and human trafficking. As of now, 160 resolutions have been filed along with numerous instances of direct engagement with companies.
Of course, one of the most important issues is corporate campaign and lobbying expenses. The report states, "In a system where one person, one vote is the supposed rule, American corporations exercise an outsized influence. Individual Americans are becoming adamant that elections be determined by votes, rather than deep-pocketed corporations."
There are now shareholder resolutions pending against some of the biggest names in the S&P 500 regarding political spending and lobbying, including 3M, AT&T, Bank of America, Chevron, Coca Cola, CVS, Deere, Ford, General Electric, Goldman Sachs, Halliburton, IBM, JP Morgan Chase, Johnson & Johnson, Northrop Grumman, Pepsi, Pfizer, UPS and Verizon.
Proponents of Citizens United and corporate campaign contributions say that giving to campaigns simply offers more opportunity to educate the voters and that it doesn’t buy political favor. We’re not buying it. Money spent on political campaigns and lobbying by corporations is meant to influence politicians and policy, plain and simple. This is money that should be spent on research and development, hiring new workers or expanding operations.
The goal of these resolutions is for companies to either stop making campaign contributions, either directly or through trade associations, or to put in place specific guidelines and institute board oversight of the process. They would also limit lobbying activities.
In the aftermath of the Best Buy and Target instances, both companies instituted guidelines for contributions and board oversight. They also took a big hit from consumers who were unhappy with their actions.
You, as an investor have a say: Educate yourself by reading the proxy materials that are sent to you, and do your own research on the internet – there are numerous resources to choose from. Or, work with a financial advisor who specializes in responsible investing and shareholder advocacy who can help empower you to be a change agent through your investment dollars.
Peter Krull is president and founder of Krull & Company, a socially and environmentally responsible investment management firm located in Asheville, NC. They specialize in helping clients align their investments with their values. He can be reached at 877-235-3684 or www.krullandcompany.com