Demand Companies Disclose Political Activity
Fossil fuel companies exert a great deal of influence over climate and energy policy at the federal, state, local and international levels – yet much of this influence occurs behind closed doors. Big corporations like ExxonMobil and Chevron can get away with spending nearly unlimited amounts lobbying for policies that benefit them at the expense of the public and the planet without voters, customers, or shareholders even knowing.
Weak disclosure requirements restrict the amount of information that is publicly available about companies' political activities, especially when it comes to their payments to third-party groups that lobby for harmful policies on their behalf. This allows Big Oil companies to maintain rosy public images while blocking climate action behind the scenes.
For example, ExxonMobil, Chevron, BP, and Shell were lauded last year for committing to "advocate sound policy and regulations on methane" when they signed on to a set of guiding principles designed to curb methane emissions. At the same time, the American Petroleum Institute, a trade association led and funded by those same companies, is lobbying for the EPA to weaken methane rules.
Shareholders are fighting back against deceptive lobbying practices by putting forth resolutions demanding that companies disclose their political activity. However, major mutual fund companies like State Street, which has sway over big companies because it manages millions of our retirement dollars, allow fossil fuel companies to continue hiding behind industry groups and third-party lobbyists by refusing to support these resolutions. While State Street supported over 50% of political spending resolutions in 2017, it decreased its support to 39% in 2018. We applaud State Street for leading among the biggest mutual fund managers (BlackRock, Vanguard, and Fidelity), but urge it to go further to meet peers like Morgan Stanley and AllianceBernstein, which supported 100% of political spending disclosure resolutions in 2018.
Tell State Street to hold companies accountable and demand that they disclose their political activity.
Reckless political activity can have a real impact on shareholder value. When companies play in politics, they risk public backlash or perceptions of being untrustworthy or corrupt. It’s no surprise then that 88 percent of both Democratic and Republican primary voters agree that corporations should be required to disclose their political spending.
State Street has signed onto the United Nations Principles for Responsible Investment (PRI), committing to upholding six principles of sustainable investing, including the principle to “support shareholder initiatives and resolutions promoting ESG disclosure.” Corporate spending in politics clearly falls under this category.
Big Oil companies are not the only companies from which State Street should be demanding better disclosure. Other companies facing requests from shareholders to disclose their political activity include Tyson Foods, Disney, Verizon Wireless, Ford Motor Company, and General Motors.
State Street encourages companies to be transparent about the environmental and social risks and opportunities they face and to adopt robust policies and processes to manage such issues. As such, we encourage State Street to follow through by ensuring that all companies in its portfolio are appropriately disclosing political spending.
Tell State Street to use its voting power, amassed from its clients’ investment dollars, to support political activity disclosure at all its companies.