2018 Proxy Season: Our Focus on Corporate Lobbying Practices

This proxy season Boston Common joined 74 other investors in filing lobbying disclosure resolutions at 50 companies in the US. We were lead filers on resolutions at American Water Works (40.3%) and Verizon Communications (36.3%) which in May received strong support from shareholders. We filed this resolution because unlike some of its peers including Alliant Energy, Ameren and Atmos Energy, American Water Works is a member of ALEC (American Legislative Exchange Council) which is controversial for promoting bills that undermine regulations to address issues like climate change, workplace safety and workers’ rights. More importantly, the company does not disclose its memberships in and payments to trade associations and other organizations nor its related policies and oversight mechanisms.  In the case of Verizon Communications, we had similar concerns with their membership in ALEC- from which Sprint and T-Mobile have left. Without transparency and accountability, corporate assets can be used to lobby for public policy objectives that can pose reputational risks and could be used to indirectly support positions that are opposed to those of its corporate position.

Boston Common has been part of a coalition of investors since 2011 that has filed over 350 shareholder proposals asking companies to disclose their federal and state lobbying expenditures, trade association payments and payments to tax exempt organizations that write and endorse model legislation. In 2013 Boston Common took this global by engaging half of the FTSE 100 on UK company influence in US politics through their trade associations.  Through Boston Common’s C-Suite engagement with GlaxoSmithKline, we were instrumental in getting the company to revise their oversight and due diligence process for vetting trade associations and ultimately leaving ALEC as more than 100 companies have now done.

During the last two years, we have moved our focus to encouraging companies to promote progressive climate policies through their public policy engagement and trade association memberships. In May, Lauren Compere, Director of Shareowner Engagement spoke at two PRI Climate Forums in Toronto and Montreal to highlight the work we have done on climate lobbying practices in the US and globally.  As part of these events PRI launched a new publication, Converging on Climate Lobbying:  Aligning Corporate Practice with Investor Expectations which features Boston Common’s case study on lobbying engagement with the banking sector under our Banking on a Low Carbon Future initiative. This case study concluded that banks fall short in encouraging trade associations and industry groups to advocate for progressive climate policies, at least in line with their own policies. By not actively engaging with their own trade associations, banks could undermine prospects for business opportunities linked to progressive market regulations and subsidies to support the low-carbon transition.  We do hope, however, to raise the level of progressive climate lobbying by banks across the globe and we aim to enable the market mechanisms and regulations to accelerate the transition to a low-carbon economy.

 

The information in this document should not be considered a recommendation to buy or sell any security.

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