For the first time, institutional investors are asking corporations they hold shares in to completely refrain from making donations on political campaigns.
On the 2nd anniversary of the Citizens United Supreme Court decision, asset managers Trillium Asset Management and Green Century Capital Management filed shareholder resolutions on behalf of investors at Bank of America, 3M & Target Corporation to this effect.
Target and 3M have been under scrutiny from shareholders since their 2010 support of a controversial Minnesota gubernatorial candidate. It sparked a nationwide backlash against Target and 3M continued to support the candidate even after the uproar. At Bank of America, resolution proponents are concerned
that continued political spending could expose the company’s already-battered brand to further risk, given its sizable "political footprint."
"Citizens United conferred expanded freedom to corporations and
unions to make political donations, but exercising that freedom exposes companies and their shareholders to significant risk," says Shelley Alpern of Trillium. "Better means exist for those in the business community to express their political and policy preferences that do not divert shareholder resources toward political ends that they may not support and which may cause public controversy."
Meanwhile, government watchdog groups Common Cause and the U.S. Public Interest Research Group sent letters to over 700 businesses, including all 500 of the companies in the S&P 500, asking each to sign a public pledge renouncing the use of funds from their corporate treasuries for political purposes. The letters also ask companies paying dues to trade groups, including the U.S. Chamber of Commerce, to specify that their dues should not be used for political ends.
A recent review of the academic literature on the correlation between shareholder value and political activity
has indicated that there is a negative correlation between the two and that shareholder value may be hurt by firm political activity.
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