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Letter presses corporations to align election spending with core corporate values.
NEW YORK, NY, THURSDAY, AUGUST 10, 2023 – Today members of the Interfaith Center on Corporate Responsibility (ICCR) announced they had sent letters to members of the Business Roundtable urging them to align political spending with their stated core values, to mitigate both reputational risks to the company, and broader risks to democracy.
Investors have long called for the alignment between a company’s political engagement and its stated values and mission arguing that any misalignment represents a source of both firm-level and systems-level risk that redounds to all corporate stakeholders.
ICCR members, a cross-section of faith-based investors, asset managers, pension funds, foundations, and other long-term institutional investors, have over 50 years of experience engaging with companies on environmental, social, and governance issues that are critical to long-term value creation, including political spending.
The investors question how corporate political donations may contribute to the degradation of democratic systems including free and fair elections at both the federal and state levels and a healthy civic discourse that supports free speech and tolerance for diverse viewpoints.
According to the letter: “Companies and investors both depend on a resilient democracy and strong rule of law to provide the economic and legal certainty that facilitates long-term market stability and allows companies to compete on the merits of their products and services. For decades, investors have sounded alarms about the strains that corporate political spending puts on our democratic institutions…”
According to a study released by the Center for Political Accountability (CPA), public companies “are pouring millions of their dollars into political spending that ultimately bankrolls the attack on democracy from Washington, D.C. to state capitals nationwide.”
Said Tim Smith, ICCR’s Sr. Policy Advisor, “Company’s election-oriented political spending or lobbying is both direct and indirect through its trade associations and their contributions to politically active nonprofits. Companies face reputational risk when they publicly promote one position while their trade associations actively promote an opposite position. The insurrection at the U.S. Capitol on January 6th, 2021 offers a fresh example of the seriousness of these risks when the press quickly and forcefully called out corporations that had supported the legislators who, under false pretenses, failed to certify the 2020 Presidential election. As leaders in their respective sectors, we are pleased to offer these tools to help BRT companies better navigate these risks and thereby model best practices for their peers.”
The first key resource is the Erb Principles for Corporate Political Responsibility, released in March after a lengthy, deliberative stakeholder process by the Erb Institute of the University of Michigan. Developed as a complement to the BRT’s statement on the Purpose of the Corporation and the BRT’s actions to support the peaceful transfer of power in 2021, the Erb Principles propose a practical, non-partisan, and comprehensive definition of corporate political responsibility (CPR ) as a first step in establishing CPR as a new norm that will reduce business risk, strengthen civic trust and foster collaborative problem-solving.
“BRT members believe that creating long-term value for shareholders requires creating value for customers, employees, and society,” said Elizabeth Doty, Director, Corporate Political Responsibility Taskforce, at The Erb Institute at the University of Michigan. “But their ability to deliver on this ‘license to operate’ depends on well-functioning markets, a stable regulatory environment, strong civic institutions, a healthy civil society, and a flourishing natural environment. We developed the Erb Principles for CPR to clarify what their conviction means for responsible corporate political influence and how companies can contribute to the conditions for shared prosperity. We were delighted to discover that business leaders and stakeholders with diverse views on issues, agreed on these foundational, non-partisan principles.”
The second important resource is the CPA-Zicklin Model Code of Conduct for Corporate Political Spending, developed by the Center for Political Accountability and The Wharton School’s Zicklin Center for Governance and Business Ethics, with extensive input from corporate governance experts, investors, and companies. The Model Code provides a broad framework for companies to approach and govern their election-related spending with treasury funds. Among other things, the Model Code recommends that companies have policies for their spending, ensure robust board oversight, disclose all expenditures, and analyze societal impacts and alignment of expenditures with stated values.
Said Bruce Freed, Director of the Center for Political Accountability, “We are pleased that ICCR calls on companies to adopt the Model Code. This is an important action for protecting companies and our democracy. The Model Code provides companies with a framework for approaching and governing their election-related spending. Beyond that, it gives corporate leadership greater control over their political spending and a clear justification to “just say no.”
Added Smith, “In its March 2021 statement following the Jan 6th attack on Congress, the BRT said, ‘The right to vote is the essence of a democratic society… Business Roundtable members believe state laws must safeguard and guarantee the right to vote’. Our intention in sending this letter is to remind BRT members that regular scrutiny of their corporate political activities is imperative should this statement ring true.”
About the Interfaith Center on Corporate Responsibility (ICCR)
The Interfaith Center on Corporate Responsibility (ICCR) is a broad coalition of more than 300 institutional investors collectively representing over $4 trillion in invested capital. ICCR members, a cross-section of faith-based investors, asset managers, pension funds, foundations, and other long-term institutional investors, have over 50 years of experience engaging with companies on environmental, social, and governance (“ESG”) issues that are critical to long-term value creation. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn, and Facebook.
Attack on Congress seen as wake up call for companies on the inherent risks of corporate money in politics to both business and the public interest.
NEW YORK, NY, THURSDAY, FEBRUARY 11TH, 2021 – A group of 81 institutional investors representing $US1.69T have endorsed a statement sent to CEO members of the Business Roundtable in the aftermath of the January 6th attack on Congress, urging them to refrain from the practice of political giving for at least six months or until such time as a thorough risk assessment can be undertaken.
Citing the potential risks of political spending not only to businesses, but to the broader political system and the public interest, the investors further called on companies to consider implementing more permanent steps to end all political spending including through direct donations to politicians, Political Action Committees (PACS), Super PACs, 527 committees or anonymously through trade associations and “social welfare” organizations (also known as 501(c)(4) groups).
In response to the 147 members of Congress who voted against certifying the results of the Presidential election, many companies saw the reputational risks inherent in these donations and, as a result, issued statements announcing that they were temporarily withdrawing their financial support for the legislators; another group of companies comprised of mainly banks and tech companies announced they were suspending all political spending, pending a more comprehensive review.
The investors say these suspensions and reviews are good first steps, but bolder action is needed.
“Many corporations are urgently evaluating appropriate options for their companies related to political spending, a welcome and important step; this is a timely moment for an in-depth board review of these practices,” said Tim Smith of Boston Trust Walden. “Investors have long raised the issue of reputational risk for companies from controversial lobbying and political spending related to elections.”
The statement cites the distortion of public policy and corrupting influence on political systems caused by corporate political spending and calls out its destabilizing effect on the broader economic and cultural environment which can inhibit the long-term sustainability of business. This viewpoint has been shared in many opinion pieces, including by prominent industry thought leaders.
Specifically, the investors request that companies strongly consider voluntarily:
- Ending all political spending at the federal, state and local levels;
- Shutting down corporate Political Action Committees (PACs);
- Ending all contributions to Super PACs;
- Ending contributions to partisan state-focused 527 committees;
- Ending the flow of corporate “dark money” to so-called “nonprofit” groups;
- Fully disclosing how much and to which intermediaries they contribute, including trade associations and other third-party groups that use that money to influence policy.
“While companies may perceive a short-term gain from funneling money to elected officials, the reputational risk that they face and, more critically, the corrosive effect on democracy of corporate money in politics should give them pause,” said Josh Zinner, ICCR’s CEO. “January 6th should have sounded the alarm: it is vitally important for companies to carefully evaluate the problematic impacts of their political spending.”
The investors say they are bringing these requests into their ongoing engagements with portfolio companies.
About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 50th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $2 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn and Facebook.
THURSDAY, JANUARY 28, 2021 – Today the Interfaith Center on Corporate Responsibility (ICCR), a coalition of investors representing over $US 2 trillion in assets under management that engages companies on environmental, social, and governance issues, released a statement it sent to the CEO members of the Business Roundtable (BRT) urging them to refrain from political spending for six months in order to allow for a thorough assessment of its inherent risks.
The investors further urged corporations to use the hiatus to consider implementing more permanent steps to end all political spending including through direct donations to politicians, Political Action Committees (PACS), Super PACs, 527 committees or anonymously through trade associations and “social welfare” organizations (also known as 501(c)(4) groups). The statement was sent to CEO members of the BRT and is being circulated to investors for endorsement.
The statement is intended to prompt a thoughtful reckoning and due diligence by companies around the inherent risks of political spending not only to businesses, but to the broader political system and the public interest. According to the statement:
“The distortion of public policy and corrupting influence on our political system caused by corporate political spending has a destabilizing effect on the broader economic and cultural environment, inhibiting the long-term sustainability of business and threatening to unravel the social fabric.”
“While companies may perceive a short-term gain from funneling money to elected officials, the reputational risk that they face and, more critically, the corrosive effect on democracy of corporate money in politics should give them pause,” said Josh Zinner, ICCR’s CEO. “January 6th should have sounded the alarm: it is vitally important for companies to carefully evaluate the problematic impacts of their political spending.”
On the heels of the violent attack on the Capitol on January 6th and subsequent public outrage against the 147 members of Congress who voted against certifying the results of the Presidential election, many companies saw the reputational risks inherent in these donations and, as a result, have temporarily ended their support for the implicated legislators; another group of companies comprised of mainly banks and tech companies are suspending all spending, pending a more comprehensive review. According to Public Citizen, since 2016, these 147 members have received at least $170 million combined from corporate and trade group PACs[1].
The investors say these suspensions and reviews are good first steps, but bolder action is needed.
“Many corporations are urgently evaluating appropriate options for their companies related to political spending, a welcome and important step; this is a timely moment for an in-depth board review of these practices,” said Tim Smith of Boston Trust Walden. “Investors have long raised the issue of reputational risk for companies from controversial lobbying and political spending related to elections.”
ICCR members and other investors have long pressed companies for transparency around their political spending to curry influence on legislation, as a way to ensure accountability and consistency with their public messaging.
A soon to be published analysis of 2020 election cycle spending by the Fortune 250 from the Sustainable Investments Institute (Si2) found particularly partisan company-connected political spending, which runs counter to the popular narrative of bipartisan giving. Just seven companies gave more than $7 million to two Super PACs that overwhelmingly funded attacks on Democratic candidates for the U.S. House and Senate. Si2 also found that the vast majority of corporate-connected political contributions went to Republicans in the South (79% of state candidates and 69% of state party giving) and Midwest (64%).
“This could be an epiphany moment for companies,” said Bruce Freed of the Center for Political Accountability. “The level of risk they face from political spending has grown exponentially. New policies, including a code of conduct for political spending, are required to guide their decision-making and risk-evaluation as they consider how their spending impacts their companies, society and our democracy.”
About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 50th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $2 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn and Facebook.
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