Lobbying Expenditures Disclosure

Resolution Text

RESOLVED, the stockholders of Capital One Financial (“COF”) request the preparation of a report, updated annually, disclosing:

1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.

2. Payments by COF used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.

3. COF’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.

4. Description of management’s and the Board’s decision-making process and oversight for making payments described in sections 2 and 3 above.

For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which COF is a member.

Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels.

The report shall be presented to the Public Responsibilities Committee and posted on COF’s website.

SUPPORTING STATEMENT

Full disclosure of COF’s lobbying activities and expenditures is needed to assess whether COF’s lobbying is consistent with its expressed goals and stockholders’ interests. COF spent $25,190,000 from 2010 – 2022 on federal lobbying. This does not include state lobbying, where COF also lobbies, for example spending $1,242,615 on lobbying in California from 2011 – 2022.

Companies can give unlimited amounts to third party groups that spend millions on lobbying and undisclosed grassroots activity.1 COF fails to disclose its payments to trade associations and social welfare groups (SWGs), or the amounts used for lobbying, to stockholders. COF discloses memberships in the American Bankers Association (ABA), Bank Policy Institute (BPI) and US Chamber of Commerce, which together spent $92,836,000 on federal lobbying for 2022. COF’s 2022 disclosure omits trade association like the Securities Industry and Financial Markets Association and SWGs like the Public Affairs Council

COF’s lack of disclosure presents reputational risks when its lobbying contradicts company public positions. For example, COF publicly supports addressing climate change, yet the Chamber reportedly has been a “central actor” in dissuading climate legislation over a two-decade period,2 and BPI lobbied the Securities and Exchange Commission to weaken proposed climate disclosure rules.3 A recent analysis looking at inconsistencies between banks’ public climate commitments and their direct and indirect climate lobbying practices noted COF failed to publicly support the Inflation Reduction Act.4 And while COF does not belong to or support the American Legislative Exchange Council, which is attacking “woke” investing,5 its trade associations do, as the Chamber sits on its Private Enterprise Advisory Council6 and ABA supported its 2022 annual meeting.7

Reputational damage stemming from these misalignments could harm stockholder value. COF should expand its lobbying disclosure.

1 https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly-reported/. 

2 https://www.washingtonpost.com/politics/2023/08/02/climate-group-pushes-big-tech-exit-nations-largest-business-lobby/. 

3 https://www.eenews.net/articles/banks-to-sec-climate-rule-poses-real-world-problems/. 

4 https://www.ceres.org/news-center/press-releases/new-benchmark-analysis-us-banks-reveals-inconsistencies-between-climate. 

5 https://www.wbur.org/hereandnow/2023/03/22/esg-investing-fossil-fuels.

6 https://ohiocapitaljournal.com/2023/09/06/coming-soon-in-ohio-alec-releases-new-raft-of-model-legislation/. 

7 https://documented.net/investigations/heres-who-bankrolling-alec-2022-annual-meeting.