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Corporations Under Pressure To Curb Political Spending

Liz Kennedy

Corporate accountability campaigns are gaining steam and already racking up victories.This week has seen several stunning victories for direct citizen action. On Wednesday, Coca-cola renounced its membership on the private enterprise board of ALEC, stating that:

The Coca-Cola Company has elected to discontinue its membership with the American Legislative Exchange Council (ALEC). Our involvement with ALEC was focused on efforts to oppose discriminatory food and beverage taxes, not on issues that have no direct bearing on our business. We have a long-standing policy of only taking positions on issues that impact our Company and industry.

Already this year Pepsi had chosen to end its decade-long membership with the organization, and yesterday Kraft followed suit. 

ALEC is the conservative group that connects businesses to conservative state legislators to push for legislation that prioritizes corporate special interests over the public interest. But ALEC is also behind the voter ID and other voter suppression laws that threaten to disenfranchise millions of voters in this year’s elections. These laws attempt to determine the outcome of an election by choosing who votes, instead of the old-fashioned way of convincing voters to choose you. Now ALEC has been unmasked as the proponents behind the “Stand Your Ground" law -- otherwise known as “Kill at Will” -- that has resulted in no arrest for the killer of Trayvon Martin.

A corporate accountability campaign is an effort by a group of people to communicate their displeasure about an action by a corporation. This may be in the hopes that the corporation will forebear from continuing that course of action. Though there is currently an attempt to obfuscate this issue it is crucial to remember that corporations, like any other actors, have no right to be free from the legal consequences of their actions.

In this case, Color of Change encouraged its supporters to tell the companies who fund ALEC, which include Wal-Mart, Koch Industries, and AT&T, that they were being tarnished through their association with ALEC’s voter suppressive agenda, and that consumers might vote with their dollars and avoid buying their products so as to stop indirectly supporting the work of ALEC with their consumer spending.

Citizens United unleashed corporations to flex their financial muscle more directly in the political realm. To counter this development, many people are seeking to influence how corporate actors engage in politics. Corporations are coming under increased scrutiny from both citizens and investors who are concerned about the processes and consequences of corporate political spending. Corporate political spending distorts democracy and drowns out the voices of the 99 percent in ways that be troubling to citizens who care about being heard in the political process; and it carries potential risks to a corporation’s brand, reputation, and underlying shareholder value that is of concern to investors.

The coming months will see an eruption in citizen action when thousands of activists bring their message of accountability straight to the corporations themselves. This “Shareholder Spring” promises actions at Bank of America, Target, Sallie Mae, 3M, and other companies

Shareholder resolutions have been filed on a range of issues:

  • Disclosure of all political spending, both direct and indirect through third party groups such as the Chamber of Commerce;
  • Board oversight of any political spending decisions to ensure thoughtful risk assessment and that any political spending is in line with a companies stated policies, including anti-discrimination policies;
  • Shareholder approval of political spending, so that shareholder money isn’t going to support causes that are antithetical or deleterious to shareholder value; and
  • Some resolutions are directly asking corporations to refrain from spending in politics altogether.                                            

The first step towards holding corporations accountable is to know what they are up to. To that end, the SEC has come under tremendous pressure to require publicly traded companies to disclose the money that they spend in politics. Crucially, this rule would include the money they spend through third parties, such as the Chamber of Commerce, which was the biggest outside spender in the 2008 elections. Currently, non-profit groups are not required by the FEC to disclose their donors, even though some are playing large roles in electoral politics.

Citizens and shareholders are not waiting for the government to act to protect their interests through legislative or regulatory action. People are standing up and expressing their own displeasure at the way corporate interests are distorting democracy and having potentially negative impacts on investments. This spring get ready for more action and accountability.