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Governance

Investor coalition files proposals at 50-plus companies on lobbying activities

A coalition of about 74 institutional and individual investors, including some public pension funds, filed shareholder proposals at more than 50 companies in the U.S. and Canada this proxy season requesting reports on their federal and state lobbying activities, said a news release Friday from the American Federation of State, County and Municipal Employees and Walden Asset Management, which coordinated the coalition.

The shareholder proposals request information on "federal and state lobbying payments, payments to trade associations used for lobbying, and payments to any tax-exempt organization that writes and endorses model legislation," according to the release.

On the reason for the proposals, AFSCME and Walden Asset Management said that "investors are concerned lobbying can pose reputational risks if it contradicts a company's publicly stated positions."

Undisclosed payments for trade association lobbying is one area of concern for coalition members.

"In some cases, a trade association may actively lobby for issues that are contrary to a company's public statement or values. Investors advancing these resolutions believe management needs to review trade association memberships to assess whether a trade association is accurately representing the company's interests and policy positions and should have procedures in place to manage conflicts when a trade association's position strongly differs from the company on a priority issue," the release said.

One area where corporate and trade association values may be misaligned is climate change. "Many companies have programs to address climate change, yet are also members of the U.S. Chamber of Commerce, which has consistently opposed legislation and regulation to address climate change," the release said.

Since 2012, members of the coalition have filed more than 340 shareholder proposals on corporate lobbying, which have received more than 25% investor voting support on average, the release said.

Companies targeted this proxy season include AbbVie, Alphabet, Aetna, BlackRock (BLK), AT&T, Boeing, Citigroup, Exxon Mobil and Goldman Sachs Group (GS). Proposals have already been withdrawn at Atmos Energy, Encana, Duke Energy, Goodyear Tire & Rubber, Textron, SCANA and Travelers Cos. because those companies have taken steps to address investor concerns. At Walt Disney Co.'s annual meeting Thursday, about 37% of investors supported the coalition's proposal. The group's 2018 proposals have also already been voted on at Emerson Electric Co. and Tyson Foods, where they were supported by 39.6% and 12% of shareholders, respectively. ​

More than $3.3 billion total was spent on federal lobbying last year, with companies spending about $2.6 billion. At the state level, companies spend more than $1 billion annually on lobbying. Trade associations, meanwhile, spend more than $100 million lobbying annually, the report said.

The coalition's pension fund members include the $209.1 billion New York State Common Retirement Fund, Albany; $8 billion Rhode Island State Investment Commission, Providence; and the $4.8 billion Philadelphia Public Employees' Retirement System.