Investors Pressure Occidental Petroleum To Increase Transparency and Accountability Around Political Contributions
Company’s support for controversial ballot initiative highlights need for increased disclosure
May 5, 2011—On Friday, Occidental Petroleum* (Occidental) shareholders will vote on a proposal requesting Board-level review of the company’s political spending and policies.
In the 2010 elections, Occidental supported the failed Proposition 23, which would have rolled back California’s landmark global warming law, with $300,000 in campaign contributions. This expenditure posed a potential risk to the company’s reputation and its stock value, potentially affecting shareholders.
“Disclosure of a company’s practices and procedures related to political spending is critical for allowing shareholders and directors to assess the risk it may pose to the company and shareholder value. Disclosure is also critical to ensure the company’s spending is in line with its own policies, positions and practices,” said Wendy Wendlandt, President of Green Century Capital Management, the lead filer of the shareholder proposal. “We want to ensure Occidental is taking the steps necessary to protect against risk,” she continued.
Green Century Capital Management is the investment advisor to two environmentally responsible mutual funds, the Green Century Balanced Fund and the Green Century Equity Fund.
Companies are not required under current law to report their soft money political donations or the portion of their payments to trade associations and other tax exempt organizations that are used for political purposes. Moreover, trade associations, which are often employed as conduits for corporate political spending, are not required to report itemized funds they receive that are spent on political activity, including advertisements supporting or opposing candidates. Many do not disclose even the names of their corporate members.
As a result, hundreds of millions of corporate dollars flow into the political process, including state judicial races and initiative and referenda campaigns, often without controls, board oversight, or public knowledge.
Currently Occidental does not disclose its payments to trade associations or other tax exempt organizations that are used for political purposes, nor does it provide comprehensive disclosure of its political contributions. In addition, the company does not provide information on its internal processes to determine how such expenditures are made or on how associated risks are minimized.
“Because Occidental has made what we consider poor choices, such as spending $300,000 of investor monies to support a backward looking and controversial environmental initiative in California (Prop 23), we believe it’s appropriate for the board to review and report on the company’s spending decisions to ensure the company is protecting shareholder value from risky political spending. We believe such transparency is more important than ever,” continued Wendlandt.
Companies are facing increased scrutiny by shareholders, the public and the media on their political spending. Last summer, retailing giant Target Corp.* faced serious outcries from stakeholders over a political contribution. “This makes it even more important that Occidental adopt robust political disclosure and accountability policies to help the company manage the heightened risks from political spending, protect shareholder value, and avoid a Target–type situation,” said Bruce Freed, President of the Center for Political Accountability.
“Two members of Occidental’s board—Peggy Foran, Chief Governance Officer with Prudential Financial,* and Howard I. Atkins, Former Senior Executive Vice President and Chief Financial Officer with Wells Fargo*—are from companies that have adopted political disclosure policies and board oversight. Prudential Financial is a leader in political disclosure; the company adopted its policy several years ago. Wells Fargo adopted a political disclosure policy earlier this year. “We hope that Ms. Foran and Mr. Atkins would help Occidental become a leader in political disclosure,” continued Wendlandt.
The shareholder proposal was co-filed by Catholic Healthcare West, Society of Mary, the Marianist Province of the United States, The Needmor Fund, Sinsinawa Dominicans and the Unitarian Universalist Association, among others.
Green Century Capital Management is an investment advisory firm focused on environmentally responsible investing. Founded by a partnership of non-profit environmental advocacy organizations in 1991, Green Century's mission is to provide people who care about a clean, healthy planet the opportunity to use the clout of their investment dollars to encourage environmentally responsible corporate behavior. Green Century believes that shareholder advocacy is a critical component of responsible investing and actively advocates for greater corporate environmental accountability.
*As of March 31, 2011, the Green Century Balanced Fund did not hold Occidental Petroleum, Target or Prudential Financial and Wells Fargo comprised 1.03% of the Balanced Fund. As of March 31, 2011, the Green Century Equity Fund did not hold Occidental or Prudential Financial and Target and Wells Fargo comprised 0.73% and 2.96%, respectively, of the Equity Fund. Please refer to the Green Century Funds website for current information regarding the Funds' portfolio holdings. These holdings are subject to risk as described in the Funds' prospectus. References to specific investments should not be construed as a recommendation of the securities by the Funds, their administrator, or their distributor.
You should consider the Funds' investment objectives, risks, charges, and expenses carefully before investing. To obtain a Summary Prospectus and/or Prospectus that contains this and other information about the Funds, please click here, email firstname.lastname@example.org, or call 1-800-93-GREEN. Please read the Summary Prospectus and/or Prospectus carefully before investing.
The Green Century Funds are distributed by UMB Distribution Services, LLC. 5/11
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