May 30, 2013 – As Chevron* wraps up its most expensive year of political spending to date, its shareholders are challenging whether this spending generated any value for them. Green Century Capital Management filed a shareholder resolution urging the company to refrain entirely from political spending, arguing that doing so would protect against risks to shareholder value. The resolution was filed in light of Chevron’s unprecedented $2.5 million contribution in the 2012 election.
“Chevron has not been able or willing to demonstrate that its use of company funds generates any value to shareholders,” stated Leslie Samuelrich, Senior Vice President, Green Century Capital Management. “During a time when public opinion for corporate involvement in politics is plummeting, shareholders are also concerned about the reputational and business risks that may be associated with Chevron’s highly visible involvement in politics.”
Corporate spending to influence elections is deeply unpopular with the majority of Americans across party lines. According to a 2012 poll by the Associated Press and the National Constitution Center, more than 8 in 10 Americans support limits on the amount of money given to groups trying to influence U.S. elections, with 85% support among Democrats, 81% among Republicans, and 78% among independents.
Chevron’s contribution received significant media coverage, as the $2.5 million donation was the largest single corporate donation since the Citizens United Supreme Court ruling. This donation prompted the shareholder proposal and highlighted a trend of increased spending in politics by the company: Chevron reported spending at least $3.9 million in the 2012 election, up from $965,000 in the 2010 election cycle, and $1.1 million in the 2008 election cycle.
“Unlimited, corporate, and secret money continues to undermine the principle of ‘one person, one vote’ at every step of the electoral process, including at the ballot box through unfounded voter suppression,” commented Democracy Advocate for U.S. PIRG Blair Bowie in a Huffington Post article. “This is why it’s more important than ever that Americans use the power of our votes to push back and make our voices heard.”
In light of the record spending levels in the 2012 elections, several academic studies have recently suggested that political spending represents a diversion of resources that may not, in fact, generate value to shareholders. Some reasons cited for these findings include the poor corporate governance policies in place to ensure that these measures align with the long-term interest of the company. Specifically, shareholders have limited power to monitor this use of company funds. Green Century notes the weak measures Chevron has in place to ensure the company’s spending on politics is accountable and transparent to shareholders. As evidence for this, Green Century cites Chevron’s score of 49/100 in the 2012 CPA-Zicklin Index, a collaboration between the Center for Political Accountability and Wharton’s Zicklin Center to score S&P 100 companies on 25 indicators related to political spending disclosure, policies, compliance, and oversight.
Similar proposals have been filed this year at ExxonMobil,* 3M,* EQT,* and Bank of America.*
*As of March 31, 2013, 3M Company and EQT Corporation comprised 0.00% and 1.09%, and 0.00% and 0.16% of the Green Century Balanced Fund and the Green Century Equity Fund, respectively. Other securities mentioned were not held in the portfolios as of March 31, 2013 . References to specific securities, which will change due to ongoing management of the Funds, should not be construed as a recommendation by the Funds, their administrator, or their distributor.
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