Religious shareholder activists are portrayed as modern-day Davids who take on corporate Goliaths. The reality is they are Davids serving a Goliath of a different stripe.

Religious shareholder activists are portrayed as modern-day Davids who take on corporate Goliaths. The reality is they are Davids serving a Goliath of a different stripe.

When graying cohorts of nuns, priests, clergy and other religious proxy shareholders hitched their wagon to the Center for Political Accountability’s crusade against Citizens United and corporate political spending, it was reported by most news sources as cute and endearing. After all, it’s a bit of the David v. Goliath scenario playing out as the faith-based underdogs take on companies with sinister motives and deep pockets full of “dark money” which they spread around to the American Legislative Exchange Council, the U.S. Chamber of Commerce, Republican candidates and other bêtes noires of the left.

If one reads the media reports following the release this week of the 2013 “CPA-Zicklin Index of Corporate Policy Accountability and Disclosure” you’d think little David scored big-time with a single stone fired from CPA’s sling at the corporate American Goliath. Well . . . yes. And no. Yes, in that some companies capitulated to CPA and proxy shareholders for more transparency. No, in that many other companies held fast to privacies guaranteed by Citizens United despite the onslaught of proxy resolutions submitted by a matrix of leftist organizations, which includes the nominally religious-based investment groups As You Sow and the Interfaith Council on Corporate Responsibility. Little David is indeed far more of a Goliath than the general public has been led to believe.

This Goliath’s “transparency” endgame is but a smokescreen for “name-and-shame” crusades against companies that dare support candidates, trade associations and causes antithetical to the left’s agenda. For example, the CPA-Zicklin Index ominously warns that “nonprofit 501(c)(4) groups … labeled ‘dark money’ conduits when they make independent expenditures without disclosing donors, have increased significantly in number and magnitude.” But that “dark money” cloud has lifted significantly, claims CPA:

Almost one out of every two companies in the top echelons of the S&P 500 has opened up about payments made to trade associations. Eighty-four of the 195 companies (43 percent) made disclosure of their payments to trade associations and the amounts used for political (and lobbying) purposes, while 14 (seven percent) said they asked trade associations not to use their payments for political purposes. In 2012, the overall figure was 41 percent. That included 36 percent that made some disclosure, and five percent that restricted their payments.

But how can this be? According to the Manhattan Institute’s Center for Legal Policy’s 2013 Proxy Monitor report, released earlier this summer, CPA is simply wrong when it claims increasing shareholder support for proxy resolutions related to political spending. MI’s independent evaluation of proxy resolutions at Fortune 250 companies found:

Proposals related to political spending or lobbying continue to receive relatively modest support from shareholders: proposals in this class, on average, received support from only 18 percent of shareholders in 2013, unchanged from 2012. Moreover, the average support for shareholder proposals relating to political spending but not lobbying fell from 17 percent to 16 percent year over year, and the support for proposals relating to lobbying dropped from 22 percent to 20 percent. Thus, the support for this class of proposals overall appears to be falling, a trend masked by the greater share of 2013 proposals related to lobbying, which tend to attract marginally more shareholder support than those devoted purely to political spending.

Thus, even though the total number of proposals related to political spending and lobbying at Fortune 250 companies increased—and there is often increased media attention on the issue—shareholder support is declining.

Private corporate donations to associations such as ALEC that oppose such things as the Patient Protection and Affordable Care Act, hydraulic fracturing or renewable energy mandates based on inconclusive climate-change theories are anathema to Goliath. Once donations to trade organizations are made transparent – ostensibly to “protect the reputation of the company” – activist shareholders then can use that information to smear the company’s reputation, which poses a major threat to the integrity of shareholder value.

Ultimately, the transparency goal of CPA and its shareholder acolytes can be boiled down to quieting all opposition to the left’s agenda. Got that? Activists engaged in all manner of political activities want to silence all parties with whom they disagree. Readers may note that unions raised $400 million for the 2012 election cycle, spending it on a variety of liberal causes and candidates at the national, state and local levels. Not a peep from CPA or its “faith based” activists on that. Billionaire donor George Soros – no conservative he – also was onboard, donating “$1 million each to America Votes, a group that coordinates political activity for left-leaning environmental, abortion rights and civil rights groups, and American Bridge 21st Century, a super PAC that focuses on election-oriented research,” according to the New York Times.

And tell me again: Which party won that last presidential election and is hard at work guaranteeing the continued regulatory morass of such government agencies as the Environmental Protection Agency, the Federal Communications Commission and the Federal Trade Commission? It should bear mentioning here that Mr. Soros’ Open Society Institute has been funding – you guessed it – Bruce Freed’s Center for Public Accountability, which is responsible not only for the “CPA-Zicklin Index” but as well authorship of the shareholder proxy resolutions submitted by AYS and ICCR. As reported by Mike Ciandella in a 2012 essay for the Media Research Center’s Business and Media Institute, “The Center for Political Accountability itself received $995,000 in Soros funds since 2004.”

Keep this in mind the next time you see or read cute “news” reports about so-called “religious” shareholder activists fulminating from their buses against the political speech of corporate America. The reality is that they’re real-life Goliaths pretending to be David with a slingshot.


  • Sam

    I find this to be truly puzzling. I was taught in Econ 101 that for a free market to yield Pareto-optimal outcomes, actors had to be rational, and they had to have perfect information about the transactions they were engaged in. In the real world, neither are true, but markets can approximate these conditions. It seems to me that by requiring companies to disclose more information about their operations–information that could affect my willingness as a consumer to do business with them–it would lead to better outcomes because I have more information to make better-informed, more rational decisions with.

    You seem to think that transparency will allow companies to be smeared, yet there is nothing preventing business-friendly trade associations or advocacy groups from combating efforts on the left that criticize the activities of big business. That’s democracy, and that freedom is one of the things that makes America wonderful. But it seems as if you think that more information in the hands of consumers is dangerous, that the more consumers know, the more they will act on it in ways that are not friendly to established businesses. If that happens, that’s a good thing, as it shows that consumers are taking more information into account and making decisions that they perceive to be better for themselves. That’s how the free market is supposed to work, and keeping that information from me means that I don’t make choices that are going to make me as well off. How does keeping the public in the dark promote a better-functioning, Pareto-optimal marketplace?

    • BruceEdwardWalker

      Perhaps if you read my previous posts on shareholder activism you would understand a bit more clearly the point I’m making — there are many groups that engage in political activism far beyond the corporate structure. These are groups with political voices remaining unfettered whether McCain-Feingold was overturned by Citizens United or not. In a country where government is growing at exponential rates with the concomitant rise in regulations and enforcement thereof, it becomes necessary — imperative — that companies maintain some type of push-back mechanism for their own good, and to the benefit of their employees, shareholders and customers. That mechanism is political speech, which may or may not be private according to the desires of said corporation. Refer to the anecdote I provided last week re: Target Corps’ donations to a gubernatorial candidate in its home state of Minnesota — strictly on the candidate’s economic policies. Because the candidate had strong views against same-sex marriage, a small group of same-sex marriage advocates targeted Target. Different topics — social and economic — but that made no never mind to the activists, and Target capitulated. So, you see how social activists can negatively impact a company’s bottom line on completely unrelated issues. Hope this helps to clarify.

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