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The Disclosure Police Target Walmart

3:38 PM, Jun 5, 2014 • By MICHAEL WARREN
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In general, the process works like this: Activist shareholders like those at Walmart urge their fellow shareholders to support proposals that require the company to disclose its political spending. If the proposal fails, the activists ramp up the public relations campaign by organizing letter-writing campaigns and promoting boycotts or rallies through friendly media, demanding to know why a company refuses to disclose. Activists will often point to the negative publicity they help generate as reason for the company to be more transparent. Bad publicity hurts the bottom line, after all.

But even if activist proposals succeed and shareholders vote to adopt stricter disclosure rules, the companies aren’t any better off. Affiliated activist groups and media outlets now have the ammunition they need to demand the company stop funding organizations that engage in (usually pro-business and conservative-leaning) political activity. The organizations are trade groups like the Chamber of Commerce, the National Association of Manufacturers, the American Petroleum Institute, and others that lobby for business and industry interests in Washington. More negative press reduces shareholder value. Really, it’s for the good of the company to pull out of the political spending business altogether. (Unsurprisingly, activists don’t appear interested in the disclosure of labor union political spending.)

In 2014 alone, companies like AT&T, Chevron, ConocoPhillips, JPMorgan Chase, Verizon, UPS, and IBM have all had transparency proposals like these presented at their shareholder meetings. The proponents and co-filers are a who’s who of left-wing investment funds and labor groups pension funds: the AFSCME pension plan, Walden Asset Management, Domini Social Investments, the United Steel Workers of America, and others. Leading the charge this year is Zevin Asset Management, who has filed or co-filed 11 proposals at 9 major corporations in 2014. Zevin calls itself “pioneers of socially responsible investing,” and Walmart is just the latest to end up in the fund’s crosshairs.

“Walmart is the largest employer in America yet is far behind other large companies on what it discloses about its lobbying activities,” said Zevin official Sonia Kowal in a press release this week. “A company that is such a large part of the American economy should not be seeking to impact legislation behind closed doors. Shareholders need better, more complete disclosure of how Walmart uses its resources to affect legislation including on issues such as raising the minimum wage or food stamp cuts.”

Walmart’s board protests that characterization of its membership in retail and trade organizations. “Although lobbying is not the primary purpose of these associations, the membership dues paid by Walmart and other members may be part of the funds they use to engage in lobbying activities,” reads the company’s statement. “Walmart may not agree with every lobbying action taken by such associations. Accordingly, the Board believes that additional disclosures regarding the specific payments made to these trade associations would not necessarily present an accurate reflection of Walmart’s positions of certain public policy issues.”

But that misses the point. It’s not that Zevin actually objects to Walmart’s political positions. Long the target of labor unions and liberals, the company has tried to placate its opponents by donating more to Democratic candidates and causes. Last month, President Obama even spoke at a Walmart store in California about the need to address one high-profile progressive agenda item: climate change. Obama touted the company’s efforts to use more energy-efficient buildings and vehicles.

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