Green Century Capital Management, Inc., a Boston-based investment adviser to the environmentally responsible Green Century Funds, announced that Eastman Kodak Company (Kodak) joins 79 other companies that have agreed to greater political transparency and accountability, according to the Center for Political Accountability (CPA).
Kodak will provide increased transparency on its payments to trade associations and other tax exempt groups and will provide more information on its accountability structures governing its political giving.
The agreement resulted from a dialogue Green Century had with the company in conjunction with the CPA, a nonprofit, non-partisan advocacy organization leading the political disclosure and oversight effort. Green Century stressed the importance of ensuring shareowners are aware of the full spectrum of political spending made by their firms, especially those made through trade associations like the U.S. Chamber of Commerce.
Companies are not required by law to disclose political contributions or payments to trade associations for political purposes. Moreover, trade associations are not required to disclose the specifics of their political spending or their membership. This secrecy leaves institutional investors, individual shareholders and even member companies in the dark.
In light of the Supreme Court ruling in Citizens United v. Federal Election Commission, which permits corporations to spend freely on independent advertising for and against political candidates, many investors believe this type of disclosure is more important than ever. According to Larisa Ruoff, Director of Shareholder Advocacy for Green Century:
The Supreme Court decision is expected to open the floodgates to vastly increased corporate political spending, meaning accountability and transparency measures are critically important to protect investors from risk. As shareholders, we believe comprehensive disclosure of political spending is necessary to ensure corporate funds are not directed toward policy objectives that harm the long-term interests of the company. We are pleased to see Kodak take steps to protect itself from this risk.
Investors are concerned that the Citizens United decision may increase pressure on corporations to get involved in the political process. According to Bruce Freed, the CPA’s President:
It is imperative that companies protect themselves from the pressure to give and from ill-considered political spending. Now it is even more important that companies are accountable for their corporate political spending. Companies that fail to do so put themselves at risk.
While Green Century commended Eastman Kodak for its new commitment to improve disclosure of its political spending, the firm will continue to encourage the company to expand its policies and practices.
Kodak sponsors a political action committee (Eastman Kodak Company Employee Political ActionCommittee, or “KodaPAC”), which is authorized to contribute to federal candidates, parties and committees, and to state candidates, parties and committees in certain states. According to company policy, all KodaPAC contributions are disclosed on the following websites: www.fec.gov and www.elections.state.ny.us. On a positive note,
Kodak does not contribute to any “527” organizations (defined as a party, committee or association thatis organized for the purpose of influencing the election or appointment of a public or political office). Further, Kodak’s policy is that the Company does not make or engage in independent politicalexpenditure activity as defined under federal election law…
With regard to Section 501(c)(6) trade associations, such as the US Chamber of Commerce:
Kodak will inquire and make a reasonable effort to obtain from such organizations the portion of such dues thatare used for lobbying or political activity. To the extent that the organizations provide this information,it will be disclosed on this website on an annual basis.
However, other than noting that “Kodak’s relationships with such organizations are overseen by the Office of Government Affairs,” their policy says noting about what stance the company will take on various issues when voting opportunities arise within the Chamber on what positions they will take. I would advise that Green Century and the Center for Political Accountability explore that critical area in future negotiations with Kodak.