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Two years ago, the public spoke out against the Supreme Court’s decision to allow unlimited corporate spending in politics when consumers boycotted Target Corporation for controversial political spending in Minnesota’s state elections.
When Target’s CEO Gregg Steinhafel used general treasury funds, money that rightfully belongs to the corporation’s shareholders, to support a group backing a candidate known for his outspoken anti-LGBT positions, it was more than a blemish on the reputation of a corporation that brands itself as progressive. That irresponsible contribution was a violation of both shareholder and public trust and, not surprisingly, it resulted in scandal and boycotts that threatened the assets of shareholders who never authorized the use of their money for political spending.
Target learned first-hand what it should have already known: consumers and shareholders do not want corporations to muddy up our democracy by interfering with our elections, yet it has not yet adopted a policy against this spending. Today, at Target’s annual shareholder meeting in Chicago, shareholders will take a vote on a resolution to refrain from political spending to once again remind Target that corporate electioneering is bad for shareholders and is bad for democracy.
After the financial meltdown we are all too aware of what shareholder value means to each of us. Many of us watched our retirements, pension funds, and other investments dissolve before our eyes because of the irresponsible, reckless actions of corporate executives hundreds of miles away. Over half of American households own stock in major corporations. All of those corporations, not just Target, risk our assets when they decide to use them without our permission to further their pet political causes. They risk public backlash from the left or the right, regardless of what that money supports. It’s clear to smart investors that a business’ business should be business – not politics.
Target’s experience is a constant reminder that political involvement threatens corporate brand and shareholder value and recent studies have shown that example to be the rule. An April study by researchers from the University of Kansas and the University of Minnesota found a decline of 7.4 basis points (or 0.074 percent) in risk-adjusted stock return for every $10,000 in political donations, in other words negative correlation between contributions and value. This week, a Rice University study backed up those results concluding that, “firms’ political investments are negatively associated with market performance.”
So, corporations like Target aren’t just mucking around in democracy, they’re playing games with our hard earned money while they’re at it. This risky business affects all of us as shareholders and as citizens.
We’ve known for years that political spending by powerful special interests like corporations threatens the integrity of the democratic process but when the Supreme Court decided in 2010 in Citizens United to give corporations the right to spend unlimited money in our elections, it opened the floodgates for a rush of corporate cash that is beginning to drown out the voices of ordinary citizens.
Already in 2012, five times as much outside money has been spent than was spent in 2008. Worse, almost ninety percent of political ads were paid for by groups that don’t disclose their donors.
All that outside money, aggregated with the help of the corporate form, is entirely unaccountable; it does not proportionately reflect the views of real people - of real citizens - and thus it skews the democratic process.
Target’s 2010 political giving is again a perfect example of this. For years, Target has groomed its image to appeal to progressive customers. It has enacted corporate policies that are inclusive of all employees regardless of sexual orientation. It touts its accolades from national LGBT civil rights groups.
Yet one man, CEO Gregg Steinhafel, was able to take the funds accumulated by this supposedly inclusive corporation and direct them based on his own personal political views - not the views of the real people who make up Target corporation - that is customers, or the employees, or the shareholders. This donation had nothing to do with their views or their well-being, just his own. And he decided to use their money, our money, really, to support a candidate for governor of Minnesota who didn’t just oppose basic equal rights for all people but who actively supports anti-gay hate groups.
There could not be a starker example of how corporate giving is disconnected from the views of the real people who comprise a corporation. This is exactly what a wiser Supreme Court warned against in 1990, when it ruled to protect against, “a different type of corruption in the political arena: the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas.”
We believe in a campaign financing system that represents the American democratic values of one person, one vote. We believe that, in a democracy, the size of your wallet should not determine the power of your voice. But when corporations are allowed to spend unlimited cash to influence the outcome of an election, the voices of ordinary citizens are drowned out. It’s like we’re standing on a soap box and they’ve got the entire Carnegie Hall speaker system.
But we can fight back – we can hold accountable corporations that choose to muck around in our democracy. That’s why we’re supporting the shareholder resolution filed by Green Century Funds at Target Corporation, a resolution that demands the corporation put an end once and for all to its risky and irresponsible use of shareholder money to influence elections.
Make no mistake, the statement that we send to Target today should be heard by all CEOs who are considering testing the waters of political involvement post-Citizens United.
In 2010, Supreme Court handed corporations a loud speaker. They may have the money, but we have the people, and we will not be silent.
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