Green Century urges Hess to end secrecy of its trade association spending
May 5, 2010 — Hess Corporation* shareholders voted today on a resolution that calls on the company to comprehensively disclose and have its board oversee its political spending. Filed by Green Century Capital Management (Green Century), the resolution would end the secrecy shielding the company’s potentially risky corporate political spending, particularly its payments to trade associations and other tax exempt organizations.
Green Century is part of a coalition of nearly 40 investor groups urging companies to take similar steps. To date, 75 S&P 500 companies and half of S&P 100 firms have agreed to implement political disclosure and accountability, according to the non-partisan Center for Political Accountability (CPA).
Hess prohibits direct corporate political spending, but does not disclose its indirect spending through trade associations and other third-party groups, which is largely unreported. “Hess’ failure to disclose political spending makes it difficult, if not impossible, for investors to assess risks that may be posed by the company’s expenditures. These risks could hurt the company and shareholder value,” said Larisa Ruoff, Green Century's Director of Shareholder Advocacy.
Trade associations, which may act as conduits for corporate spending, are not required to report the corporate funders that underwrite their political spending, including ads, and many do not disclose even the names of their corporate members. As a result, hundreds of millions of corporate dollars flow into the political process, including state judicial races and initiative and referenda campaigns, often without risk management controls, board oversight, or public knowledge.
“We believe the company’s failure to comprehensively disclose its corporate political spending has the potential to pose serious threats to shareholder value,” Ruoff said. She continued, “It is likely that trade associations will play even more of a role in the political process given the recent Citizens United Supreme Court decision, which will put individual companies under much greater pressure to spend politically and will make that spending even more risky. As a result, we believe it is necessary for companies to have corporate governance standards in place to protect the company and shareholders.”
The proposal was one of nearly 50 resolutions filed in 2010 in conjunction with the efforts of the CPA, whose mission is to bring transparency and accountability to corporate political spending.
“Companies must protect themselves from the pressure to give,” said Bruce Freed, president of the CPA. He continued, “Adopting the CPA’s corporate governance model on political disclosure and accountability deflects pressure and protects companies from risk.”
*As of March 31, 2010, Hess Corporation was not held by the Green Century Balanced Fund and comprised 0.37% of the Green Century Equity Fund. Portfolio composition will change due to ongoing management of the Funds. Please refer to the Green Century Funds website for current information regarding the Funds' portfolio holding. These holdings are subject to risk as described in the Funds' prospectus. References to specific investments should not be construed as a recommendation of the securities by the Funds, their administrator, or their distributor.
You should consider the Funds' investment objectives, risks, charges, and expenses carefully before investing. For a prospectus that contains this and other information about the Funds, call 1-800-93-GREEN, visit www.greencentury.com or email email@example.com. Please read the prospectus carefully before investing. Investments are not FDIC insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
The Green Century Funds are distributed by UMB Distribution Services, LLC 5/10
> Back To News Listings