by Michael Connor
Three leading sustainability investment firms said they filed shareholder resolutions at Target and Best Buy seeking to have independent board members review the companies’ political contributions and spending processes.
The two national retailers, both headquartered in Minnesota, have been under fire since the disclosure last month of their political contributions to an organization that backs a state gubernatorial candidate who opposes gay marriage.
Target has contributed $150,000 and Best Buy $100,000 to MN Forward, an independent expenditure committee that has taken out ads in support of Tom Emmer, a Republican state lawmaker.
The contributions have drawn widespread media coverage and criticism from customers and organizations such as Human Rights Campaign, a national advocacy group for lesbian, gay, bisexual and transgender (LGBT) rights.
Investment firms Walden Asset Management, Trillium Asset Management Corporation and Calvert Asset Management Company, Inc. said they joined together to file a proposal at Target Corporation that asks the company’s independent board members to undertake a “comprehensive review of Target’s political contributions and spending processes including the criteria used for such contributions” and “oversight processes by management and the Board.” Calvert and Trillium have filed a similar resolution at Best Buy, Trillium on behalf of the Equity Foundation, which works to eradicate prejudice towards the sexual and gender minority communities of Oregon.
Collectively, the firms said they control more than 1.1 million shares of common stock in Target worth $57.5 million, and 344,000 shares of Best Buy worth $11.3 million.
Target and Best Buy have both previously stated that their contributions were aimed at supporting candidates whom they felt would foster economic growth in Minnesota. Target has since issued apologetic statements directed toward employees and customers.
The investment firms noted that Target and Best Buy have traditionally had “exceptionally strong workplace policies” for LGBT employees. They said their shareholder proposals were intended to draw “attention to the misalignment between the donations and the companies’ corporate values.”
Human Rights Campaign has sought to have Target and Best Buy make contributions to groups supporting gay-rights candidates in Minnesota. However, “after two weeks of good-faith discussions – and two tentative agreements,” the organization said this week, Target has declined “to take corrective action.” Discussions with Best Buy continue, according to Human Right Campaign.
The controversy involving Target and Best Buy is the most high-profile since the U.S. Supreme Court’s decision last January in Citizens United, which gave corporations and unions new freedom to support political candidates through contributions to Independent expenditure committees.
Tim Smith, senior vice president at Walden, said, “It is unclear how frequently companies will decide to spend shareholder monies in controversial political races. But if the Best Buy and Target contributions are any indication, imprudent donations can potentially have a major negative impact on company reputations and business if they don’t carefully and fully assess a candidate’s positions. Funding ballot initiatives or ‘issue ads’ can similarly backfire.”
Shelley Alpern, vice president at Trillium, said, “Tom Emmer has made it no secret that as governor he would deny members of the LGBT their full civil rights. No company can credibly claim that it continues to support the LGBT community if at the same time it is financing a deliberate effort to keep it in second-class citizenship.”
Stu Dalheim, Director of Shareholder Advocacy at Calvert, said, “We continue to call for increased transparency and disclosure of corporate political spending. The absolutely wrong conclusion for companies to draw from this controversy is that everything will be all right as long as they conceal their political contributions.”
Moveon.org, the national advocacy group, has announced an effort to organize boycotts of Target and Best Buy.