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The Progressive

NewsWire

A project of Common Dreams

For Immediate Release
Contact: Phone: (202) 588-1000

59,000 Petitions Urge Vanguard to Support Political Spending Disclosure

Largest  Mutual Fund Has Chance to Sway Shareholder Votes in Favor of Transparency

WASHINGTON

Current and prospective investment customers have flooded Vanguard, the nation's largest manager of retirement savings, with more than 59,000 emails urging the company to change its policy on corporate political spending disclosure.

Over the past decade, shareholders who are rightfully concerned about a lack of corporate transparency around political spending and the impact on their investments have filed shareholder resolutions calling for companies to disclose this information.

This issue has become the most frequently filed resolution in the environmental, social and governance space. Political disclosure resolutions were filed at more than 100 shareholder meetings last spring; however, opposition and abstention from major mutual funds, which hold a large share of the stock market, present a serious challenge to winning majority votes despite robust retail and institutional investor support.

Mutual funds own a quarter of the U.S. stock market, and while major mutual funds could have a huge influence on the outcome of political spending disclosure votes at annual shareholder meetings, they tend to stay away from the topic of political spending transparency (despite the call for the information). According to a new study by the Center for Political Accountability, Vanguard has voted against or abstained from disclosure votes every time they came up in 2015.

"The secret spending that's flooded our democracy is political, but when it's funded by our retirement savings, it gets personal," said Emma Boorboor, election reform campaign director with U.S. PIRG. "For millions of American families, retirement savings with Vanguard mean hard work, a smart investment and the promise of a secure future, but post-Citizens United, it also means corporate political spending without shareholders' knowledge. As a mutual fund known for challenging the status quo, Vanguard can and should lead the way to protect investors and support corporate political spending disclosure."

In November, the Corporate Reform Coalition, a group of advocacy organizations and investors, launched a campaign urging Vanguard to change its stance on shareholder resolutions related to political spending disclosure. Since the campaign's launch, current and prospective investing customers have delivered more than 59,000 emails to Vanguard urging the company to amend its proxy voting guidelines to vote in favor of political spending disclosure. If the company responds favorably, shareholders could win many more resolution votes at corporations, creating greater transparency in corporate political spending on a company-by-company basis.

In fact, as a recent signatory to the United Nations-supported network Principles for Responsible Investment, Vanguard has a responsibility to "seek appropriate disclosure on Environmental, Social, and Governance (ESG) issues" by the entities it invests in. Political spending undoubtedly falls under the umbrella of governance and has clear impacts on both environmental and social issues.

The Vanguard campaign is part of a larger effort to require all publicly traded companies to disclose their political spending. As more companies move toward transparency, the need for the U.S. Securities and Exchange Commission (SEC) to create a uniform structure for these disclosures grows. The SEC has received a record number of comments in support of a rule that would require political disclosure, and supportive action by a major mutual fund will only bolster the case for SEC Chair Mary Jo White to move forward with a national rule.

"Transparency is the first step to accountability. Shareholders need this basic information to determine if the company is acting in the best interest of long-term shareholder value," says Leslie Samuelrich, president of Green Century Capital Management, a financial advisory firm that offers socially responsible mutual funds. "Vanguard should be leaders, not laggards, in asking for the information that investors are coming to expect."

"Vanguard manages some of the nation's biggest index funds, which means that a huge chunk of the investing public trusts it to represent their interests," said Lisa Gilbert, director of Public Citizen's Congress Watch division. "Unfortunately, Vanguard has not yet met the market's demands when it comes to political spending disclosure. Vanguard should move swiftly toward the commonsense position of voting their shares to support transparency to protect their investors."

Public Citizen is a nonprofit consumer advocacy organization that champions the public interest in the halls of power. We defend democracy, resist corporate power and work to ensure that government works for the people - not for big corporations. Founded in 1971, we now have 500,000 members and supporters throughout the country.

(202) 588-1000