Investors demand food and beverage companies' disclosure of global political activities and spending
Investors representing 13% of Coca-Cola share ownership voted for a shareowner proposal for the company to publish a Global Transparency Report at its annual meeting on April 26, 2022. The result is not only impressive for a first-time vote on a shareholder resolution, but it also ensures the resolution can be reintroduced for 2023.
The proposed Global Transparency Report would compel the company to fully disclose its political activity and spending globally, covering company funding and in-kind support directed to candidates or electioneering, lobbying, and charitable donations. Such disclosure should cover recipients and amounts, membership in / payments to nongovernmental organisations, including trade and business associations, scientific or academic organisations and charities, as well as the rationale for these activities (more information in The Coca-Cola Company 2022 Proxy Statement, p96). These requirements show that investors have become more concerned with the role of food and beverage companies’ lobbying activities in promoting public health. They expect companies to prove legitimacy for their political influence and have also recognised the role of intermediaries in exerting such influence.
On the same day, members of the Interfaith Center on Corporate Responsibility (ICCR) and close to 20 investors, representing nearly $140 billion in assets signed an open letter to food and beverage industry executives to step up their global disclosures of political activities.
‘’For food and beverage corporations like Coca-Cola, PepsiCo, and McDonald’s which rely heavily on consumer trust and public good will, there is no denying the value of political transparency in a world where public officials, journalists, NGOs, social movements, and even social media can quickly and publicly reveal business practices that are at odds with brand reputation and values. It is why we as investors ask that you publicly disclose detailed data on your political contributions, lobbying expenditures, charitable giving, and scientific funding, all of which are mechanisms for shaping political discourse and policy across all the markets where you have business operations.’’
- Investors’ open letter to Coca-Cola executives
The investor actions followed an investigation report Coca Cola’s tokens, published in March, criticising the company’s ‘tactics to influence public health policies’ in the Mexico market, such as employing politicians (revolving door practice) and sponsoring science. The report also implicated peer companies such as Kellogg and PepsiCo.
As investor groups step up pressure on companies over climate lobbying, it is likely only a matter of time before nutrition lobbying receives the same level of scrutiny. In the case of food and beverage companies, for example, their political engagement concerning sugar-sweetened beverages has been frequently associated with cardiovascular disease, diabetes, obesity and dental problems - the World Health Organization has defined certain practices of the private sector as ‘commercial determinants of health’. It is, therefore, imperative for companies in the sector to disclose political spending and demonstrate transparency and good governance of corporate political activity to retain long-term value for investors.