Investors have been increasingly pressuring companies to disclose their relationships with trade associations, including political contributions, driven in part by the concern that the associations take advocacy positions on public policy that are contrary to the best business and reputational interests of the companies.
Last month, investors filed shareholder resolutions at Accenture, IBM, Pepsi, JP Morgan, UPS, and Pfizer, all of which hold seats on the Board of Directors of the U.S. Chamber of Commerce. The resolutions ask the companies' own boards of directors to report on oversight of corporate political expenditures and on "risks and responsibilities associated with serving on boards of and paying dues to trade organizations when positions of the trade association contradict the company's own positions."
The chamber website states its board determines its policy positions on business issues and directors help implement and promote its policies and objectives. Noting that the chamber has worked against legislation and regulation on climate change and financial reform, the investors argue that a company official serving on the chamber's board can lead to the company being "widely perceived as supporting its policies and programs, which can have a negative impact on a company with a strong reputation for good governance and corporate responsibility." This is but one example of how working through or providing funds via a trade association has significant implications for a company.
Another recent striking example of a disconnect between a company's interests on a specific issue and the position of its trade association stems from Eastman Chemical Company's engagement with the American Chemistry Council (ACC), the major trade association of the U.S. chemical industry. The ACC has been in the trenches fighting state legislative bans on polycarbonate baby bottles containing the chemical Bisphenol A (BPA). Over the ACC's opposition, bans have been enacted in seven states. BPA is a key ingredient in polycarbonate baby and sport bottles and is a health issue because of scientific studies raising concerns about, among other things, its impact on the brain, behavior and prostate gland.
During the closing days of the current congress, Senator Dianne Feinstein introduced an amendment to the proposed Food Safety Act to enact a federal ban on polycarbonate baby bottles containing BPA. After strenuous negotiation a bipartisan accord was reached to allow the amendment to be voted on. But, according to media reports, at the last minute the ACC intervened and the bipartisan agreement was scuttled.
The ACC Board of Directors sets ACC policy, provides overall strategic direction and approves advocacy priorities and the council's annual budget. The chairman of the ACC's board in 2010 is J. Brian Ferguson, who also serves as executive chairman of the board at Eastman Chemical Company. In the world of alternatives to BPA, Eastman is best known for having created a copolymer marketed as Tritan.