On May 26, Clean Yield Asset Management uploaded an open letter to other Alphabet, Inc. shareholders on the Securities and Exchange Commission web site. In it, we call for shareholders’ support for Proposal No. 7 on the ballot, which calls on Alphabet to fully disclose the extent of its political spending. The shareholder meeting takes place on June 8.
Specifically, Alphabet has refused calls to disclose what it contributes to so-called “dark money” nonprofits such as trade associations and 501(c)(4)s. These are entities that can receive payments from corporations but do not have to disclose the source of those contributions. In the 2012 and 2014 election cycles, dark money groups spent more than $474 million to influence electoral outcomes.
At the company’s stockholder meeting in 2014, a shareholder made a similar point to Mr. Schmidt, and he responded:
Let me summarize your request. We need to be more transparent? Is that right? We get it. We’ve heard that from a number of other shareholders, so let us come back with some ideas. We got a very clear set of messages from a number of shareholders about this transparency issue already.
But Alphabet has offered no “ideas” to date, and falls short of best practices. The company scored only 33 out of 100 possible points on the CPA-Zicklin Index, a widely-referenced benchmark of the political disclosure and accountability policies and practices of leading U.S. public companies.We’d like to know why it’s okay for Alphabet to contribute the company’s money to secretive groups that can spend it however they wish, even in ways that conflict with Alphabet’s values. Alphabet showed real spine when it quit the American Legislative Exchange Council in 2014, but it still has an expansive political footprint, supporting about 140 trade associations and other nonprofits across the political spectrum. The reputation risks are not hypothetical. Alphabet has come under heavy criticism in the media for its aggressive lobbying of the European Commission.
These activities contribute to the public’s worst suspicions that the U.S. political system is rigged in favor of large donors, which is a key factor in the political instability we are experiencing in the U.S. Alphabet can and should do better.