Boston Common Asset Management commends Verizon for joining over 100 other companies including its peers, Sprint and T-Mobile, by leaving the American Legislative Exchange Council (ALEC). This came about after ALEC’s decision to host David Horowitz as a featured speaker at the ALEC summit in New Orleans last month. Verizon’s statement to The Intercept states “Our company has no tolerance for racist, white supremacist or sexist comment or ideals,” quoting Verizon spokesperson Richard Young.
Boston Common has called on Verizon Communications over the past few years to report on its federal and state lobbying including indirect funding of lobbying through trade associations and support for ALEC. Boston Common’s lobbying disclosure resolution at Verizon’s May 2018 annual shareholders meeting received strong support from shareholders, with 36.3% voting in favor. “We now urge Verizon to take the next crucial step in advancing transparency and accountability in the spending of shareholder resources by adopting comprehensive lobbying disclosure,” states Lauren Compere, Managing Director, Boston Common Asset Management. Verizon currently fails to disclose its trade association memberships, and does not disclose its trade association payments, nor the amounts used for lobbying.
Since 2010, Verizon has spent more than $108 million on federal lobbying, and there is incomplete disclosure by Verizon about its spending at the state level, where Verizon spends millions lobbying extensively in all 50 states. Corporate reputation is tied to shareholder value, as studies show companies with a high reputational ranking may perform better financially than lower ranked companies.[i] Verizon already faces reputational risk, as the telecommunications industry has one of the worst reputations among the public according to the Reputation Institute.[ii]
- For example, Verizon states that it fully supports the open Internet, yet Verizon is a member of CTIA, the powerful wireless industry trade association that lobbied to repeal net neutrality laws and is lobbying the FCC to preempt state net neutrality laws.
- There is a clear values incongruity here: Verizon says it is taking one position, yet is making undisclosed payments to its trade associations that are being used to advocate for the opposite position.
Without transparency and accountability, corporate assets can be used to lobby for public policy objectives that can pose reputational risks, as illustrated by Verizon’s move to exit ALEC.
The information in this article should not be considered a recommendation to buy or sell any security.
[i] “Reputation Risk,” The Conference Board, 2007, p. 6. [ii] “The Reputation Challenge of Telecom: Shielding the Intangible,” Reputation Institute, April 27, 2017.