Lawyers, nuns, and money

COMPANIES HAVE BEEN BESIEGED BY SHARE holder activist campaigns that press businesses to be more transparent about their political contributions. The campaigns, which often put managers in ' an uncomfortable spotlight, are starting to have an effect. [paragraph] In April, boards at both Schering-Plough Corp. and Johnson & Johnson reported that they intend to publicly post their companies' political contributions, including monies given to political action committees (PACs).

The decision to divulge the sensitive information came after faith-based investor groups and union pension funds filed shareholder resolutions that would require the two businesses to account for their campaign contributions. "It's very difficult to tell where the money is going and why," says Daniel Rosan, director of health-care access at the Interfaith Center on Corporate Responsibility (ICCR), a shareholder advocacy group representing the fliers. "Are they giving money that, in the long term, benefits shareholders?"

Other shareholders appear to have similar concerns. According to the Investor Responsibility Research Center, stockholders filed 37 resolutions this year asking corporations to go public with political contributions (up from just two campaign-related proposals in 2003). Margaret Weber, coordinator of corporate responsibility for the Adrian Dominican Sisters, the Michigan-based order that spear headed the campaign at Schering-Plough, says the ICCR resolutions were spurred by the passage of the Medicare Prescription Drug Improvement and Modernization Act--and the influence drug companies purportedly exerted on legislators drafting the bill. The agreements with Schering-Plough and J&J, says Weber, are part of a push to shed light on "the very public and powerful role pharmaceuticals play in shaping health-care policy."

The newly released information from Schering-Plough hints at that role. According to company data, the distributor of Cipro and Levitra gave more than $800,000 to politicians and PACs in 2004, with the lion's share going to Republican candidates and organizations. Two of the company's biggest donations went to PACs run by senators Bill Frist (R-Tenn.) and Richard Shelby (R-Ala.), legislators not known for their hostility to big pharma. All told, health-care PACs doled out more than $32 million in 2003 and 2004.

Although other shareholder resolutions targeting campaign contributions failed to garner much support (a proposal filed at Eli Lilly and Co. by the Sisters of Mercy got a 6.5 percent yes vote), Schering-Plough and J&J avoided a showdown. Schering-Plough spokesperson Rosemarie Yancosek says the company plans to update the information twice a year. Meanwhile, J&J will begin posting its political contributions in 2006. "We believe this is an appropriate level of transparency," explains Jeffrey Leebaw, a spokesman for the New Brunswick, N.J.-based company.

Of course, activists are successfully pushing companies to come clean on more than just political contributions. In April, the Rainforest Action Network partnered with shareholders to get investment bank JP Morgan to adopt a"green" lending policy. And after years of pressure from activists, Nike produced a report detailing its difficulties in improving labor conditions in Third World factories.

With directors monitoring company expenses more closely--and plenty of closely contested congressional races expected next year--it's possible that political contributions could be a very hot topic in 2006. At the very least, some companies can expect to hear from Sister Margaret again. "Our job is to be well in front of the curve," she explains. "We were way ahead on climate change, too, and now, many companies see it as a legitimate business concern."

CLIMATE CHANGE

ExxonMobil faces a shareholder resolution this year to state its position on the risks of global warning.

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