The New York State Common Retirement Fund (Fund) has reached an agreement with Ohio-based utility FirstEnergy Corp. to comprehensively disclose its political spending, New York State Comptroller Thomas P. DiNapoli, trustee of the Fund, announced today. In response to the agreement, the Fund withdrew its shareholder resolution with the Ohio-based electric utility.
“Many publicly traded companies use corporate funds to influence the political process and it is important investors know how that money is being spent,” DiNapoli said. “This is a positive step for a company that has run into significant troubles with its political spending. Transparency is crucial and so is accountability. In a starkly divided country, companies need to answer whether the benefits of political donations outweigh the risks.”
The company agreed to the Fund’s request to post semi-annual comprehensive reports listing its corporate spending on candidates, political parties, ballot measures, payments over $25,000 to any trade associations used for political purposes and payments made to any organization that writes and endorses model legislation.
Publicly available records show FirstEnergy, which serves 6 million customers in seven states, has contributed at least $4.5 million in corporate funds since the 2010 election cycle, but that does not provide a complete picture of the company’s electoral spending.
FirstEnergy is currently facing federal public corruption charges involving both criminal and civil allegations that the company and its affiliates used “secret payments” totaling over $60 million in exchange for a bailout. This illustrates how undisclosed corporate political activity can backfire and harm a company’s reputation, create litigation risks and impact shareholder value.
During the 2021 proxy season, the Fund filed five shareholder proposals seeking a public report disclosing companies’ direct and indirect political spending and disclosure of lobbying expenditures, including contributions to independent committees, and the portion of trade association dues used for political purposes. Discussions are ongoing, with more agreements expected in the coming weeks.
Since the 2010 U.S. Supreme Court's Citizens United ruling striking down certain restraints on corporate political spending, DiNapoli has made it a priority to engage the Fund's portfolio companies in disclosing their political spending. The proposals filed by the Fund ask companies for comprehensive and public reports that list their corporate spending on candidates, political parties, ballot measures, any direct or indirect state and federal lobbying, payments to any trade associations used for political purposes, and payments made to any organization that writes and endorses model legislation.
NYS Common Retirement Fund’s Political Spending and Lobbying Disclosure Engagement
Since 2010, the Fund has filed over 155 shareholder proposals on political spending and 43 companies have adopted or agreed to adopt such disclosure, including Bank of America Corp., Delta Airlines and PepsiCo Inc.
New York State Common Retirement Fund
The New York State Common Retirement Fund is the third largest public pension fund in the United States with assets of approximately $247.7 billion as of Dec. 31, 2020. The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. It has consistently been ranked as one of the best managed and best funded plans in the nation.
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