It’s worrying to think that shareholder democracy is needed to rectify shortcomings in the real thing, yet this week two of the nation’s biggest corporations will give their investors precisely that opportunity. Motions on the ballots at the annual meetings of Bank of America and 3M will act as referenda on the U.S. Supreme Court’s decision in the Citizens United case, which handed companies the same freedoms of speech accorded people. Happily, restricting the use of corporate money in politics isn’t just good for democracy, it’s good business.
In Citizens United, the court struck down limits on political spending by corporations and unions, holding that such restrictions were prohibited by the First Amendment. The ruling risked undermining faith in the democratic process by opening the floodgates to an unprecedented flow of money into political campaigns. Justice John Paul Stevens summed it up best in his dissent: “A democracy cannot function effectively when its constituent members believe laws are being bought and sold.”
The Supreme Court could get another crack at the issue thanks to Montana’s high court, which decided the ruling did not supersede state laws on political corruption. In the meantime, though, it will be up to citizen shareholders to blunt the impact of Citizens United.
They can start on Tuesday in St. Paul and Wednesday in Charlotte when the shareholders of 3M and BofA, respectively, gather. They’ll be voting on proposals submitted by Trillium Asset Management of Boston to “request that the board of directors adopt a policy prohibiting the use of corporate funds for any political election or campaign.”
Unsurprisingly, both the maker of Post-it notes and the nation’s largest bank want shareholders to turn down the proposals. The companies say they need as free a hand as their competitors in, as 3M puts it, “supporting candidates whose views are aligned with the company’s business interests.”
But shareholders must also consider that playing politics can backfire, as the retailer Target discovered two years ago. After the Citizens United ruling, Target donated $150,000 of its shareholders’ money to a political fund, MN Forward, which supported the gubernatorial campaign of an anti-gay Republican. That led to an embarrassing customer boycott supported by intense social-media campaigns. At best, Target shareholders received no benefit from management’s use of their treasure in the political game. At worst, the bosses’ behavior hurt the bottom line.
The Supreme Court may have damaged democracy with Citizens United. Now, ironically, it’s up to the people who own corporations to make it right.