Boeing is one of the biggest corporate spenders on federal lobbying, spending over $166 million since 2010, and Boeing’s reputation and financial health remain at serious risk in the wake of two fatal crashes of its 737 MAX.

Serious questions have been raised about whether Boeing’s lobbying led to relaxed Federal Aviation Administration (FAA) oversight, including long-standing concerns about industry capture of the FAA, from lobbying.  Boeing spends millions lobbying Congress and federal agencies each year, with a revolving door between it and the FAA.

Shareholders who have asked Boeing to improve its lobbying disclosure each year from 2014 to 2019 can only wonder if Boeing’s lack of lobbying transparency, disclosure, and oversight were the major factors that contributed to this public relations and regulatory nightmare.

Reputation Matters

Corporate reputation is an important component of shareholder value. Companies with a high reputation rank perform better financially than lower ranked companies, and executives find it is much harder to recover from a reputational failure than to build and maintain reputation. Without transparency, corporate lobbying can present reputational risk that harms shareholder value. 

In the case of Boeing and its undisclosed trade association payments, Boeing management is getting a crash course in reputational crisis management, and Boeing shareholders are getting a close-up view of what happens when a system of proper board oversight and lobbying spending transparency are missing. Proponents of lobbying disclosure are left to wonder why Boeing and its board were so opposed to disclosure that might have mitigated this unfolding disaster.

2020 Lobbying Disclosure Campaign

For 2020, the investor campaign for lobbying disclosure continues to focus on corporate political responsibility, with a concentration on climate change lobbying in many cases. Approximately 40 proposals have been filed asking companies to disclose their federal and state lobbying, trade association payments, and support for the American Legislative Exchange Council (ALEC), which has drafted thousands of legislative bills supporting corporate special interests.

Corporate lobbying provides decision-makers with valuable insights and data, but it also leads to undue influence, unfair competition, and regulatory capture. In the United States, more than $3.4 billion was spent on federal lobbying in 2019, and over $1 billion is spent yearly to lobby at the state level, where disclosure is less robust. Trade associations spend hundreds of millions of dollars annually lobbying indirectly on behalf of companies. 

A major concern for investors is companies lobbying, often through their trade associations, for policies that directly contradict company public positions. For example, many companies that support addressing climate change belong to the Chamber of Commerce, which opposed the Paris Agreement and has spent $1.583 billion on lobbying since 1998, or to ALEC, which also undermines climate change regulations.

The 2020 proposals focus on companies that lobby heavily at the federal and state levels, do not disclose their trade associations lobbying payments, and are members of ALEC. In addition to climate lobbying, the proposals also target lobbying misalignments on drug pricing, net neutrality, opioids, sick leave, shareholder rights, tobacco, and worker safety.

John Keenan
Corporate Governance Analyst, AFSCME Capital Strategies