Can big US companies stay with the Chamber of Commerce when it contradicts their own policies?

Resolutions will be filed at IBM and PepsiCo asking them to explain their position.

Rufus Miles formulated what came to be called Miles’ law in the late 1940s. A colleague of his at the US Bureau of the Budget received an offer at a higher grade from one of the agencies whose budget he reviewed. At the Bureau he was very critical of the particular agency. After his departure Rufus predicted that within a short period of time the former colleague would be as critical of the Bureau as he had been of his new employer. And he was right. Thus was born Miles’ law: “Where you stand depends on where you sit.”
The validity of Miles’ law still stands but now perhaps more than ever individuals and institutions have many more places where they sit, and to mix the metaphor, many more feet to put in their mouths regarding where they stand. Miles’ law came to mind at February’s Accenture annual meeting where I asked how their principles and actions as presented in their Corporate Citizenship Report 2008-2009 could be reconciled with their participation on the board of the US Chamber of Commerce. Accenture’s report enthusiastically states sustainability is “one of the most significant issues for society.” Climate change and environmental stewardship, the needs of disadvantaged communities, supply chain management, and inclusion and diversity are highlighted enthusiastically. Accenture’s role in the UN Global Compact and their joint research with the UNPRI suggest that they want to be part of the solution rather than the problem. They note with pride that they received a score of 76 out of 100 for transparency in reporting their carbon reduction efforts from the Carbon Disclosure Project, up from 41 the previous year.
Accenture’s Code of Business Ethics states, “Accenture does not endorse political candidates or make political contributions” or “endorse political activities or event.”The Chamber of Commerce’s web site tells us that board members, like Accenture, determine the Chamber’s policies, advise on strategies, and promote Chamber policies and strategies. But the Chamber’s policies appear to be in opposition to Accenture’s. The Chamber has played a strident and politically partisan role in the 2010 elections. It has also been hostile to climate change legislation, sued the US Environmental Protection Agency to undermine its efforts to regulate carbon emissions, and defended BP after the Gulf oil spill. The Chamber has also vigorously opposed mine safety legislation, and petitioned the US Department of Labor to challenge investors who exercise their fiduciary duties to consider environmental, social and governance factors in company engagements and proxy voting. Accenture is not alone in dealing with this dissonance. They are among the 35 companies on the Chamber ‘s board who were sent a letter on January 18, 2011 initiated by Walden Asset Management and signed by investors, investment firms and mutual funds representing approximately $43 billion in assets under management. The letter asked them all where they stand? Among these 35 companies were names that appear regularly on lists of the best corporate citizens, and most admired. These include, in addition to Accenture, Fed Ex, IBM, JP Morgan Chase, PepsiCo, UPS, Xerox, Dow, AT&T, Duke Energy and Alcoa. On March 1, Christopher Reynolds Foundation and Walden filed a shareowner resolution with Accenture requesting a review of their role on the Chamber’s board. Resolutions driving the same point home will be voted on at Pepsi and IBM’s spring shareowner meetings, and in an novel approach resolutions will be moved from the floor at the CVS-Caremark, JPMorgan Chase, Conoco Phillips, and 3M meetings in this spring. Shareowners

will also be filing resolutions and seeking dialog with many of the other companies. Shareowners recognize that with more than 100 members the Chamber’s board is effectively ungovernable, leaving the door wide open for management. There are board committees on different issues, such as the environment, but committees do not govern, they recommend.

Shareowners also recognize that the Chamber may serve useful practical functions for companies that are not in stark contrast to their stated principles and practices. This may justify their continued participation and membership.

But companies have an obligation to their shareowners to make public where they stand on key issues of the day. Many of them do in their corporate social responsibility, citizenships reports and on their websites. But what are shareowners to believe: reports or actions?A company’s obligation to its shareowners also goes beyond disclosure. Companies also have an obligation to shareowners to oversee the activities of their trade associations. They can have a major impact on companies and pose a range of risks. It is important to understand the principal-agency relationship between companies and trade associations. Principals are responsible for the actions of their agents.

Shareowners look forward to hearing from Accenture, and the other 34 companies, in the very near future. Where do each of you stand as a company and what actions are you planning to take to reduce the dissonance between what you say you are and how that relates to your membership on the US Chamber of Commerce’s board? We know that you sit in many places. We need to know where you truly stand!

Stephen Viederman is a Strategic Advisor to the Christopher Reynolds Foundation