Kraft Foods Faces Pressure to Keep Money Out of Politics

Media Contacts
Dev Gowda

Illinois PIRG

Glenview, Illinois: During its annual meeting of shareholders today, Kraft Foods Group, Inc.* will face a resolution filed by the Green Century Equity Fund urging the company to refrain from using corporate funds to influence any political election campaign. Kraft Foods spent millions to oppose legislation for labeling food containing genetically modified organisms (GMOs) last year, which shareholders argue exposed the company to significant brand and reputational risks without generating value for shareholders.

“Companies that spend millions to undermine key environmental and consumer protections put both our democracy and shareholder value at risk” noted Lucia von Reusner, Shareholder Advocate for Green Century Capital Management. “American consumers widely disapprove of corporate money in politics, and shareholders urge Kraft Foods to listen to its customers and keep money out of high risk political gambles.”

Kraft Foods is one of the largest food and beverage companies in the world, and is recognized as among the top five contributors to opposing controversial legislation that would have provided consumers with information about genetically modified organisms (GMOs) in their food. Labeling of GMOs is supported by over 90% of U.S. consumers, and companies that spent millions to defeat labeling measures were the subject of significant media coverage and controversy surrounding these initiatives.

“It’s unfortunate that food companies such as Kraft continue to spend millions of dollars to defeat GMO labeling and leave consumers in the dark,” said Dev Gowda, Advocate with Illinois PIRG (Public Interest Research Group).  “Illinois PIRG fully supports Green Century’s resolution to get Kraft money out of politics.”

“The people of this country want and deserve a democracy in which politicians are elected on the basis of where they stand on issues and how they will serve their constituency,” said Rey López-Calderón, Executive Director of Common Cause Illinois. “Yet, corporations such as Kraft threaten that fundamental belief by buying votes, influencing politicians, and creating legislation through large sums of corporate donations that better serve their profit margin off the backs of hard working Americans. The time has come to organize and take back our democracy through shareholder resolutions such as this one.”

“Growing demand for GMO labeling proves that companies like Kraft, which spend millions to silence consumer demand, will succeed only in tarnishing their brand identity and alienating concerned shoppers,” said Jessica Fujan of Food and Water Watch.  “The food industry spent $40 million lobbying the federal government in 2011, and smart shareholders know this is bad for the food system, and bad for democracy.”

The public overwhelming disapproves of corporate money in politics, with over 80% of Americans across party lines agreeing that there is “too much money in politics” according to a 2012 Bannon Communications poll.  The same poll reported that 79% of respondents would boycott a company to protest its political spending, and 65% would sell stock in the company.

In addition to being controversial, several academic studies suggest that corporate political contributions do not generate returns to shareholders. Among them is a 2012 study by Harvard Business School professor John C. Coates, which concludes that “in most industries, political activity correlates negatively with measures of shareholder power, positively with signs of agency costs, and negatively with shareholder value…Overall, the results are inconsistent with politics generally serving shareholder interests.”

Expressing concern about the reputational risks that political contributions expose companies to and citing the company’s controversial GMO contributions, Green Century filed a shareholder proposal urging Kraft Foods to refrain entirely from using corporate funds to influence any political election.

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Lucia von Reusner, Green Century Capital Management (617) 482-0800
Dev Gowda, Advocate, Illinois PIRG  (312) 544-4433 x210

The Green Century Equity Fund invests in the companies that comprise the longest running socially responsible index.   Green Century Capital Management is the investment advisor for the Green Century Equity Fund and Green Century’s fossil fuel free Balanced Fund.  Founded by a partnership of non-profit environmental advocacy organizations in 1991, Green Century Capital Management provides people who care about a clean, healthy planet the opportunity to keep their money out of environmentally irresponsible companies and use the leverage of their investment dollars to encourage environmentally responsible corporate behavior.

*As of March 31, 2014, Kraft Foods Group, Inc. comprised 0.54% and 0.00% of the Green Century Equity Fund and the Green Century Balanced Fund, respectively. Other securities mentioned were not held in the portfolios as of December 31, 2013. The holdings of the Green Century Funds may change due to ongoing management of the Funds. References to specific investments should not be construed as a recommendation of a security by the Funds, their advisor, administrator, or distributor.

Stocks will fluctuate in response to factors that may affect a single company, industry, sector, or the market as a whole and may perform worse than the market. Bonds are subject to risks including interest rate, credit, and inflation. The Funds’ environmental criteria limit the investments available to the Funds compared to mutual funds that do not use environmental criteria

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This information has been prepared from sources believed to be reliable. The views expressed are as of the date of this writing and are those of the Advisor to the Funds.
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