After weeks of public protest over its financial support of an organization that backed a GOP gubernatorial candidate opposed to gay rights, Target Corp. now faces a new form of pressure: demands from institutional shareholders that it revamp its donation process to avoid the chance of additional backfires.
“Imprudent donations can potentially have a major negative impact on company reputations and business if they don’t carefully and fully assess a candidate’s positions,” said Tim Smith, a senior vice president at Walden Asset Management, one of three asset management firms that this week filed a resolution asking the retail giant to overhaul its campaign donation policies. He cautioned that funding ballot initiatives, as many corporations have done, “can similarly backfire.”
The three management firms sponsoring the resolution — Calvert Asset Management, Trillium Asset Management and Walden — together hold $57.5 million of Target stock. Other institutional investors, including the giant New York state pension fund and union investment managers, are considering co-signing the resolution, which calls on Target’s independent directors to review the criteria and risks in making donations to organizations active in political campaigns.
Retailers Target and Best Buy were among several Minnesota firms that gave large donations to MN Forward, a new tax-exempt committee running ads backing GOP gubernatorial candidate Tom Emmer, a staunch opponent of LGBT rights and same-sex marriage.
Best Buy has received the same shareholder resolution as Target, which calls for a far more rigorous and specific review by independent board members and for disclosure of the company’s contributions policy.