ELI LILLY AND COMPANY | Lobbying Expenditures Disclosure at ELI LILLY AND COMPANY

Status
31.39% votes in favour
AGM date
Previous AGM date
Proposal number
7
Resolution details
Company ticker
LLY
Lead filer
Service Employees International Union (SEIU)
Resolution ask
Report on or disclose
ESG theme
  • Governance
ESG sub-theme
  • Lobbying / political engagement
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Health Care
Company HQ country
United States
Resolved clause
RESOLVED, the shareholders of Lilly request the preparation of a report, updated annually, disclosing:
1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
2. Payments by Lilly used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.
3. Lilly’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.
4. Description of management’s and the Board’s decision-making process and oversight for making payments described in sections 2 and 3 above.

For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Lilly is a member.
Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, territorial, state and federal levels.
The report shall be presented to the Public Policy and Compliance Committee and posted on Lilly’s website.
Whereas clause
WHEREAS, we believe in full disclosure of Lilly’s lobbying activities and expenditures to assess whether Lilly’s lobbying is consistent with its expressed goals and shareholder interests.
Supporting statement
SUPPORTING STATEMENT
Lilly spent $95,877,000 from 2010 – 2021 on federal lobbying. This figure does not include state lobbying, where Lilly lobbied in at least 46 states in 2021. Lilly also lobbies abroad, spending between €900,000–999,000 on lobbying in Europe for 2021.
Lilly fails to disclose its third-party payments to trade associations and social welfare groups (SWGs), or the amounts used for lobbying, to shareholders. Companies can give unlimited amounts to third party groups that spend millions on lobbying and undisclosed grassroots activity. These groups may be spending “at least double what’s publicly reported.”1 For example, Pharmaceutical Research and Manufacturers of America (PhRMA) has given millions to controversial “dark money” SWGs like the American Action Network.2
Lilly belongs to the Chamber of Commerce, Business Roundtable, National Association of Manufacturers (NAM) and PhRMA, which together have spent over $2.8 billion on lobbying since 1998, and supports SWGs that lobby, like the Alliance for Patient Access (AfPA), “which claims to be pro-consumer but consistently advocates against policies to lower drug prices.”3
We believe Lilly’s lack of disclosure presents reputational risk when its lobbying contradicts company public positions. For example, Lilly states it supports more affordable medicines, yet funds PhRMA and AfPA’s opposition to lower prescription drug prices.4 Lilly opposed Indiana voter restrictions, yet groups have asked Lilly to cut ties with the American Legislative Exchange Council (ALEC) “because of its voter restriction efforts.”5 Lilly is also represented at ALEC by its trade associations, as the Chamber, NAM and PhRMA each sit on its Private Enterprise Advisory Council.
 
1 https://theintercept.com/2019/08/06/business-group-spending-on-lobbying-in-washington-is-at-least-double-whats-publicly- reported/.2 https://www.opensecrets.org/news/2019/11/big-pharma-bankrolled-conservative-groups-tax-returns-show/.3 https://prospect.org/power/astroturf-campaign-attacks-discount-drug-program-for-poor/.4 https://www.opensecrets.org/news/2021/09/pharmaceutical-industry-backs-democratic-holdouts-on-drug-pricing-plan/; https://nonprofitquarterly.org/alliance-for-patient-access-not-even-trying-subtlety/.5 https://www.thenation.com/article/politics/alec-corporations-democracy/.

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
Anima Sgr For A vote FOR this proposal is warranted, as additional disclosure of the company's direct and indirect lobbying-related expenditures would help shareholders better assess the risks and benefits associated with the company's participation in the public policy process.

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