ELI LILLY AND COMPANY | Annual report of political expenditures by third-party organisations at ELI LILLY AND COMPANY

Status
4.11% votes in favour
AGM date
Previous AGM date
Proposal number
13
Resolution details
Company ticker
LLY
Lead filer
Change Finance, PBC.
Resolution ask
Adopt or amend a policy
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
The shareholders of Eli Lilly & Company (“Lilly” or “Company”) ask the Company to adopt a policy requiring that, prior to making a donation or expenditure that supports the political activities of any trade association, social welfare organization, or organization organized and operated primarily to engage in political activities, Lilly will require that the organization report, at least annually, the organization’s expenditures for political activities, including the amount spent and the recipient, and that each such report be posted on Lilly’s website. For purposes of this proposal, “political activities” are (i) influencing or attempting to influence the selection, nomination, election, or appointment of any individual to a public office; or (ii) supporting a party, committee, association, fund, or other organization organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures to engage in the activities described in (i). This proposal does not encompass lobbying spending.
Supporting statement
As long-term Lilly shareholders we support transparency and accountability in corporate electoral spending, including indirect political spending that is the subject of this proposal. Misaligned or non-transparent funding creates reputational risk that can harm shareholder value and place a company in legal jeopardy. Without knowing which candidates and political causes its funds ultimately support, our Company cannot assure shareholders, employees, or other stakeholders that its spending aligns with core values, business objectives, and policy positions. Without this information, none of the board, senior management, or shareowners can assess the risks associated with political spending.
The risks are especially serious when giving to trade associations, Super PACs, 527 committees, and “social welfare” organizations – groups that routinely pass money to or spend on behalf of candidates and political causes that a company might not otherwise wish to support. The Conference Board’s 2021 “Under a Microscope” report details these risks, discusses how to effectively manage them, and recommends the process suggested in this proposal. Media coverage amplifies the risk a company’s spending can pose and contributions to third-party groups can also embroil companies in scandal. Public records show Lilly has contributed at least $8.4 million in corporate funds to third-party groups dating to the 2010 election cycle. Beneficiaries of this spending have been tied to attacks on voting rights, efforts to deny climate change, and efforts to impose extreme restrictions on abortion – associations many companies wish to avoid.
It is unclear whether Lilly and its board received sufficient information from these groups to assess (a) the potential risks for the Company and stockholders, and (b) whether the groups’ expenditures aligned with our Company’s core values, business objectives, and policy positions. Mandating reports from third-party groups receiving Lilly political money would demonstrate our Company’s commitment to robust risk management and responsible civic engagement.
We urge a vote FOR the commonsense risk management measures contained in this proposal.

How other organisations have declared their voting intentions

Organisation nameDeclared voting intentionsRationale
Anima SgrAgainstA vote AGAINST this proposal is warranted, as it should be the ultimate decision of the Board to oversee and manage any potential risks related to the company’s trade association memberships, and the company is unable to control the accuracy of these associations’ disclosures.

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