Lobbying Expenditures Disclosure - Climate Change
WHEREAS, we believe in full disclosure of Phillips 66's lobbying activities and expenditures to assess whether its lobbying is consistent with Phillips 66's expressed goals and in shareholders' best interests.
RESOLVED, the shareholders of Phillips 66 request the preparation of a report, updated annually, disclosing:
- Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
- Payments by Phillips 66 used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.
- Phillips 66's membership in and payments to any tax-exempt organization that writes and endorses model legislation.
- 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 Phillips 66 is a member.
Both "direct and indirect lobbying" and "grassroots lobbying communications" include efforts at the local, state and federal levels.
The report shall be presented to the Public Policy Committee and posted on Phillips 66's website.
Supporting Statement Phillips 66 spent $25,160,000 on federal lobbying from 2012- 2018. This does not include state lobbying, where Phillips 66 also lobbies but disclosure is uneven or absent. For example, Phillips 66 spent
$6,954,496 lobbying in California from 2012- 2018. Phillips 66's lobbying to criminalize pipeline protests has attracted media attention.1
Phillips 66 belongs to the American Petroleum Institute, Business Roundtable (BRT), Chamber of Commerce and National Association of Manufacturers (NAM), which altogether spent $260,638,048 on lobbying for 2017 and 2018. Both the BRT and NAM are lobbying against shareholder rights to file resolutions. Phillips 66 discloses the lump sums of its trade association payments and the amounts used for lobbying on its website, but this fails to break out payments and lobbying amounts by trade association. And Phillips 66 does not disclose its payments to tax-exempt organizations that write and endorse model legislation, such as the American Legislative Exchange Council (ALEC).
We are concerned that Phillips 66's lack of disclosure presents reputational risks when its lobbying contradicts company public positions. Phillips 66 involvement in a lobbying campaign to rollback higher fuel efficiency standards has drawn scrutiny,2 as has its ALEC membership.3 Investors participating in the Climate Action 100+ representing $34 trillion in assets are asking companies to align their lobbying with the goals of the Paris agreement.
We believe reputational damage stemming from misalignment between policy positions and actual direct and indirect lobbying efforts harms long-term value creation by Phillips 66. Thus, we urge Phillips 66 to expand its lobbying disclosure.
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1 https://theintercept.com/2019/09/27/pipeline-safety-legislation/
2 https://www.nytimes.com/2018/12/13/ climate/cafe -emissions- rollback- oil-industry .html
3 https://www.prwatch.org/news/2014/07/12557/polluters