Miss a day, miss a lot. Subscribe to The Defender's Top News of the Day. It's free.

The world’s biggest purveyors of junk food — including Coca-Cola, PepsiCo and McDonald’s — shell out untold millions for everything from running deceptive advertising campaigns to influencing science.

They also spend big on lobbying public officials in an effort to skirt regulations, maintain their monopolistic practices — and even dictate what children eat at school.

But exactly how much these companies spend, where they spend it and what they spend it on is unclear, according to Corporate Accountability, a nonprofit that says it “stops transnational corporations from devastating democracy, trampling human rights, and destroying our planet.”

In an effort to shed more light on Big Food’s Big Spending, a broad, global coalition of institutional and individual investors, and nonprofit organizations delivered shareholder resolutions to Coca-Cola, McDonald’s and PepsiCo demanding full transparency on their global expenditures.

The resolutions garnered enough votes at this year’s shareholder meetings to be placed on the ballots again at next year’s meetings.

The resolutions originated from documented instances of political spending on the part of these corporations in countries such as Brazil, Mexico and South Africa aimed at undermining consumer protection laws, proposed food and product safety regulations, environmental regulations and public health.

Ashka Naik, Corporate Accountability’s research director, explained the rationale behind shareholder resolutions.

Naik told The Defender:

“Transnational corporations have long translated market power into political power and used both to foist staggering human and environmental costs on the world public.

“And they’ve been able to do so generation after generation by keeping their ugly, anti-democratic political activities out of public view, and concentrating their power in the Global South, and with their power their abusive behavior.

“The public can’t correct what it can’t see. Truly responsive and representative government has to operate in the daylight … the present initiative stands on the shoulders of countless advocates — over generations and generations — for working democracy and open government that truly works for the people.”

Broad global coalition of investors, advocates behind push for transparency

Harrington Investments, a California-based advisory firm that describes itself as “a leader in socially responsible investing and shareholder advocacy since 1982,” introduced the resolutions, Naik said.

Several investment firms and other organizations signed an open letter to the CEOs of Coca-Cola, McDonald’s and PepsiCo in support of the campaign for the full disclosure of these corporations’ global political activities.

And there is growing public and investor pressure for greater transparency and a full curb on corporate political spending.

Brianna Harrington, a research analyst with Harrington Investments, said:

“Harrington … is the proponent, but we have received support from other firms and groups due to the efforts of Corporate Accountability and their petition and campaigning to spread awareness on the importance of pressing companies such as these on financial transparency.”

Naik said numerous NGOs, operating in several countries, are heavily involved with this campaign. They include Brazil’s ACT Promoção da Saúde, Mexico’s El Poder del Consumidor and South Africa’s Amandla.Mobi.

Representatives of some of these organizations recently addressed shareholders at the Coca-Cola, PepsiCo and McDonald’s annual meetings.

Other examples cited by Naik include the U.S.-based Declaration for American Democracy coalition, which she says “is pushing for major good governance reform, including stronger political disclosures,” and organizations such as Friends of the Earth and the HEAL Food Alliance who, along with other organizations, signed a separate petition targeting Coca-Cola, McDonald’s and PepsiCo.

These organizations accompany a growing push by investors for greater disclosure from the corporations they hold shares in or are considering investing in.

Such investment philosophies include socially responsible investing (SRI) and environmental, social and governance (ESG) standards, according to Harrington.

Major institutional investors, such as Vanguard, also proclaimed their support for better corporate governance, stating:

“Poor governance of corporate political activity, coupled with misalignment to a company’s stated strategy or a lack of transparency about the activity, can manifest in financial, legal, and reputational risks that can affect long-term value.”

But Harrington said these pronouncements may not be fully sincere. “Vanguard does not advocate SRI/ESG, Harrington said. “It is strictly for marketing purposes.”

She added: “Companies such as Vanguard are much more interested in perception of transparency than actual corporate transparency.”

Harrington told The Defender this is reflective of a broader lack of willingness among major corporations to operate transparently, as according to her, “no global corporations provide total transparency and full disclosure.”

She connected this lack of transparency and lack of global disclosure with lax reporting requirements in numerous countries.

“Companies generally will only disclose what is required by law, and in the international market, those requirements are scant or non-existent,” she said.

This has led to the recent push for greater transparency, especially when it comes to political contributions multinational corporations make in various countries.

According to Harrington:

“The little that is known regarding corporate contributions [is] cause for concern, so full transparency on all donations is not only a sensible request but would be beneficial for investors to understand what their company is financing.

“[Harrington Investments President and CEO] John Harrington, along with Corporate Accountability, have felt for a long time that the current disclosure by these giant food/beverage companies has been so minimal, and this was somewhat of a unique ‘ask’ from investors, to request transparency on not only the political influence, but all the company’s funds used to influence public policy, internationally.”

Addressing why full disclosure matters, Harrington stated in a Corporate Accountability press release:

“Disclosure across all markets should be a fundamental part of a corporation’s license to operate.

“Because transparency laws are weak — often thanks to lobbies funded by corporations like McDonald’s — does that mean investors should be blind to the risks posed?”

Undermining consumer laws in foreign countries

Investors and advocates targeted Coca-Cola, McDonald’s and PepsiCo because they’ve been accused of trying to undermine existing laws and proposed legislation in several countries.

For example, Corporate Accountability cited Coca-Cola’s “very public vow to ‘do better’ on transparency,” contrasting this promise with alleged efforts on the part of the company “to undermine front-of-package labeling in Mexico.”

Alejandro Calvillo, speaking at Coca-Cola’s annual meeting on April 26, said:

“I have observed first-hand how the food and beverage industry, and specifically Coca-Cola and its trade associations, have used influence and financing to try to block nationally and internationally recommended public health policies, most recently [Mexico’s] new front-of-package food label.

“For decades, this political interference in major markets like Mexico, Brazil, India and other countries has been a major liability to people’s health and the planet, but has been largely undisclosed.”

Calvillo added:

“We are asking simply for Coca-Cola to adhere to basic, universal values of integrity and accountability that all corporations should practice in all the places they do business.

“Why should investors fail to be informed about or have any less visibility into Coca-Cola’s political actions in my country or any other? There is no justification for Coca-Cola to have a double standard in the way they apply transparency and ethics principles across countries of the Global North versus the Global South.”

Another set of examples involving Coca-Cola pertains to one of its major overseas bottlers, Coca-Cola Hellenic Bottling Company, and its operations in Nigeria.

In 2017, following a lawsuit, a Nigerian court found that some of the company’s products could pose a health risk to consumers.

And in 2014, Coca-Cola Hellenic’s CEO in Nigeria faced criminal charges for consumer protection violations, including “rusty cans, rusty bottle tops and foreign objects in the soft drinks.”

Also in 2014, Coca-Cola Hellenic delisted its shares on the New York Stock Exchange, which meant that it would no longer be registered with, or subject to oversight by, the SEC.

In turn, McDonald’s is accused of “a long and troubled track record of playing politics at the public’s, and even investor, expense,” according to Naik, citing alleged civil rights, public health, animal welfare and environmental concerns.

Similarly, Paula Johns of ACT Promoção da Saúde, speaking at PepsiCo’s May 4 annual meeting, cited McDonald’s’ alleged role in obstructing and watering down Brazilian national health policies and pressuring authorities for the rollback of a proposed soda tax, despite evidence of prevalent diet-related disease in the country.

According to Johns, ACT contributed to the successful ratification and implementation of several international measures, such as the World Health Organization’s Framework Convention on Tobacco Control, before expanding into corporate advocacy with a focus on non-communicable diseases caused by unhealthy diets and the role played by major food producers.

Addressing PepsiCo’s activities in Brazil, Johns told The Defender:

“[PepsiCo has shown a] … total lack of transparency in their political spendings and CPA (corporate political activities), including, but not limited to, hiding behind their trade associations in their daily lobby within the National Congress.

“Here we are talking about very basic policies designed to protect children from harmful health products, such as sales of [sugar-sweetened beverages] in schools, protecting children from marketing practices and lobbying against effective front-of-package labeling regulations and against fiscal measures to make healthy foods more accessible and unhealthy foods more expensive and less accessible.”

In addition to consumer-level issues, Johns addressed similar alleged problems in the production chain, including “violations of human rights for indigenous populations” and “poisoning of local farmers with pesticides” by PepsiCo’s suppliers in Brazil.

Palesa Ramolefo of Amandla.mobi addressed investors at McDonald’s’ annual meeting, stating:

“Many companies who influence our democracy and government behind closed doors may profit in the short term, but the truth often comes to light.

“In most of the countries McDonald’s does business in, like my own, we haven’t any idea what the corporation is doing and spending to upend public policy.

“If Mcdonald’s has nothing to hide, full transparency and accountability should be easy. If Mcdonald’s can do it in the U.S., why not in African countries? Why the double standard?”

According to Corporate Accountability, South Africa has experienced a so-called “McDonald’s effect:” The incidence of diet-related disease has increased as the chain’s presence in the country has expanded. South African President Cyril Ramaphosa formerly owned 145 McDonald’s franchises.

‘Making the invisible visible’ is first step toward global transparency

Naik argued that “making the invisible visible is the first step toward advancing a call demanding corporations stop interfering in our policies and politics once and for all.”

Such calls have come in the form of a global transparency proposal, which was presented at the annual meetings of Coca-Cola, McDonald’s and PepsiCo.

The proposal called for drafting corporate global transparency reports on the political activities and spending of the three corporations, as well as studies and disclosure related to the external public health impacts of the companies’ products and activities.

According to Harrington, while “all companies are subject to inquiries on transparency and requests from investors on the issue of disclosure” — and despite the fact that “investors and stakeholders have been pressing companies for decades on numerous forms of disclosure” — this resolution is unique in that it is rare that investors will request full financial disclosure from a corporation, on all company expenditures.

Harrington told The Defender:

“Disclosure across all markets should be a fundamental part of a corporation’s license to operate … Most large corporate entities are global. There should be global disclosure and transparency.

“These proposals request full disclosure on all funds spent, internationally, to influence public policy.

“This includes, but is not limited to, political contributions, lobbying, charitable donations, and funding given to “research” organizations to produce junk-science reports that impact health policies.”

Johns added:

“We would love to know how much they spend overseas, we do not have this information.

“We know they lobby because of our sources in the national congress and because we also lobby there (for public health policies).”

According to Naik, Harrington Investments was able to introduce these resolutions for a vote at the three annual meetings because “investors with a certain amount of holdings over a certain amount of time can introduce resolutions before a filing deadline with the Securities and Exchange Commission [SEC].”

These resolutions enjoyed a significant degree of success, according to Harrington:

“Our proposals at KO [Coca-Cola] received 12.6% and PEP [PepsiCo] received 17.6% support from shareholders … which is a very positive sign for a proposal of this nature in its first year of introduction.”

The official vote count from the McDonald’s annual meeting is still pending as of this writing.

Harrington noted that this came despite the opposition of corporate leadership at these companies:

“Not surprisingly, all the companies at which we filed the proposal do not support the proposal, management indicates a recommendation for shareholders to vote against the resolution(s).

“[Neither Coca-Cola nor PepsiCo] responded to our proposals or offers for engagement after we filed. PEP on the other hand challenged our proposal and fought hard to try to convince the SEC it should not be allowed on the shareholder ballot and in the proxy materials. PEP did agree to engagement, and we held a conference call with them.”

Johns told The Defender:

“I was told that getting 18% was an unusually high response for this type of resolution.

“But, being in the meeting and listening to the official response and recommendation from the board to reject the resolution was quite an experience.

“Most of the things that I value as positive were presented as negative in the meeting and vice versa, it felt like we live in parallel planets. They claim that they are wonderful, responsible corporate ‘citizens’ in their contribution to food and nutritional security and what the evidence shows is basically the opposite.”

More actions to follow

A recent investor statement released by the Interfaith Center on Corporate Responsibility (ICCR), which represents more than $4 trillion in assets, stated that “corporate political spending has a destabilizing effect on the broader economic and cultural environment, inhibiting the long-term sustainability of business.”

ICCR members representing more than $140 billion in assets, supported an open letter to food and beverage industry executives asking them to increase their global disclosures.

This appears to be a new trend among investors, according to Naik. “Given the early success and growing momentum for more heightened political transparency among the Fortune 500, expect resolutions like this to proliferate,” she said.

Johns added:

“Trying to move [a] company from inside and to plant a few critical seeds in their shareholder meetings is only part of a much larger strategy to ensure healthier and more sustainable food systems for all.”

But why should investors be concerned about issues involving disclosure and transparency, as well as corporate political spending abroad, if the companies are profitable and performing well financially?

For Johns, specifically referring to PepsiCo’s activities in Brazil, it is a matter of the broader issue of sustainability.

“Because there is one planet Earth and the practices, policies and products of the overwhelming majority of Pepsico’s portfolio is harmful to health, to the environment and to social justice,” Johns told The Defender.

Naik added:

“For the planet, people, and economies to thrive, governments need to first and foremost be servants of the public interest, not a handful of global corporations.

“To correct today’s gross imbalance, we need to first know how transnationals are controlling governments and public policy. Then we need to correct it.

“We would have corporations, as should be the license for doing business of any enterprise, fully disclose their political activities and spending in every geography in which they do business.”

This is important for investors, Naik argued, even large institutional firms such as Vanguard and BlackRock:

“If you’re investing in a corporation you should have full view of the liabilities you are taking on. What else is this corporation keeping from investors and the public that could affect its stock value?

“Vanguard, BlackRock and others are sitting on mountains of risk in this regard. When corporations are selling one thing to investors and the public and doing another thing altogether to influence policy, when it surfaces, it can create significant reputational liability and harm.”

Ultimately, Harrington said, the goal is to see corporations “disclose all of their international financing to influence public policy,” adding, “it is only fair that investors and stakeholders have access to information about where their money is going and what their money is supporting.”

Johns agreed:

“It would be wonderful if all the big corporate players, not only Pepsico, McDonald’s and Coca-Cola and Bayer, Unilever [and] Phillip Morris … but also the major investor groups such as BlackRock, Vanguard, State Street, Elon Musk, Google, Shell, Exxon, banks and others, truly became part of the solution by lobbying for rules that would put limits in corporations, that their CEOs would be held responsible and accountable for their practices and policies.”