Political parties, candidates, and special interest groups spent approximately $4 billion on the 2014 elections, the most expensive midterm elections ever. Despite all this money changing hands for seats in Washington, there is good reason to believe that what really matters is what goes on in the states. The media often refers to the 113th Congress as one of the least productive congresses in history, having only passed 124 substantive laws as of September 2014 (Pew Research Center). Comparatively, state legislatures have passed more than 24,000 bills. Monumental change can happen at the state level, and quickly too.
This fact is not wasted on the American Legislative Exchange Council (ALEC), which in its own words is the “largest nonpartisan, voluntary membership organization of state legislators.” On its website, ALEC touts its success promoting state legislation: “Each year, close to 1,000 bills, based at least in part on ALEC Model Legislation, are introduced in the states. Of these, an average of 20 percent become law.”
Yet, ALEC is a controversial organization. Its role in connecting state legislators with large corporations has garnered significant attention in recent years, namely for the lack of transparency (though that is improving) and for the substance of its model legislation. Currently problematic from Walden’s perspective is ALEC’s draft legislation that obstructs state renewable energy initiatives and undermines regional programs addressing climate change.
In August, Walden challenged 35 corporate social responsibility leaders to assess their support of ALEC, providing a research brief documenting examples of ALEC’s model legislation. We believe involvement with ALEC, as well as other organizations that appear to block legislative progress on climate change, may present inconsistencies between these companies’ stated principles and their public policy actions—therefore posing reputational and operational risks that could have an impact on long-term shareholder value. In the past few months, several companies have decided to cease their affiliation with ALEC, including AOL, Emerson Electric*, Facebook, Google*, International Paper, Microsoft*, News Corp, Occidental Petroleum*, Overstock.com, SAP, Yahoo!, and Yelp.
Aside from the price tag, the 2014 elections were also notable for having the second lowest percentage of voter turnout in American history. Interestingly, some media reports link poor turnout to previous ALEC initiatives. Prior to disbanding its Public Safety and Elections taskforce, ALEC was the primary clearinghouse for model “Voter ID” legislation that makes it harder for citizens—particularly the elderly, students, and people of color—to exercise their right to vote. Clearly, what happens at the state level can have national impact and sometimes that impact ought to be cause for concern.
*Companies engaged by Walden on these issues