As Microsoft shareholders we support transparency and accountability in corporate electoral spending, including the indirect political spending that is the subject of this proposal. Misaligned or non-transparent funding creates reputational risk that can harm shareholder value. It can also place a company in legal jeopardy. Unless a company knows which candidates and political causes its funds ultimately support, it cannot assure shareholders, employees, or other stakeholders that its spending aligns with core values, business objectives, and policy positions. Without the information requested by this resolution, 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” organisations – 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.

At its core, lobbying is a way for citizens and corporations to make their voices heard by the government when it passes laws and legislations that affect them. However, a company’s spending on corporate political activity is difficult, if not impossible, to track without voluntary disclosures from the company. Often, a company’s lobbying efforts are aimed in direct contrast to their stated mission and values.

One such example is Microsoft’s stance on the overturning of Roe v. Wade. After the ruling, which states that the constitution generally protects the right to choose an abortion, was struck down, Microsoft came out in support of its workers by saying it will cover employee travel expenses for abortions. However, despite this apparent stance in support of abortion rights, the company has a decades-long history of funding conservative rightwing politics. This is a key illustration of how companies, like Microsoft, have the power to influence policies that extend far beyond just their own business interests.

Corporations usually provide financial support to certain candidates, political action committees (PACs), ballot measures, or other similar organisations to aid them in their long-term goals or to push public policies that align with their business strategy. However these expenditures, aimed to promote a company’s financial returns, can end up at odds with the company’s stated values. In this example, Microsoft has taken no responsibility for policies their funding has ended up supporting. This not only flies against company values, it can also stand to alienate their customer base and damage Microsoft’s brand reputation hurting the long-term value for shareholders.

When consumers make their spending decision, they are increasingly looking at the ESG values of their purchases. In particular, over 40% of consumers consider authenticity very important when making purchase decisions. Thus, putting people before profits and being transparent in business operations makes a key difference for consumers. With the evolution of social media, it is increasingly possible for activists to track down Microsoft’s spending. Irresponsible lobbying can hence negatively impact the company in the long term.

With this proposed model code, however, Microsoft can continue to make its voice heard on legal matters without alienating its stakeholders. Furthermore, by agreeing to be more transparent regarding lobbying practices and considering the potential side effects, the company stays true to its own values as well.

Microsoft has spent $10.2 million on lobbying the federal government in 2021 , an 8% increase from the previous year. Customers and shareholders, who at the base level provide this funding, have a right to know that this is being done properly and not against values Microsoft markets itself to follow.