Case Study: Shining a Light on Business Dealings in China at Verizon

The proposal: Shareholders requested that Verizon prepare a report on the extent to which its corporate operations depend on China, including an explanation of the influence of the Chinese Communist Party on Verizon’s business.

Why it matters: Under the Chinese Communist Party, the Chinese state represents a serious threat to the United States and the U.S. economy. Given China’s history of intellectual property theft, the risks to operating in China are particularly acute for a technology company like Verizon. Furthermore, companies with supply chains that are exposed to China are vulnerable to coercive action by the Chinese Communist Party, which can create significant economic disruption for companies with Chinese operations and the U.S. economy generally. To properly assess the risks that China poses to corporate operations, companies should provide detailed disclosure on their Chinese operations.

The outcome: Unfortunately, the proposal failed with 4.5% of the vote. But given the increasing recognition that doing business in China presents serious risks for shareholders, we expect to see more proposals on this subject moving forward.