2323 E.

Franklin Ave Minneapolis, MN 55406

April 27, 2012 Minnesota State Board of Investment Retirement Systems Building 60 Empire Drive, Suite 355 Saint Paul, MN 55103

Dear Members of the Minnesota State Board of Investment, The 2012 election is expected to be the most expensive in history, due in part to the Supreme Courts Citizens United decision. That decision undermined a generation of good government reforms enacted in the wake of Watergate and opened the door to unrestricted corporate and union political expenditures for the first time since 1947. As a result, the demand for political contributions from the business community is intensifying. Investors need to be concerned about the risks posed by using corporate treasury funds to influence elections. For decades, Common Cause Minnesota has been the studying the corrosive impact of money in politics. Since the Citizens United decision, the evidence has begun to show that corporate political spending is both bad for business and bad for our democracy. This new era, in which unprecedented pressure is exerted on corporate leadership to divert corporate resources from business growth and development into political expenditures, is both fundamentally damaging to shareholder value and to the preservation of the strong and fair democracy needed to support a competitive economy. Therefore, we are urging the State Board of Investment to support the resolution before 3M shareholders that requires greater disclose of lobbying expenditures and urges the board of directors to adopt a policy prohibiting the use of corporate funds for any political election or campaign. Increasingly, companies such as IBM, Colgate Palmolive, Wells Fargo and others are adopting policies prohibiting spending of political funds directly or indirectly to influence elections. A report by the Committee for Economic Development explained that corporations should not engage in this type of behavior because, a vibrant and strong economy results from business competition in the economic marketplace, not in the political arena Donor influence serves to undermine market forces by facilitating policies or regulatory requirements that diminish competition or unduly advantage particular firms or industries. Furthermore, the influence of money can sustain inefficient or outmoded businesses, thereby subverting and frustrating the creative innovation that encourages new investment, spurs business development, and keeps jobs and investment at home.

2323 E. Franklin Ave Minneapolis, MN 55406

In addition, corporate political spending is not only bad for the free market, it is also bad for a corporations reputation. Corporate political contributions can backfire on a corporations reputation and bottom line. In 2010, Target and Valero received unwanted attention, consumer boycotts, and protests for their support of controversial candidates and ballot measures. In a Harris Poll released in October 2010, a sizable portion (46%) of respondents indicated that if there were options, they would shop elsewhere if they learned that a business they patronized had contributed to a candidate or a cause that they oppose. Moreover, academic research in this area has found that corporate political spending can be detrimental to shareholder value. A recent study at the Carlson School of Management at the University of Minnesota concluded that companies making large political contributions had poor corporate governance and lower shareholder value. The study suggests that when managers use corporate funds to make political donations, the donations often advance their political views and own careers--not the interests of the corporations they manage. In a letter to the Securities and Exchange Commission, Professor Michael Hadani at Long Island University reviewed much of the academic research on corporate political spending and found that firms' political spending, in particular contributions to policy makers, at best has an insubstantial impact on their bottom line and more often results in a negative effect of firm financial performance, as well as an increase in risk taking which will also erode future earnings. The State Board of Investment is entrusted by the people of Minnesota to manage our public investments in a responsible manner. This proposal reduces shareholder risk, stops wasteful corporate spending and removes the power of corporate executives to use shareholder profits as their own personal political action funds. Today you can take an important stand to protect Minnesota shareholders and we urge you to do so. Sincerely,

Mike Dean Executive Director, Common Cause Minnesota