Steadily building corporate political transparency

As cash-for-access fundraising and campaign finance reform dominate news headlines, public concern over how Canadian corporations influence the democratic process has grown.

Most provinces have already outlawed corporate and union donations to political campaigns, although British Columbia and Saskatchewan are notable exceptions. Yet even where campaign contributions are forbidden, a substantial amount of lobbying activity means that corporations still play an active role in policy.

That’s not a bad thing, necessarily, but it must be done in a transparent manner.

SHARE’s engagement program has been steadily developing an ever-wider group of companies that are disclosing information to shareholders about how their companies invest in influencing public policy, and we’re pleased to see that list grow.

For investors, the issue of political spending by publicly-traded corporations is foremost a question of governance. What board oversight exists regarding spending by management on influencing electoral politics and public policymaking? How does the board ensure that political spending is in the interests of the company, its shareholders, and its stakeholders? What risks does political spending create for investors, and how is the board managing those risks?

But it is also an issue of transparency.

This quarter, SHARE filed shareholder proposals at three Canadian companies and one US company on behalf our clients. All three Canadian companies: Canadian National Railway Co., Goldcorp Inc., and Cenovus Energy Inc., have now agreed to provide additional disclosure to investors about how they oversee and engage in political activity including direct lobbying, campaign contributions, and indirect lobbying through trade associations. Last year SHARE filed three successful shareholder resolutions on behalf of clients (at Enbridge Inc., TransCanada Corporation, and Bank of America Corp.) resulting in agreements to improve oversight and disclosure at all three firms.

A resolution filed at US company Caterpillar Inc. will be voted by shareholders at the company’s annual general meeting in June.

Although some of these corporations choose to continue to make campaign contributions (where legal), Cenovus Energy announced that it has adopted a new policy to no longer make campaign contributions. Between 2012 and 2015 Cenovus contributed $85,000 to the BC Liberal Party and $55,000 to the Saskatchewan Party respectively.

On behalf of SHARE clients, we are continuing private discussions with other Canadian companies to spread the practice of political spending disclosure across the Canadian market. As the list of transparent companies grows, we believe democratic practice is improved and shareholder risk reduced.

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