Proxy Alert: Oversight and Disclosure of Corporate Political Spending

By March 20, 2018News, Proxy Alert

Imperial Oil Limited
Symbol: IMO (TSX/IMO)
Annual Meeting Date: April 27, 2018
Filer: OceanRock Investments Inc. (Supported by the Shareholder Association for Research and Education)

FOR shareholder proposals at Imperial Oil Limited

Imperial Oil Ltd. is actively engaged in lobbying activity in a number of Canadian jurisdictions and, where legal, has made political contributions. Its registered lobbyists in British Columbia, Alberta, and at the federal level are actively lobbying on energy, climate change and environmental policies. However, there is little additional detail available to investors about the extent and content of Imperial’s political activity, its oversight by management and the board, and the outside organizations that are involved in policy activity to which Imperial contributes annually.

Shareholders do not tend to have problems with legal involvement in policy activity where it is clearly connected to and consistent with building company value, but they do value strong governance, oversight and transparency of any potentially controversial activities including political activity. Lobbying activity and political campaign spending by corporations has associated reputational and regulatory risks that are best assessed when the corporation’s activity is fully transparent and well overseen by the board.

The proposal filed by OceanRock Investments Inc., represented by the Shareholder Association for Research and Education (SHARE), seeks information about the oversight and extent of Imperial Oil’s contributions to political activity:

Resolved, shareholders request the Board prepare a report, updated annually, disclosing:

  • Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
  • Payments or dues paid by the Company that may be used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.
  • The Company’s membership in and/or payments to any tax-exempt organization in Canada or the USA that writes and endorses model legislation or advocates for policy change.
  • Description of the decision-making process and oversight by management and the Board for making payments described in sections 2 and 3 above.

For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation, regulation, or government policy (b) reflects a view on the legislation, regulation or policy and (c) encourages the recipient of the communication to take action with respect to the legislation, regulation or policy. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which the Company is a member. Both “direct and indirect lobbying” and “grassroots lobbying communications” include lobbying at the local, provincial, state and federal levels.

The report shall be presented to the Audit Committee or other relevant oversight committees of the Board and posted on the company’s website.

Vote recommendation rationale

The company says that its lobbying activity is disclosed in public registries in the applicable jurisdictions. However these registries are often incomplete or inconsistent1 , and without direction and disclosure from the company it may not be clear to investors which jurisdictions the company is active within.

The company notes that it is a member of “various trade and business associations that may engage in the regulatory or public policy process, as appropriate.” It says its “support is predicated on each association’s expert contribution to the public debate to develop sound policy that supports a competitive business environment in Canada.”

The company has not disclosed any policies or procedures regarding lobbying or political activity, nor any list of external associations or advocacy organizations to which it contributes funds. Shareholders therefore remain in the dark about:

  • the company’s positions and priorities for policy activity;
  • which external associations the company supports;
  • the company’s oversight and review process for aligning association contributions and memberships with business priorities and shareholder value; and
  • how the company reviews memberships for potential risks to the company’s reputation.

SHARE’s Recommendation

SHARE recommends a vote FOR this proposal. Link to full proposal:


Kevin Thomas

[email protected] | 416-306-6453