By Kevin Thomas, Executive Director
Canada’s largest engineering firm, SNC-Lavalin Group Inc., published its first annual report on Lobbying & Political Activities as a result of positive engagement and discussion with SHARE and the Fonds de solidarité des travailleurs du Québec, the development capital organization of the largest labour federation in Quebec.
While corporate political engagement and lobbying are legitimate activities when conducted transparently and with integrity, they can also run counter to the interest of shareholders, the public interest, and even the company’s own stated goals if not properly managed.
We raised the issue of effective oversight and transparency of lobbying activity with SNC-Lavalin because of concerns over negative long-term impact on company performance as a result of business disruption, bans on contract bidding, legal penalties and reputational risk. As recently as October, shares dropped 14 percent when it was revealed that the Canadian government would not allow SNC to negotiate a remediation deal related to bribery and corruption charges made against the company in 2015, related to its dealings in Libya.
That’s why we welcome SNC-Lavalin’s new report and its continued commitment to overseeing and reporting on lobbying activities, as well as its commitment to continued dialogue with SHARE.
This outcome is part of broader multi-year SHARE engagement on political activity which has resulted in annual political spending disclosure by numerous US and Canadian firms in multiple sectors. It’s also representative of a growing global demand for companies to disclosure their political spending. The global corruption watchdog Transparency International recently published its own 2018 Corporate Political Engagement Index to raise standards of political engagement and provide companies with an understanding of the respective strengths and weaknesses of their current approach to political engagement.
The SNC-Lavalin-owned Atkins received an overall grade of “C,” well above the average.
Another Canadian company, Bombardier Inc., did not do as well and received an “F” grade in nearly every category. Earlier this year, SHARE filed a shareholder proposal on behalf of OceanRock Investments Inc. asking Bombardier to file its own yearly reports on lobbying activities. Institutional investors including the Canada Pension Plan Investment Board, the California Teachers’ Pension Fund and the Florida State Board of Administration all supported the proposal. Although this resolution was opposed by management, it received 12.25 percent of the total vote. This result was largely skewed by Bombardier’s dual-class share structure, which allows the founding family and select executives 10 votes for every 1 of common shareholders. Taking into account the dual-class and controlled votes, 48.47 percent of non-controlling shareholders supported SHARE’s proposal.
That sends a powerful message about the importance of reporting on political spending and SHARE will continue discussions with Bombardier.
Across North America, SHARE is working with coalition of 74 institutional investors that last year collectively filed similar proposals at 50 companies. The coalition, coordinated by the American Federation of State, County and Municipal Employees and Walden Asset Management, is filing multiple proposals again this year.
Corporate lobbying has the power to influence laws and regulations that affect all aspects of the economy, on issues from climate change and drug prices to financial regulation, immigration and workers’ rights. We believe shareholders and other members of the public have the right to know what role corporations are playing in the development of public policy and business regulations. Further, we believe it is in the company’s own best interest to effectively oversee and align its lobbying activity – and that of its trade associations – so that it is promoting the kind of regulatory environment that fosters a sustainable, inclusive and productive economy for everyone.