The finances of Canadian corporations have come under the microscope recently, particularly when it comes to how much money they give to politicians.
Last week, the Canadian government tabled a bill that would require oil, gas and mining companies listed on Canadian stock exchanges to disclose how much they pay governments for access to their resources. And while that law still has a long way to go before it becomes an operational rule, it is a step toward creating a clearer picture of how much money is changing hands between Canadian corporations and politicians, at home and abroad.
A report released today by the Shareholder Association for Research and Education (SHARE) is another step toward corporate transparency; but more than anything, the report shows that we don’t know nearly enough about political spending, said Kevin Thomas, director of shareholder engagement at SHARE, which provides research and education on responsible investment for institutional investors.
Canada has relatively strict campaign finance laws that prevent individuals from contributing more than $1,200 per year and prohibits corporations from making any political contributions whatsoever. However, there is significant room for companies and individuals to support other organisations involved in politically charged activity that can affect public perception, said Nicholas Kyonka, chief executive officer of Canadians for Responsible Advocacy, an advocacy watchdog in Ottawa.
“It depends on what kind of activity you’re trying to get to the heart of. If you want to find out how much they’re spending on lobbying that’s different from how much they’re spending on changing public perception,” he added.
To that end, SHARE is undertaking a three-year project that will explore the influence that Canadian corporations have on public policy debates and decision-making, both at home and across the border. SHARE also aims to start a discussion with investors and companies about what kinds of disclosure – mandatory or voluntary – would be appropriate.
The initial report, “Are Canadian companies spending to influence the US political process,” focuses on the U.S. because data across the border is more complete, said Thomas. It shows that companies listed on the Toronto Stock Exchange (TSX) spent over $15 million in the first three quarters of 2014 on lobbying U.S. politicians, but the same data is not available in Canada because federal and provincial registries do not require this information.
“There is a mountain of information that we don’t know about and the relatively small amount of information that we do have is barely even the tip of the iceberg, said Kyonka. This is a problem because Canadians should be aware of who is shaping their country, and the best way to gain that knowledge is almost always to follow the money, he said.
SHARE says investors also need this information to decide whether or not a company’s political activity is consistent with their own long-term interests, and whether the company is vulnerable to reputational risks, said Thomas.
For example, a pension fund may invest in insurance companies that are facing losses from weather events. If the fund also invests in an oil company that is lobbying against climate change regulation, it would not be well served by that kind of political activity. Shareholders also need to consider the reputational risk that can arise when a company lobbies on the wrong side of an issue, such as climate change, he added.
Companies have a great deal of insight to offer politicians in terms of creating effective policies and avoiding unintended consequences, said Thomas. They should have a voice at the table with decision-makers, we just need to know what they are saying, he added.
