Investors say firms’ political lobbying needs transparency, business case and board oversight

Companies’ political contributions and lobbying expenditure needs clear disclosure, business rationale, shareholder support and “robust” board oversight, according to new guidance from the International Corporate Governance Network (ICGN), the group of global investors with assets totalling $18trn (€13.8trn).

The ICGN’s new ‘Statement and Guidance on Political Lobbying and Donations’ has been developed in response to “widening jurisdictional divides” about the growth of corporate lobbying in the political process.

The political expenditures issue has risen up the agenda in the US in particular with the landmark Citizens United ruling in the Supreme Court in 2010, which essentially freed up corporate political spending. The new guidance is globally relevant and aims to tackle an issue that is “not frequently transparent to shareowners”.
“The ICGN is advocating for political donations to be supported by a transparent policy framework, a businessrationale, shareholder support, robust board oversight and clear public disclosures,” the group says.

It has been working on the topic for more than 18 months as concerns about companies’ increased involvement in the political process has become an issue for share owners.

“Corporations can play a meaningful and legitimate role in the public policy process,” said George Dallas, the F&C Investments’ Director of Governance who chairs the ICGN’s Business Ethics Committee.

“However there is also scope for potential reputational and legal risk, particularly with regard to monetary donations, that call for robust governance of corporate political influence.

The guidance, and the ICGN’s new model mandate guide, will be launched at a dinner in London on Monday ahead of the group’s conference called ‘Capitalism in Crisis: priorities for recovery and reform’.