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Investor News - 23/01/2012

Companies and lobbying

Leading U.S. institutional investors announced the filing of shareholder resolutions at 40 corporations, for votes at 2012 shareholder meetings. The resolutions urge the corporation to report on direct and indirect lobbying expenditures.

It is important for them that shareholders know whether and how the resources of companies in which they invest are used to influence laws and regulations. Greater transparency on those expenditures should lead, according to the initiators of these resolutions, to a higher levels of insurance concerning the risks faced by companies. Published in November 2011, a study funded by the IRRC Institute found that in 2010 the S&P500 companies spent a total of  $ 1.1 billion in lobbying. The study found that only 14% of those companies disclose the portion of their trade association dues used to fund lobbying. This group of investors ask for the disclosure of  four information: (1) company policy and procedures governing lobbying, including that done on the company’s behalf by trade associations, (2) payments used for direct lobbying as well as grassroots lobbying communications, (3) membership in and payments to any tax-exempt organization that writes and endorses model legislation, (4) decision-making processes and oversight by management and the Board. Since 2010, Vigeo integrated a specific criterion to its evaluation model regarding the transparency and integrity of influence strategies and practices.


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Keywords : Business Behavior, World