dollars democracy disclosure - share · year project to encourage dialogue among capital market...

Dol lars , democrac y and disc losureShould investors demand better d isc losure f rom

Canadian corporat ions on pol i t ica l spending?

A discussion paper from the Shareholder Association for Research & Education

Author: Kevin Thomas, Director of Shareholder Engagement, SHAREResearch Assistants: Zoë Yunker and David Norwell, School of EnvironmentalStudies, University of VictoriaEditing and review: Peter Chapman, Shannon Rohan, Anne Wittman

Cover photo: © Devonyu, dreamstime.comIcon images (pages 4,5, 8, 10, 12, 15, 18): ©Stoyanh Haytov, dreamstime.com

Published by the Shareholder Association for Research & Education (SHARE),January 2015

SHARE is a Canadian leader in responsible investment services. SHARE pro-vides policy development, proxy voting and shareholder engagement servicesto investment managers, public and multi-employer pension funds, founda-tions, and faith-based organizations, as well as investment and governance ed-ucational programs for pension trustees and other investmentdecision-makers, and practical research on important and emerging responsi-ble investment issues.

This paper is the second in a series of papers to be released as part of a three-year project to encourage dialogue among capital market participants abouthow Canadian corporations’ influence on public policy debates and decision-making affects the interests of long-horizon investors. SHARE would like tothank the British Columbia Government and Service Employees’ Union, theCanadian Union of Postal Workers, the Columbia Institute, the GlasswatersFoundation, the J.W.McConnell Family Foundation, the Muttart Foundationand the School of Environmental Studies (University of Victoria) for their sup-port of this project. SHARE is solely responsible for the content of this report.

For more information on SHARE, please visit: www.share.ca

Except where noted, this work is licensed under a Creative CommonsAttribution-NonCommercial-NoDerivatives 4.0 International License.

Table of Contents

Introduction ....................................................................................................................................................2

A. How do corporations spend to influence public policy in Canada? ................................41.Direct political contributions..........................................................................................................52.Direct lobbying ....................................................................................................................................83.Trade associations ............................................................................................................................104.Funding third-party organizations.............................................................................................125.Advertising and public relations.................................................................................................15

B. Discussion Questions ...........................................................................................................................171. Can we differentiate between appropriate and inappropriate

corporate political spending?...................................................................................................172. Should Canadian companies have policies on political spending

and disclose them to shareholders?.......................................................................................193. Should corporate political spending in Canada be disclosed?.....................................204. What is the appropriate mechanism for disclosure? ........................................................225. What information should be disclosed and what should be the

threshold for disclosure? ............................................................................................................246. How often should information be disclosed?.....................................................................257. Are there risks or costs for investors from disclosure? .....................................................27

C. Conclusion ................................................................................................................................................28

Endnotes .........................................................................................................................................................29

2 | D O L L A R S , D E M O C R AC Y A N D D I S C LO S U R E W W W. S H A R E . C A

If a few groups are able to flood the electoral discoursewith their message, it is possible, indeed likely, that thevoices of some will be drowned out … Where those havingaccess to the most resources monopolize the election discourse, their opponents will be deprived of a reasonableopportunity to speak and be heard.

Supreme Court of Canada, Harper v Canada (Attorney General)1

To ensure transparency and fairness, Canadian taxpayersshould be fully aware of which local and foreign interestsare funding Canadian groups and to what level with thegoal of hindering development of economically beneficial,yet environmentally sustainable projects in Canada.

– Canadian Chamber of Commerce2

Concern about the effect of money onpolitics is perennial.Aside from the obvi-

ous concern about outrightcorruption and/or illicit ex-penses and bribery, there is abroader concern about the in-fluence of private interests onthe development of policy andregulation, as well as on thecontent and tenor of public po-litical debate.

The influence of money onelections, leadership contests,public policy decisions, mediaand public debate is contestedequally from across the politicalspectrum. While some commen-tators raise concerns about theinfluence of oil companies onenvironmental policies, othercommentators (and, indeed,

some federal Cabinet Ministers3)point to the influence of “foreignmoney” on environmental cam-paigns in Canada.

From a public policy anddemocratic perspective, politicalcontributions, lobbying and po-litical advertising by corpora-tions, or other associations cantilt the playing field towardspoliticians, parties and policiesthat better serve those interests,regardless of whether those in-terests represent the wishes ofthe majority of citizens.

Even where that influence isnot truly present, the widespreadperception of undue influencefrom political spending can bedamaging if it increases the senseamongst citizens that the systemis weighted against them andthat “big players” have better ac-

cess to political representatives,which undermines political par-ticipation. As Alison Loat, Execu-tive Director of Samara Canadawrote recently in a summary ofworkshops on political participa-tion held with young Canadians,“Those who felt that the politicalpower deck was stacked againstthem seemed to feel it was awaste of time to even try to influ-ence political decisions.”4

This discussion paper outlinessome of the ways Canadian cor-porations engage in politicalspending – broadly defined inthis paper as spending to influ-ence the public policy processthrough direct campaign contri-butions, lobbying, advertisingand support for public policy re-search and advocacy by trade as-sociations and think-tanks.

Introduction

D O L L A R S , D E M O C R AC Y A N D D I S C LO S U R E | 3W W W. S H A R E . C A

There is an important role forcorporations and trade associa-tions in advocating for laws, poli-cies and regulations that helpbuild the economy, that are ef-fective, and do not have unin-tended consequences. Lobbying,public education and support forpublic policy research by corpo-rations can be an important partof political discourse.

However political spending isnot without risks, and investorsin particular are beginning totake stock of political spendingby publicly-traded corporationsin order to understand and eval-uate those risks.

For investors, the issue of po-litical spending by publicly-traded corporations does notdepend upon one’s politicalviewpoint; it is not aboutwhether we“like” the politi-cal activity ornot. Rather, it isforemost a ques-tion of gover-nance. Whatboard oversightexists regardingspending bymanagement oninfluencing elec-toral politics andpublic policy-making? Howdoes the board ensure that politi-cal spending is in the interests ofthe company, its shareholders,and its stakeholders? What risksdoes political spending create forinvestors, and how is the boardmanaging those risks? How is thisspending, and related risks, dis-

closed to the company’s share-holders? What role do sharehold-ers have in approving politicalspending by the company?

These questions are at theheart of this discussion paper.

SHARE’s political spending projectThe Shareholder Association forResearch and Education (SHARE)is engaged in a three-year proj-ect to encourage dialogueamong capital market partici-pants about how Canadian cor-porations’ influence on publicpolicy debates and decision-making affects the interests oflong-horizon investors.

This is the second in a seriesof publications analyzing Cana-dian corporate political spendingand legal and policy options to

promote a bal-anced role forcorporations,from an in-vestor perspec-tive. The firstpaper, pub-lished in Octo-ber 2014,examinedspending byCanadian pub-licly-traded cor-porations in theUS 2014 mid-

term elections.5

This discussion paperThis discussion paper starts witha look at the scope of politicalspending by Canadian publicly-traded corporations as well asthe rules governing spending

and disclosure for corporations inCanada. We discuss the risks thatthis spending can create for in-vestors. We then ask questionsabout the appropriate voluntaryor regulatory mechanisms for ad-dressing those risks, specifically:

n Can we differentiate be-tween appropriate and inap-propriate corporate politicalspending?

n Should Canadian companieshave policies on politicalspending and disclose theseto shareholders?

n Should corporate politicalspending in Canada be dis-closed?

n What is the appropriatemechanism for disclosure?

n What information should bedisclosed and what should bethe threshold for disclosure?

n How often should informationbe disclosed?

n Are there risks or costs for in-vestors from disclosure?

As a follow-up to this paper,SHARE will engage in discussionswith companies, investors, andpolicy-makers in Canada aboutthese questions and the variouspolicy options for addressing theconcerns they raise. We will alsopublish further reports address-ing specific examples of politicalspending relevant to investors tobetter illustrate how this spend-ing does or does not align withshareholder interests.

We welcome your participa-tion in this discussion. Pleasesee page 28 for ways to join theconversation.

“It could be argued that in-formational input is a socialresponsibility of business,particularly where there isimportant corporateknowledge about issues ortechnologies that can helpto inform intelligent legis-lation and public policy”

International Corporate Governance Network3


How do corporationsspend to influence public policy in Canada?Political spending by cor-porations is a broad term.While the most obvioustype of spending is directfinancial contributions topolitical parties, candidatesor leadership campaigns,political spending also in-cludes resources expendedin lobbying politicians, con-tributions to third-partythink-tanks, advocacy or-ganizations and trade asso-ciations, and advertisingand editorial contributionsintended to influence pol-icy debates.

Se

ctio

n A


1. Direct political contributions

Unlike some countries, Canadahas limited opportunities for di-rect political contributions bycorporations, and yet donationsto political parties, candidatesand leadership contestants arenot universally banned.

Federally, unions and corpo-rations are both banned fromcontributing directly to politicalcandidates, political parties, lead-ership contestants or nominationcontestants. Provincially, how-ever, there are different rules.

Seven of the ten provincesand all three territories allowcorporate contributions, whilethree provinces (Quebec, Mani-toba and Nova Scotia) do not.6

Amongst those sevenprovinces, Alberta, Ontario andNew Brunswick place financiallimits on the size of contribu-tions. The other four provinces(British Columbia, Newfound-land and Labrador,

Saskatchewan, PEI) and Yukondo not.

Ontario currently caps contri-butions (in an election year) at$19,950 to the party, $13,300 tocandidates and $13,300 to con-stituency associations. Albertacaps contributions at $30,000 toa party and $10,000 in total to aparty’s candidates in an electioncampaign, and $5,000 in total toa party’s constituency associa-tions (although not during cam-paigns). New Brunswick capsdonations at $6,000 per year.

Within the provinces that donot place caps on corporate do-nations, the size of donations isstill relatively low. The largest do-nations in any recent provincialelection cycle by a publicly-traded corporation are set out inTable 1, below.

Most provinces make dona-tion reports publicly available onthe web, with the exception of

New Brunswick, which does notappear in the table below.

Forty-six of the companies inthe TSX60 index made politicalcontributions to major politicalparties in one or more provincesin 2013.8 Of those, only elevenreport the total sum of theirCanadian political contributionsto investors, and of those nonereports the individual amountsand recipients of company dona-tions. Of the companies in theTSX60 index, the top five directpolitical donors in 2013 (by sumtotal of donations) are set out inTable 2 (next page).

Municipalities, like provinces,vary in their approaches. The Cityof Toronto, Canada’s largest city,does not allow corporate dona-tions. However they are allowedin Vancouver.

Table 1: Largest donations by publicly-traded corporations in most recent provincial election period

Province Amount Party Company Year

British Columbia $200,000 Liberal Party Goldcorp Inc. 2013

Alberta $25,500 Wildrose Party Cenovus 2012

Saskatchewan $51,200 Saskatchewan Party7 Crescent Point Resources 2011

Ontario $9,975 Liberal Party Numerous publicly-traded 2014

(max allowed) companies

Ontario $9,975 PC Party of Ontario Numerous publicly-traded 2014

(max allowed) companies

PEI $7,998 Liberal Party Scotiabank 2011

Newfoundland $10,000 Progressive Shoppers Drug Mart 2011

Conservative party

Yukon $1000 Yukon Party RBC, Scotiabank, TD Bank each 2011

Yukon Liberal Party gave $1000 to both parties


Table 2: Top five direct political donors, 2013 (TSX60 index)

Company Direct campaign Recipients Reported to

contributions investors?

Goldcorp Inc. $210,000 BC Liberal Party Aggregate sum

Teck Resources Limited $125,900 BC Liberal Party Aggregate sum

$57,500 BC Conservative Party

Encana Corporation $100,475 BC Liberal Party No

$13,422 Alberta Conservative Party No

$9,800 Alberta Wildrose Party No

$3,000 Alberta Liberal Party No

Canadian National Railway Company $53,150 BC Liberal Party No

$21,000 BC Conservative Party No

$9,300 Ontario Conservative Party No


$4,350 Ontario Liberal Party No

$1,995 Saskatchewan Party No

Canadian Pacific Railway Limited $55,738 BC Liberal Party No

$10,500 BC Conservative Party No


$3,326 Saskatchewan Party No

Does size matter?None of the amounts donated above are large from the perspective ofcorporate cash flows. Corporate spending in Canada on direct politicalcontributions is clearly not as large as corporate spending in US elections.At the same time, total expenditures by political parties are much smallerin the Canadian context, due to legal limits on campaign spending. TheLiberal and Conservative parties each spent approximately $19.5 millionin the last federal election, compared to the average of $912 millionspent by each of the Democrats and Republicans in the 2014 US congres-sional elections9 – almost 47 times higher.

At the provincial level, the winning Liberal Party spent $11.7 million inthe last British Columbia election, approximately 33% of the amountspent by the winner of the Kentucky senator’s seat in 2014, a state with asimilar size population. If we include outside advertising spending bythird parties in Kentucky, the BC Liberals’ election spending amounts to19% of what was spent to win Kentucky.10

So how do corporate contributions compare, as a percentage of thatspending? Goldcorp’s $200,000 donation to the BC Liberals in 2013 repre-sented 1.7% of the party’s total campaign spending. The winning Ken-tucky Senator’s largest direct donor (the Blackstone Group) contributedUS$213,400 or 0.7% of the candidate’s direct spending.11

Note: the prevalence of donation to BC political parties reflects the fact that 2013 was an election year in that province, unlike in the other reporting provinces.

Party Leadership campaignsEight provinces allow corpo-

rate donations to leadership con-tests within political parties.(Alberta, British Columbia, PEI,Saskatchewan, Nova Scotia, NewBrunswick, Ontario, Newfound-land & Labrador15). Federal par-ties are not allowed to solicitcorporate contributions to lead-ership contests and there is a$1,200 limit for individual dona-tions.16 Parties are required topublicly report contributions toleadership contests at the federallevel, as well as in Alberta, On-tario, BC, and Manitoba.

No legislated limits are set ondonations to leadership contestsin Alberta, although financial re-ports now must be filed withElections Alberta. The AlbertaProgressive Conservative Party


Breaking the rulesWhere it is illegal for a corporation to make a campaign contribution, it is also illegal for acorporation to reimburse its employees for individual campaign donations. In 2013 a SNCLavalin executive testified that a group of approximately 50 company employees lent theirnames for party donations in Quebec and that their donations were reimbursed throughannual bonuses, in contravention of Quebec campaign financing laws.12 SNC Lavalin wasalso investigated by CBC News for a set of donations made by twelve executives and twofamily members to a Conservative candidate, all but one at the maximum allowableamount. The donations, made in a single day in the 2011 federal election, accounted for 2/3of the candidate’s war chest. Thirteen SNC Lavalin executives and family members madesimilar donations to a Conservative candidate in the 2009 election.13 Several SNC Lavalinexecutives face charges for fraud in connection with government contracting, but have notbeen charged under campaign finance laws.14

the Insurance Bureau of Canada(an industry association ofwhich most publicly-traded in-surance companies are mem-bers).19 Former OntarioProgressive Conservative leaderTim Hudak’s 2009 leadershipcampaign received $10,000 fromCanaccord Capital Corporation,while Rogers Group of Compa-nies donated $15,000 to Mr.

The takeawayWhile the rules for direct political contributionsvary, even where Canadian corporations are allowed

to donate freely to political campaigns or leadership con-tests the amounts currently being donated are relativelysmall for investors. However, even small political contribu-tions can create risks for the company: n the corporation may become associated with political po-

sitions and personalities that create reputational risks forthe company;

n the public may perceive the corporation as buying influ-ence, which could hinder genuine and positive relation-ships between the corporation and the government if thecompany is forced to back away from those relationshipsfor reputational reasons; and

n relationships with legislators may be harmed if the com-pany has backed the opposing party.

instituted a $30,000 cap on do-nations to its 2014 leadershipcontest.17 Similarly, while no leg-islated limits on the size of lead-ership campaign donations existin BC, contributions do have tobe reported publicly. Manitobaand Quebec do not allow corpo-rate donations and cap individ-ual contributions at relativelylow amounts.

Ontario requires disclosure ofdonations to leadership racesbut has no limits on the size ofdonations and allows corporatedonations.18

Onex Corporation, for exam-ple, was the largest donoramongst publicly-traded corpo-rations and one of the largestdonors overall to Ontario Pre-mier Kathleen Wynne’s leader-ship race in 2013 with a $10,000contribution. (The companysubsequently gave the maxi-mum allowable donation toboth the Liberal Party and thePC Party in the 2014 election aswell as the maximum annual do-nation to each party.) The largestdonation, of $25,000, came from

l

Hudak and $10,000 to his rivalChristine Elliott.20

Notably, a percentage of On-tario leadership campaign dona-tions is typically forwarded to theparty, but is not counted in thecontributor’s total allowable an-nual donation – providing ameans by which a contributor candonate more than the normal an-nual allowable total to the party.21


2. Direct lobbying

Canadian corporations activelylobby political office-holders andthe civil service. Lobbyists di-rectly employed by for-profit cor-porations are the second largestportion of the approximately8,500 registered lobbyists at thefederal level, after non-profit as-sociations (which may, in turn,be associations serving for-profitcorporations, as we will discussbelow). Consultant lobbyists(often hired by corporations) area smaller proportion of federally-registered lobbyists.22

As an example, in the monthof November 2014, of the morethan 1800 communicationsrecorded in the federal lobbyistregistry, 301 were in-house lobby-ists from corporations, 380 were

from industry associations or or-ganizations representing compa-nies, and 352 were consultantshired by corporations. Althoughin-house corporate lobbyists filedonly one quarter of lobbyist com-munications in that month, al-most 60% of the monthlycommunications reports were onbehalf of private interests.23

The content of lobbying ef-forts frequently relates to specificprojects or provisions that affecta company directly. This often in-

cludes efforts to win governmentcontracts or concessions thatfavour the company’s operations.Companies also lobby, at times,to keep policy-makers abreast oftheir industry’s general concerns,and/or to develop relationshipswith regulators. Other lobby ef-forts may be part of an effort torespond to the government’s pol-icy initiatives or to propose oneof their own.

The influence of lobbying, inCanada, is thought to be moreimportant than that of financialcontributions. Of the top 20companies lobbying the BritishColumbia government (regis-tered as of April 1, 2014), onlyone company (Encana) wasamongst the top 20 donors tothe BC Liberal Party.29

Not surprisingly, then, Cana-dian publicly traded corpora-tions are actively engaged inlobbying governments at nu-merous levels. A review of activelobbyists registered in provincialand federal databases in Canadareveals that 80% of the TSX60corporations have active lobby-ists in at least one jurisdiction,and more than half are lobbyingin multiple jurisdictions.30 Thereare 956 lobbyists currently regis-tered to TSX60 companies inpublicly-available provincial andfederal databases,31 an averageof 16 lobbyists per corporation.Two-thirds of the TSX60 compa-nies directly lobbied federal offi-cials in 2014, collectivelyinitiating almost 1,100 meetings.

Tip of the iceberg?Lobbyists registered in the federal database represent a fraction ofthe contact between government officials and corporations. When afederal official initiates the communication (i.e. by phoning the com-pany rather than the company phoning them) there is no require-ment to register the communication unless a financial benefit wasinvolved.24 These types of communications are common.

For example, Canadian company representatives are regularly in-vited to participate in policy discussions including: • the Finance Minister’s annual summer policy retreat25

• the Finance Minister’s Economic Advisory Council (which currentlyincludes ten members from boards or management of publicly-traded corporations)26

• the since-disbanded “Oilsands Clean Energy Coordinating Commit-tee” (which appears to have been coordinating international oil-sands promotion efforts by the Canadian government)27

• Natural Resources Canada’s “Pan-European Oilsands Team” whichcoordinated lobbying of European governments on behalf of Cana-dian oilsands exports (and notably produced a list of “allies” includ-ing Shell and BP, and “enemies” – including “NGOs”, “Competingindustries i.e. biodiesel industry” and “Aboriginal groups”).28


However even this public dis-closure may not reflect the fullextent of a company’s lobbyingin Canada, since not all jurisdic-tions require lobbyist registra-tions. Further, not all lobbyists areequal: one registered lobbyistmay conduct dozens of meetingswith government officials, whileanother may meet just once; and,the level of access to high-levelofficials afforded to these lobby-ists may differ. Lastly, companiesmay lobby in many internationaljurisdictions that do not havestringent rules about lobbying orpublic disclosure.

Half of the companies in theTSX60 index make mention oftheir involvement in lobbyinggovernments in their public re-porting, but of those only one –Telus Corporation – reports sub-stantially on the scope and con-tent of its lobbying efforts.

Example: ProjectsApproaching government for approval or assistance for a particular proj-ect is a frequent subject of lobbying activity. For example, officials fromEnbridge, Cenovus, Suncor and MEG Energy met with the Deputy Minis-ters of Aboriginal and Northern Development Canada, Industry Canada,Finance Canada, and Natural Resources Canada on August 29th, 2013 todiscuss future plans for Enbridge’s Northern Gateway pipeline project.This was prior to a decision by the Government of Canada to approve thepipeline. Details of the contents of the meeting were excised from theminutes that were released under an Access to Information request.33

Example: Policy initiativesApproaching government for changes to policies and regulations is an-other common subject of lobbying efforts. For example, the Canadian As-sociation of Petroleum Producers met with the Deputy Minister of NaturalResources Canada and with the Clerk of the Privy Council in May 2013urging the federal government to renew a joint federal/provincial/territo-rial initiative to develop “goal-oriented regulation” for offshore oil andgas exploration, which sets general goals but gives industry “flexibility”in how it meets those goals and relies on third-party certifications ratherthan government inspectors to monitor compliance.

CAPP also lobbied for devolving environmental assessment powers tofederal/provincial Offshore Petroleum Boards (OPBs),34 joint bodies thatare mandated to promote oil and gas development while also protectingthe environment.35

A briefing note prepared for the Deputy Minister of Natural Resourcesagreed with devolving those powers to the OPBs.36 And, in November of2013, the federal government announced that environmental assess-ments will be required only for the first well drilled in “an area set out inone or more exploration licences” – which will be defined by the OPBs.37

This was requested by CAPP at its May 2013 meetings.

Example: Canadian corporations’ overseas influenceEven if public lobbyist registries were complete and consistent in Canada,the sheer number of jurisdictions would make compiling an accurate pic-ture of a company's activities nearly impossible for shareholders. With theaddition of overseas lobbying by companies with global operations, thepicture becomes even more opaque. For example, Yamana Gold was re-cently the subject of an uproar in Argentina when a local Yamana man-ager was revealed to be exchanging text messages with an Argentinianlegislator during a government debate on the country’s new mining law.Yamana’s manager texted proposals for changes to the law. This revela-tion drew calls for a veto of the new bill.38

The take-awayConsiderable financialand human resources

are devoted to lobbying byCanadian corporations. Whilesome details on the amountand content of lobbying activ-ity may be available throughgovernment registries, share-holders have no way of know-ing the full extent ofexpenditures on lobbying orthe positions taken by theircompanies. While some of thislobbying may well benefit in-vestors, without additionaldisclosure neither the benefitsnor the risks resulting fromsuch activity can be evaluated.

l


3. Trade associations

Corporate lobbying often takesplace not individually butthrough trade associations orthird-party organizations act-ing on behalf of a large numberof corporate members. InCanada, for example, there arethousands of trade organiza-tions, from regional or localChambers of Commerce tolarger industrial organizationslike the Canadian Forestry As-sociation and cross-sectoral or-ganizations like the CanadianCouncil of Chief Executives(CCCE). Most of these are regis-tered as non-profits, and theycollectively make up the major-ity of registered lobbyists at thefederal level.39

Table 3 shows the trade asso-ciations in Canada that lobbiedthe federal government mostfrequently in 2014. Almost half ofthe companies in the TSX60index are members of one ormore of these five trade associa-tions. Of the companies in theTSX60 index, however, only ninereport fully on the membershipsthey hold in trade associations.

The CCCE is a frequent lobby-ist on a range of issues on behalfof their membership. BetweenDecember 2013 and November2014, the CCCE initiated 53meetings with federal officialsand/or politicians, according tothe federal lobbyist registry. Sim-ilarly, the Canadian Associationof Petroleum Producers (CAPP)initiated 128 meetings with fed-eral officials (including ten Cabi-

net Ministers) over the same pe-riod to represent its members’ in-terests.40 CAPP has a total of 70staff registered to lobby in Cana-dian provincial and federal juris-dictions. The Canadian BankersAssociation, which representsthe country’s largest banks, has49 lobbyists registered in everyprovincial and federal jurisdic-tion that currently maintains alobbyist registry.

Corporations fund trade asso-ciation political activity throughboth membership fees and spe-cial allocations. Although theysometimes assess “special levies”on members for particular pur-poses,41 the application of gen-eral membership fees to supportpolitical activity poses a difficultyfor a company that may wish tohold a membership in a trade as-sociation for any number of rea-sons (networking opportunities,membership benefits and pro-grams, educational opportuni-ties) but also wants to managethe risk of being linked to politi-cal positions taken by that asso-ciation on its behalf where thosepositions conflict with its own.

For example, in 2013 CAPPlobbied the Alberta government

Top 5 lobbyists: Canadian Corporations32

The top five Canadianpublicly-traded corporations lobbyingOttawa in 2014 were:

u CN Railv Telusw Shawx Suncory Blackberry

The top five Canadianpublicly-traded corporations lobbyingOttawa (when lobbying by trade associations towhich they belong isincluded):

u Royal Bankv Suncorw Bombardierx SNC-Lavaliny Teck Resources


TABLE 3: Top five trade association lobbyists (federal) and their TSX60 members

Lobbyist Communication

Trade Association Reports, 2014 TSX60 Members

Alliance of Manufacturers & Exporters 275 RBC, SNC-Lavalin, Bombardier, (only reveals Board

Canada members)

The Mining Association of Canada 154 Agnico-Eagle Mines, Barrick Gold, Cameco Corporation,

Eldorado Gold, First Quantum Minerals, Kinross Gold

Corporation, Suncor Energy, Teck Resources

Canadian Association of Petroleum 128 ARC Resources, Canadian Natural Resources Ltd.,

Producers Canadian Oil Sands Ltd, Crescent Point Energy, Encana

Corporation, Enerplus Corporation, Husky Energy,

Imperial Oil, Penn West Petroleum, Suncor Energy,

Talisman Energy, Teck Resources

Canadian Bankers Association 95 Bank of Montreal, Bank of Nova Scotia, CIBC, Canadian

Tire, Manulife Financial, National Bank of Canada, Royal

Bank of Canada, TD Bank,

Food & Consumer Products of Canada 77 None

to delay greenhouse gas emis-sions regulations (specifically, in-creases in a provincial carbonlevy), arguing the proposed reg-ulations were “very likely” to “im-pact production and revenue”and “could lead capital to flowfrom Alberta to other projects inNorth America and abroad.”42 43

Yet there is reportedly “little con-sensus” amongst CAPP memberson the issue,44 and, notably,some member companies suchas Teck Resources already factorin a much higher carbon price intheir internal projections.45

On the other hand, compa-nies may participate in trade as-sociations specifically so that theassociation can advocate collec-tively without any one companybearing the full costs or reputa-tional risk associated with the as-sociation’s position.

Chamber of Commerce pipeline advocacyIn September 2013, the Canadian Chamber of Commerce released areport arguing for more pipelines and energy infrastructure to trans-port hydrocarbons to foreign markets, arguing that the lack of trans-portation causes $50 million a day in lost revenues for oil and gascompanies, and that “failing to export Canadian energy products willhave little impact on global greenhouse gas emissions …. If Canadadoes not export Canadian oil and gas, the world will not stop usinghydrocarbons, but Canada will have missed the opportunity to investthe proceeds of its energy resources back into Canadian society.”46

The study was sponsored by Enbridge, TransCanada, Shell, Nexen andSuncor and others. Perrin Beatty, the Chamber’s president, led aspeaking tour in support of new energy infrastructure in the fall of2013.47 In July, 2014, the Chamber released another report suggest-ing the risks from shipping oil from the BC coastline are “extremelylow” and that we “can’t ignore the benefits” to the economy.48

Does this more active advocacy on behalf of the oil industry by theChamber of Commerce reflect the views of all Chamber members(which include green energy companies)? Do shareholders of itsmember companies believe that their portfolio’s long-term value isserved by this advocacy?


The takeawaySome political posi-tions taken by a trade

association may pose risks forthe reputations of corporatemembers or for those corpora-tions’ investors. In general,shareholders should be care-ful to assess the degree towhich a corporation is associ-ated with a trade associationor third party’s lobbying andadvocacy activities. Indicatorsof closer association may in-clude the presence of a corpo-ration’s representative on theboard of the organization,special allocations or sponsor-ships for particular projects orevents, or direct involvementwith the organization’s offi-cials in lobbying or public ad-vocacy efforts.

Example: Disagreeing with your own associationThe UK-based Carbon Disclosure Project (CDP) has, since 2013,been asking corporations to report not only on their own politicalengagement on climate policy, but also on whether they weremembers of relevant industry associations, whether the com-pany’s position on climate policy is “consistent with” the associa-tion’s stance, and how the company is attempting to influence theassociation’s position.

According to a report by the Center for Science and Democ-racy, in 2013 57% of companies reporting publicly to the CDP ac-knowledged that the industry associations they belong toinfluence climate policy, and 40% recognized that they “could di-rectly or indirectly influence policy on climate change” by moresubstantial involvement (e.g. board membership, funding). Thatsaid, 95 companies (5%) responding to the CDP noted that one ormore of the trade groups to which they belong held positions onclimate policy that differed from their own, yet companies mayremain as members when the trade association does representtheir views on other matters.49

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4. Funding third-party organizations

Alongside trade associations,Canada’s public policy environ-ment is influenced by othertypes of third-party organiza-tions, such as think tanks thatproduce materials aimed at in-fluencing policy-makers. Somehave strong corporate represen-tation on their boards andamong their donors.

For example, the CD Howe In-stitute produces regular researchpapers and conferences on pol-icy matters, and solicits dona-tions from corporations. TheFraser Institute, the Canadian In-

ternational Council, the Mon-treal Economic Institute and theMacDonald Laurier Institute areall examples of third party or-ganizations whose goal is to in-fluence the policy debate and allreceive funding from publicly-traded corporations. In addition,Canadian corporations may fundthird-party organizations orcampaigns in the United Statesor elsewhere that produce ma-terials and/or advertising es-pousing positions on matters ofpublic policy.

The University of Pennsylva-

nia publishes an annual list ofthe most influential think tanksglobally, with regional sub-lists.50

The university’s list of top Cana-dian think tanks is included inTable 4, ranked by the universityin order of influence, along witha sample of their funding sourcesand the presence of executivesfrom publicly-traded companieson the think-tank’s board.


Board members affiliated withOrganization Identified publicly-traded funders Trade Association Funders publicly-traded companies

Fraser Institute no information no information Canaccord Capital, Brookfield Properties, FirstEnergy Capital, Goldcorp

Centre for International Encana, Power Corporation, Scotiabank no informationGovernance Innovation

CD Howe Institute A large list of major corporations Canadian Association of Petroleum GE Canada, Intact Financial, FordProducers, Canadian Federation of Canada, Manulife, Potash, Open Independent Businesses, Canadian Text, Brookfield Renewable Bankers Association, others. Power, CIBC, Enbridge, BMO

Canadian Defence and no information no information RBC, IAMGold, Aviva insuranceForeign Affairs Institute

Institute for Research on no information no informationPublic Policy

Canadian International Council Power Corporation, RBC, Teck Resources, no informationSun Life Financial, Barrick Gold, AGF Management, BMO, Scotiabank, TD

MacDonald Laurier Institute BMO, Google Canada, Martinrea, TD, Canadian Association of Petroleum Martinrea, Aecon RBC Foundation, Arc Resources, Producers, Canadian Fuels Association, Spectra Energy Mining Association of Canada

Atlantic Institute for Clearwater Fine Foods, Astra Zeneca PLC, Canadian Petroleum Products Clearwater Fine FoodsMarket Studies Bank of Montreal, Empire, Google, Intact Institute, Rx&D

Financial, Merck Frosst, Pfizer, Questerre Energy, Scotiabank, TD Bank, the Shaw Group, CST Brands

International Institute for Enbridge, Shell, Transcanada no informationSustainable Development

Conference Board of Canada funded through fees for services no information Rogers Communications, GM Canada, CGI Group, Transalta, RBC Financial, Shell Canada, Xerox Canada, Sasktel

Montreal Economic Institute 27% of its budget comes from corporations, no information Garda World Security but no information on funders Corporation, BMO, Schiff

International, Fiera Capital, Groupe Canam, Reitmans

Public Policy Forum Apache Canada, ATCO Group, BMO Financial Canadian Association of Petroleum RBC, CenovusGroup, Capital Power Corporation, Cenovus Producers, Canadian Bankers Energy, CIBC, CISCO, CN Rail, Enbridge, Association, Canadian Energy General Electric Canada, Loblaw Companies, Pipeline Association, many othersManulife Financial, Microsoft Canada, Power Corporation of Canada, RBC, Sun Life Financial, Suncor Energy Inc, TD Bank Financial Group, TransCanada

Frontier Centre for Public 18% of its budget comes from corporations, no informationPolicy but no information on funders

Queen's Centre for no corporate funding no informationInternational & Defence Policy

Table 4: Top Canadian think-tanks and funding from publicly-traded companies


While a company may be in-volved in a trade association toaccess a range of benefits andnot necessarily to engage in pol-icy debates, special funding pro-vided to think tanks is usuallymore directly linked to specificpolicy or research objectives.

For example, the Fraser Insti-tute solicited corporate dona-tions from a range of tobaccocompanies by promoting publi-cations and conferences thatquestion the re-lationship ofsecond-hand-smoke and can-cer, decryinggovernmentregulation ofthe tobacco in-dustry and ask-ing for supportin further re-search on “riskand regulation”.The Instituteclaimed creditfor the Parlia-mentary Fi-nanceCommittee be-ginning to as-sess the cost ofregulations onthe economy.51

The Atlantic Institute for Mar-ket Studies, which receives fund-

ing from numerous publicly-traded companies, has advo-cated for school voucher sys-tems,52 private provision ofhealth care53, against CanadaPension Plan expansion,54 and infavour of moving public sectorworkers from defined-benefitpension plans to defined-contri-bution plans.55 Whether or notthese controversial positionsalign with the values and pur-pose of the individual publicly-

tradedcorporations thatsponsor the Insti-tute, they may beproblematic forthe shareholdersin those compa-nies, which in-clude the pensionplans of teachers,nurses, and otherpublic sectorworkers.

Not surpris-ingly, then, someshareholders havereacted negativelyto news that theircompanies pro-vide funding topolicy-orientedthird-party organi-

zations. For example, US compa-nies like Google and Facebookwere challenged by investors

after it was revealed that theysupported the controversialAmerican Legislative ExchangeCouncil (ALEC), a group thatdrafts and promotes legislation.ALEC has advocated the expan-sion of “right-to-work” laws,56

and has been accused of cli-mate-change denial.57 Althoughlittle information is available onits membership or corporatesupporters, TransCanada has re-cently been identified as a spon-sor of ALEC’s activities.58

The takeawayAlthough companiesmay wish to support

organizations that contributeresearch to public policy dis-cussions, companies that pro-vide funding to theseorganizations should be clearabout the purpose of thisfunding and how it aligns withthe company’s interests – andthat of their shareholders.

lWhether or not thesecontroversial positionsalign with the values andpurpose of the individualpublicly-traded corporations that sponsor the Atlantic Institute, they may beproblematic for theshareholders in thosecompanies, which include the pensionplans of teachers, nurses,and other public sector workers.


5. Advertising and public relations

required. In Canada, consider-ably more is spent by trade asso-ciations and publicly-tradedcorporations to influence policyand/or the policy environmentbetween elections.

Canadians will be very famil-iar, for example, with advertisingby Suncor, Cenovus and theCanadian Association of Petro-leum Producers (CAPP) regard-ing the benefits of oilsandsdevelopment in Canada. Adswith slogans like “See what Yescan do” that make claims aboutthe environmental and eco-nomic benefits of oilsands proj-ects run frequently in Canadianmovie theatres, on television,and in newspapers. In addition,new “Advertorial” content (ad-vertising designed to look likenews reporting) with similar pos-itive messages about the indus-try is now appearing regularly innewspapers and websitesowned by Postmedia – some-times without notifying readersthat it is paid advertising –through a special deal betweenthe media conglomerate andCAPP.65

“We’ve done a lot of advertis-ing on oil sands,” says CAPP’sPresident, David Collyer, “and Ithink the public opinion pollingthat we do suggest that they are,overall, effective, in terms ofmoving the middle.”66

Syncrude’s VP of Governmentand Public Affairs Kara Flynn,says the ads deliver “The mes-sage … that the folks who work

in the oil sands are your neigh-bours, your colleagues, the peo-ple your children play minorbaseball with. They are just likeyou and I. They go to work everyday as dedicated individual em-ployees.”67

Figures for the cost of thesemedia campaigns are not pub-licly available nor are they re-ported to investors in thecompanies footing the bill, butJanet Annesly, Vice President ofCommunications at CAPP, hassaid ad campaign costs are “inthe millions of dollars, all fundedby the industry.”68

The ad campaigns by CAPPand other oilsands industry play-ers do not advocate for oragainst a particular politician orpublic policy, but they are an im-portant part of framing the pub-lic policy discussion on oilindustry regulation and creatinga supportive atmosphere for po-litical lobbying. “Our researchshows that the longer the adsare on, the more effective theybecome,” Annesly says.69

At the same time, they maybe considered legitimate publicrelations efforts by companiesthat face a serious reputationaland/or regulatory risk to theirbusiness.

Investors have not typicallycalled for disclosure of public re-lations spending by companies.However there is an investor in-terest in careful board oversightof these public relations cam-paigns, as they can cross the line

At the federallevel, thirdparties canspend up to$150,000 na-

tionally on advertising in an elec-tion period.59 In the last federalelection (2011), however, thirdparty reports showed no contri-butions to third-party advertis-ing from publicly-tradedcorporations in Canada.60 The ve-hicle of third-party advertisingwas used much more frequentlyby trade unions and civic organi-zations. A total of just over$1,250,000 was spent in total onthird party election advertisingin the 2011 election.61

Provincially, third party adver-tising during election periods isnot officially limited in Ontario,PEI, and Newfoundland andLabrador, as well as the three ter-ritories. Other provinces eitherprohibit third party spending en-tirely (Saskatchewan, Manitoba)or place financial and time limitson spending, ranging from amere $300 in Quebec to$150,000 in British Columbia.62

Nova Scotia allows third partyadvertising by corporations, butany group that spends morethan $500 must register as athird party and can spend up to$10,465.63 However few thirdparties registered in the most re-cent (2013) election.64

Third party spending outsideof election campaign periods (i.e.before the writ is dropped) is notlimited by law, nor is reporting


into political advocacy and alsohave the potential to create theirown, additional reputational risksfor companies and undermineacceptance of key projects. For example, Kinder-Morgan wasthe subject of a complaint to theBC Elections Commission overtelevision ads run during theprovince’s municipal elections inOctober, 2014. The ads, in sup-port of the company’s TransMountain pipeline expansion,were run extensively during theelection in Burnaby and Vancou-ver, where the expansion was amajor issue of the campaign.Kinder Morgan denied the adswere targeting the elections,70

and the Elections Commissionerultimately ruled that the com-pany did not have to register as athird-party advertiser, 71 but theincident generated substantialnegative press for the company.

In November 2014 the leak of astrategy document by a public re-lations company employed byTransCanada Corporation to helpsell its Energy East Pipeline proj-ect created damaging headlinesfor the company at a time when itwas seeking regulatory approval.The document advised Tran-

sCanada to “play offense” by“work[ing] with third parties topressure Energy East opponents”and “add[ing] layers of difficultyfor [its] opponents, distractingthem from their mission andcausing them to redirect their re-sources.” The document proposed“opposition research” focused onorganizations like the Council ofCanadians, Equiterre and theDavid Suzuki Foundation.72 Afterthe document was revealed,Trans Canada quickly disavowedthat component of the strategyand announced that its contractwith the public relations firmwould not be extended. Howeverit acknowledged that the leak“has created distraction most no-tably in Quebec.”73

TransCanada’s public rela-tions strategy – also outlined inthe leaked document – includesmobilizing citizens to advocatefor the project politicallythrough “digital grassroots advo-cacy initiatives”. The strategy ad-vises the company to focus on“recruiting a sizeable commu-nity of supporters in our key au-diences and geographies (e.g.Conservative, Quebec, etc)”.TransCanada has established an

“Energy East Action Network”featuring an online petition di-rected at political leaders anddecrying a “well funded, well or-ganized campaign” to “do what-ever it takes to deny Canadafrom realizing our potential.”74

Establishing grassroots net-works to petition political lead-ers or regulators is clearly a formof political spending, not simplypublic relations. Two examplesare the newly formed “EnergyCitizens” network (a CAPP-spon-sored platform which seeks tocreate a movement of “advo-cates” for Canada’s oil and gas in-dustry75) and the CanadianChamber of Commerce-funded“Partnership for Resource Trade”organization that hosts an on-line petition to political leadersurging support for Canada’s nat-ural resources industries.76 Theearlier Energy Policy Institute ofCanada, which featured many ofthe same supporters andclaimed responsibility for signifi-cant changes in Canada’s envi-ronmental policies77, took abackseat after its director wascharged by the RCMP with pro-hibited lobbying and influencepeddling.78

The takeawayCareful board policy and oversight of the purpose, content and tim-ing of advertising and public relations campaigns is essential. Ad-

vertising and public relations efforts related to the public policyenvironment or electoral campaigns may create additional reputationalrisks for companies and their shareholders. At present, spending on advo-cacy campaigns by companies either directly or through their trade associa-tions is not generally revealed to investors in Canada.

l


Discussion QuestionsS

ect

ion

B

SHARE is inviting institutional investors and other Canadian marketparticipants to join in a conversation about political spending as acorporate governance question. We set out, below, a number ofquestions to help guide that discussion. Along with each question,we include information on practices in other jurisdictions, examplesof current practice, and proposals relevant to shareholders.

Like beauty, the appropriatenessof a corporation’s political spend-ing may be in the eye of the be-holder. When it comes to thequestion of corporate involve-ment in politics, an individualmay view the activity morefavourably when it supports theirpersonal beliefs or preferred can-didates and disapprove when itruns counter to their personalpreferences. Clearly a more ra-tional approach to assessing cor-porate political activity is needed.

Can we, however, make dis-tinctions between types of cor-porate political activity? Can wedifferentiate between appropri-ate activities and inappropriateactivities?

The short answer is yes, inthat the law does differentiate.As outlined in the previous sec-

tion, the law sets limits on lobby-ing, contributions, and advertis-ing, and it addresses the timingof these activities, who can un-dertake them, as well as the levelof public disclosure required foreach activity.

There is, of course, room fordebate about the omissions orinclusions in these legal limita-tions, and there are a number ofproposals for new limitationsand better disclosure, including:n Provincial-level bans on union

and corporate campaign con-tributions

n Requiring disclosure ofprovincial leadership contestdonations

n New and/or lower limits oncampaign contributions ineach province79

1. Can we differentiate between appropriate and inappropriate corporate political spending?

Example: Lobbying for tax reductionsA common subject of businesslobbying is corporate tax reduc-tion, and political contributionsmay be given to candidates thatfavour lower corporate taxes. Al-though lower taxes may servecompanies and executives in theshort term, companies and theirshareholders may have differentlong-term interests. For example,a lower tax base may lead to pub-lic service cuts that affect the ben-eficiaries of public sector pensionplans that may hold substantialshares in the companies under-taking lobbying. Is this lobbyingin shareholder interests?


For investors, however, thelimitations imposed by law arenot the only yardstick. For a cor-poration to engage in politicalactivity it must be clear that theengagement or spending pro-vides value, does not createundue risks, and does not runcounter to the company’s andshareholders’ interests – even ifthe activity is legal.

The question is whether thecompany’s board makes any dis-tinctions beyond those pre-scribed by law. For example, injurisdictions where campaigncontributions are allowed, howdoes the board assess whether aparticular expenditure is in thecompany’s best interest? Shouldthe company devote resourcesto lobbying governments, and ifso, how does the company de-termine the issues on which itlobbies and the positions ittakes? How does it assess the

risks involved in the political ac-tivity?

Assessing the value of politi-cal contributions for the corpo-ration is difficult. Usingshareholder interests as a bench-mark is itself difficult since share-holders vary considerably intheir interests. Even their com-mon interest in financial returnsmay vary depending on each in-vestor’s anticipated holding pe-riod and tolerance for risk.Whether political contributionsby a corporation result in supe-rior financial returns for a com-pany and its shareholders issubject to considerable – andongoing – empirical study andscholarly debate.81 Similarly, as-sessing benefits to the corpora-tion of lobbying activity isdifficult, since beneficial lawsand regulations may be the re-sult of many factors, whichmakes conclusive attribution

and measurement difficult, if notimpossible.

Finally, any returns from polit-ical activity must also beweighed against the risks the ac-tivity may create for the corpora-tion, both in terms ofreputational risks, as well as thedistinct possibility that a candi-date or party that received con-tributions may not win (i.e.wasted resources and/or gener-ating hostility from the winningparty or candidate).

Questionsn What criteria should be ap-

plied to determine whether apolitical action is in the com-pany’s interests?

n What criteria should be usedto assess risks in politicalspending?

Example: Against Say-on-pay and majority votingCompanies sometimes advocate regarding questions of corporate ac-countability to shareholders. For example, Power Corporation of Canadasubmitted a comment letter to Industry Canada in 2014 arguing againstthe inclusion of provisions in the Canada Business Corporations Act re-quiring “say on pay” votes, majority voting procedures for boards, andsplitting the role of Chair and CEO.82, 83 Yet all three of these are consid-ered good governance practices by shareholders.84 When does corporatemanagement's use of corporate resources to advocate against the ex-pansion of shareholder rights cross the line?"85

Example: Market level risksPolitical spending may create both company and market-level risks. Forexample, an International Monetary Fund Working Paper correlated lob-bying activity in the U.S. mortgage lending sector with riskier lending bythose companies that undertook lobbying, the sum of which had mar-ket-wide effects in the crash of 2008.86


Legitimate corporate political activities are those that are conductedlegally and transparently, are clearly linked to a company’s business purposes and strategic intent and carry the support of its shareholders.Such activities serve the interests of the company as a whole, not interestsspecific to individual managers or shareholders. Legitimacy is enhancedwhen corporate political activities occur within a clear policy frameworkthat is overseen by the company’s Board and carries investor support.

International Corporate Governance Network80

2. Should Canadian companies havepolicies on political spending anddisclose them to shareholders?

In the US, more than 125 of theS&P500 companies voluntarilydisclose their political spendingand lobbying policies.87 InCanada, 22 companies in theTSX60 have disclosed policies re-lated to political donations88, butof those only seven provideguidance on the size or type ofacceptable contributions andidentify the committee or indi-viduals responsible for authoriz-ing contributions. Fifteencompanies simply identify thoseresponsible for authorizing con-tributions, but provide no indica-tion of what guides thecompany’s decision-makingprocess. The other two thirds ofthe TSX60 companies have notdisclosed any policy related topolitical contributions.89

The content of existing corpo-rate policies and disclosurevaries considerably. Proposals formodel board policies also differin their scope and content.

One of the most comprehen-sive models is that of the Inter-

national Corporate GovernanceNetwork, which proposes a set ofprinciples for policies on politicalactivity framed around the con-cepts of legitimacy, trans-parency, accountability andresponsibility. The ICGN pro-poses that policies include pub-lic disclosure of lobbyingactivities and political donations,including spending on third-party organizations and trade as-sociations, the peopleresponsible for making decisionsin the company, oversight by theBoard’s governance or risk man-agement committee, and disclo-sure of lobbying positions takenon key policy issues. Lastly, theICGN proposes that shareholdersbe allowed to vote on the politi-cal donations policy and to set amaximum amount for companypolitical donations.90

Another set of model boardpolicies has been made availableby the Coalition for Accountabil-ity in Political Spending, mod-eled after existing company

policies from Colgate-Palmolive,IBM and Microsoft. The Colgate-Palmolive model is the most re-strictive, prohibiting direct andindirect political contributions, aswell as indirect spendingthrough non-profit organiza-tions. It also requires that duesand other payments to trade as-sociations not be used for politi-cal purposes.91

In France, a coalition of corpo-rate members of TransparencyInternational (including BNPParibas and L’Oreal) signed a dec-laration last year pledging to de-velop responsible lobbyingpolicies, disclose political contri-butions as well as lobbying activ-ities and positions being taken(including through trade associa-tions), and to promote similarpolicies amongst their trade as-sociations.92

Oversight of third-party asso-ciations is perhaps the most diffi-cult part of policy development,because it is difficult to distin-guish at the policy level betweenuseful memberships in trade as-sociations and potential undesir-able political activity by anassociation that the Board doesnot control. On this point, poli-cies may outline a process for risk


management, and provide foraccess to the necessary informa-tion upon which to make opera-tional decisions. For example, IraM. Millstein, the former Chair ofthe OECD Business Sector Advi-sory Group on Corporate Gover-nance, proposes that Boardpolicies require trade associa-tions to provide the membercompany with a report on theirpolitical spending, and discloseto members the full list ofdonors underwriting their politi-cal spending.93

Some shareholders, seeingthe risks involved in corporatespending to influence politicalelections, have filed shareholderproposals simply urging a com-pany to refrain entirely frommaking contributions to politicalcandidates or parties. For exam-ple, in 2014 the US shareholdergroup As You Sow filed a resolu-tion at DuPont asking “that the

board of directors adopt a policyto refrain from using corporatefunds to influence any politicalelection,” including taking meas-ures to prevent any contribu-tions or dues to tradeassociations being used for thesame purpose. (Notably, the pro-posal did not seek to restrainlobbying). As You Sow arguedthat disclosure alone was insuffi-cient, because

disclosure is retroactive, occur-ring after the contribution has al-ready been made, and does notallow shareholders to anticipateor pre-emptively evaluate thepotential risks associated withthose contributions. Conse-quently, proponents believe thata company policy against politi-cal contributions intended to in-fluence elections will ensureshareholders are protectedagainst the potential risks andcontroversies associated withthis practice. 94

Questionsn What should be addressed in

a corporate policy on politicalspending?

n Should all spending be forbid-den?

n What should it say aboutmembership in trade associa-tions or other third party or-ganizations?

n Who should be responsiblefor overseeing and/or signingoff on political spending?

n Should there be a shareholdervote to approve politicalspending, and if so should itbe binding or advisory in nature?

3. Should corporate politicalspending in Canada be disclosed?

Disclosure of political spendingby corporations is seen by manyUS investors as a critical elementin good corporate governanceand an important accountabilitymechanism because corpora-tions in that country can spendunlimited amounts on influenc-ing the political process, and be-cause the evidence is clear thatsome corporations are indeedspending very large sums ofmoney on political influence.

In Canada, legal limits on cam-paign contributions are stricter

and, even where allowed, littleevidence of the type of largecampaign contributions seen inthe US. Is the level of politicalspending, then, a substantialconcern for Canadian investors?

If we include spending onlobbying,95 spending on adver-tising and editorial content, andcontributions to third party or-ganizations and industry associ-ations that buy advertising andconduct lobbying, the total levelof spending by Canadian corpo-rations to influence public policy

is clearly much larger than justamounts donated to electoralcampaigns. Because most ofthat spending is not subject toany regulated disclosure regime,it is not possible for investors todetermine the full extent ofspending by Canadian corpora-tions to influence public policy.

In the United Kingdom, wherecorporate campaign donationsalso do not reach the levels seenin the US, UK corporate law re-quires that political donations bedisclosed to shareholders andtheir upper limits prescribed byshareholder vote. Total author-ized spending between 2001and 2010 was more than £85.6


million, but actual reportedspending by publicly-traded cor-porations during that period wasonly £10.2 million (C$18.5 mil-lion).96 Yet, disclosure is still a re-quirement under UK law.

Current Canadian securitieslaws already require disclosuresat fairly low financial thresholds.For example, companies mustdisclose perks provided toNamed Executive Officersamounting to more than$50,000 in a given year, not be-cause these are material in a fi-nancial sense but becauseinvestors have a clear interest inthe information.

In a similar vein, the test ofmateriality for spending on polit-ical influence should not relysolely on the level of spendingbut also on the risks it creates forthe corporation.

The test for materiality inCanadian securities law iswhether a “reasonable investor’sdecision whether or not to buy,sell or hold securities of the is-suer would likely be influencedor changed if the informationwas omitted or misstated”97

Speaking to the same pointin US law – and opposing a dis-closure rule at the SEC – PaulAtkins writes:

Fundamentally, it is not enoughthat some investors may view afact as important; rather, it mustbe important to the reasonableinvestor. Not a special-interestshareholder, a shareholder withan axe to grind, a shareholderwith a particular religious or po-litical bent, or a shareholder whothinks that it would be “nice toknow” some relatively insignifi-

cant fact, but a reasonable share-holder focusing on the total mixof information informing his in-vestment decisionmaking.98

For political spending, the“reasonableness” test wouldlikely centre on reputational riskscreated by the activity, whichcould include impacts on thingslike brand value, consumer pref-erence, employee loyalty, obtain-ing regulatory approval ofprojects, the company’s relation-ship with local communities, andthe company’s relationship withgovernment.99

The editors of Bloomberg.comnote, for example, that even a rel-atively small political donation byTarget Corporation to a businessgroup supporting an opponentof same-sex marriage “resulted indamaging publicity and a nation-wide boycott of Target stores bygay-rights supporters.”100 Theamount of the donation was notmaterial; its results, however,were.101

Apart from the disclosure ofspecific political spending, in-vestors may be interested in thepolicies and practices adoptedby the Board to oversee politicalspending, as discussed above.Typically, boards do not discloseall policies to the public, butmany non-financial policies (e.g.Environment, Health and Safetypolicies) are disclosed, and pro-vide confidence to investors thatthe Board is exercising appropri-ate oversight in a particular area.

Before voluntarily disclosinginformation that is not requiredby law, company boards or man-agers must evaluate whether the

disclosure is needed or wantedby investors or other stakehold-ers such that the cost of collect-ing, preparing and publishing thedata is justified. Similarly, whenenacting regulations requiringdisclosures, regulators often con-sult stakeholders to determinewhether there is sufficient inter-est in the new requirement.

In the US, investor interest inpolitical spending has beenclearly evidenced by the 530shareholder proposals related topolitical spending filed in the USduring the last five years. Politicalspending disclosure requests nowrepresents the largest category ofshareholder proposals filed in theUS, and in 2014, 16 of those pro-posals achieved support of morethan 40% of votes cast.102 Thelevel of investor interest is alsoclear from the more than one mil-lion comment letters received bythe Securities Exchange Commis-sion on the issue.

In Canada, however, politicalspending is still a nascent issue,and has not yet been the subjectof shareholder resolutions.

Questionsn To what degree do Canadian

companies face reputationalor other risks from politicalspending?

n Is there a clear need and/ordesire for disclosure of spe-cific spending in Canada?

n Should investors be madeaware of Board or manage-ment policies regarding over-sight of political spending?


Should disclosure be pursued asa voluntary option for individualcompanies or a regulatory re-quirement across the market? Ifa regulatory approach makessense, is it better to makechanges to applicable securitiesregulations or to corporate law?Should shareholder approval ofpolitical spending be required?

In order to answer thesequestions, we look first to exist-ing practices in Canada andother jurisdictions for experienceand guidance.

1. Voluntary approaches

As noted above, disclosure ofpolitical spending by individualUS corporations has been thesubject of numerous share-holder resolutions and some vol-untary disclosure. The US Centerfor Political Accountability pub-lishes an annual Index of Corpo-rate Political Disclosure andPolitical Accountability (the Zick-lin Index) which measures trans-parency at the largest 300companies in the S&P 500.103 The2014 survey found that 99 of thecompanies surveyed havereached agreements with share-holders to disclose politicalspending, and that 100 of the192 companies included in boththe 2013 and 2014 indices hadimproved their scores. However65 of the companies surveyedstill disclose little or no informa-tion. More companies disclosed

direct political contributions toparties or candidates, whilefewer disclosed their contribu-tions to trade associations ornon-profit third-party organiza-tions. Notably, as pressure to dis-close grows in the US, a numberof companies that had not yetfaced a shareholder resolutionon the subject had also madepartial disclosures. 104

2. Regulatory approaches

Changes to corporate lawIn the United Kingdom, the

Companies Act of 2006 (Part 14)requires UK companies to obtainshareholder approval for finan-cial contributions to politicalparties and organizations (de-fined as organizations that seek

to influence public support for aparty, candidate, or position in areferendum) or political expen-ditures (including advertising orcompany activity designed to in-fluence public support for aparty, candidate, or position in areferendum). Shareholders areasked to approve an overall ceil-ing on donations or expendi-tures for a given period (ratherthan specific sums for specificpurposes), with a maximum pe-riod of four years. If a companymakes a donation that is not au-thorized by a general share-holder resolution, the Directorsare personally liable for reim-bursing the amount and com-pensating the company for anydamage.105

General memberships in tradeassociations, even if those associ-ations carry out political activity,is not considered a political do-nation under the law.106 The Com-

panies Act politicalspending provisionsalso do not addresscorporate lobbying ex-penditures, which rep-resents a significantgap in disclosure obli-gations compared, forexample, to the ICGNstandard.

Companies arerequired to include intheir annual Directors’Report to sharehold-ers a list of any politi-cal donations orexpenditures that ex-ceeded £2000 (aggre-gated over the year),including naming the

4. What is the appropriate mechanism for disclosure?

A modest proposal?Lucien Bebchuk (Director of the CorporateGovernance Program at Harvard LawSchool) and Robert Jackson (Associate Pro-fessor of Law at Columbia Law School) havesuggested that US lawmakers: • Provide shareholders with a role in deter-

mining the amount and targets of corpo-rate political spending;

• Require that independent directors over-see corporate political speech decisions;

• Allow shareholders to opt out of – that is,either tighten or relax – each of these firsttwo rules; and

• Mandate detailed and robust disclosure toshareholders of the amounts and benefici-aries of a corporation’s political spending,whether made directly by the company orindirectly through intermediaries.109


candidate, party or organizationthat received the donations. Sim-ilarly, companies must reportcharitable donations over a simi-lar threshold.107

Similar approaches have beenproposed but not adopted in theUnited States. In 2011, for ex-ample, legislators in New Yorkproposed amendments to thestate’s corporate laws requiring acorporation to obtain priorshareholder approval “at leastannually” before making any po-litical donations or independentexpenditures, and to set an an-nual aggregate amount of al-lowed donations orexpenditures. The law wouldalso require disclosure to share-holders of the company’s dona-tions or expenditures and thebusiness rationale for them. Thebill did not pass.108

In Canada, enacting changesto corporate law is complicatedby the constitutional division ofpowers. While the federal gov-ernment may make changes tothe Canada Business CorporationsAct, this only governs companiesincorporated federally. Changesto the relevant company laws ineach province would be requiredfor any companies incorporatedprovincially. Further, changes tocorporate laws would also affectprivately-held companies. Whilethere may be an argument forpublic disclosure of spending byprivately-held companies, thispaper is concerned with protec-tion of public company share-holders and does not necessarilyextend to the spending beingdone by private parties.

Changes to Securities LawA group of ten U.S. law pro-

fessors submitted a proposal tothe Securities Exchange Com-mission in 2011 asking that theSEC “develop rules to requirepublic companies to disclose toshareholders the use of corpo-rate resources for political activi-ties.”110 The rule-making petitionreceived more than one millioncomment letters, more than anypetition ever received by theSEC. Although the rule-makingproposal was put on the SEC’sagenda for 2013, the SEC facedconsiderable political pressurefrom Republican lawmakers notto adopt a rule,111 and the proj-ect was subsequently aban-doned in favour of completingoverdue Dodd-Frank rule-mak-ing projects. It is not clearwhether the SEC will again takeup the project.

Efforts have been made toenact changes to the US Securi-ties Exchange Act of 1934 in theUS Congress, most notablythrough the Shareholder Protec-tion Act of 2013 (S. 824). Intro-duced in the US Senate in April,2013, this bill proposed anamendment to the Securities Ex-change Act requiring companiesto obtain majority shareholderapproval for annual expendi-tures for political activities, in-cluding funds provided to tradeassociations or tax exempt or-ganizations that may be used ortransferred to other organiza-tions for political activities, butnot including direct lobbying ex-penditures.112 The Act would alsorequire issuer Boards to vote on

any political expenditure in ex-cess of US$50,000 and to disclosethese votes – including the votetaken by each Director – to share-holders. Lastly, the Act would re-quire issuers to report quarterlyon any political expenditures andvotes of the board authorizingexpenditures, and to summarizeevery expenditure over $10,000in an annual report.

The Act was immediately sentto the Senate Committee on Bank-ing, Housing, and Urban Affairsand is not expected to go to avote.113 This was the third attemptat introducing similar legislationby Democratic Senators.

In Canada, enacting changesto securities regulations is, at pres-ent, complicated by constitutionaldivision of powers, as there is nosingle national securities regulator.Efforts to maintain a level playingfield across the country mean thatchanges made by some of thelarger securities regulators maylead to eventual adoption acrossall jurisdictions; opportunities mayalso arise from the introduction ofthe proposed Co-operative CapitalMarkets Regulatory System.

Questionsn Are voluntary measures (en-

couraged by shareholder votes)sufficient, or is there a space forregulatory approaches to re-quiring disclosure?

n If so, are securities regulatorsbest equipped to create ap-propriate rules or should dis-closure be enacted byamendment to Canadian cor-porate laws?


One difficulty with voluntary dis-closure at a company-by-com-pany level is that the scope andquality of data reported can varysignificantly, making analysis byinvestors more akin to readingtea leaves than a careful assess-ment of risks and opportunities.

Even if companies were con-sistent in the type of spendingthey reported, there is still thequestion of the threshold ofspending that requires disclosure(the “material” threshold forspending).

A comment letter submittedto the US SEC by a group of forty

institutional investors represent-ing more than US$690 billion inassets under management pro-posed answers to the questionsof scope and materiality. Theyargued that the following infor-mation should be disclosed: n Policies and procedures for

political contributions andexpenditures

n The title of the person re-sponsible for making deci-sions about politicalcontributions

n Monetary and non-monetarycontributions and expendi-tures (direct and indirect)

used to participate or inter-vene in any political cam-paign, broken down byrecipient.

n How trade associations areusing their payments, includ-ing the recipients or benefici-aries of trade associationpolitical spending underwrit-ten by company funds114

They also argued that thereshould be no de minimis excep-tions for direct donations, on thegrounds that even small, imma-terial do-nationscan createlarge repu-tationalrisks forcompaniesand there-foreshould beknown toinvestors.They pro-posed a$25,000thresholdfor report-ing mem-berships in associations, suchthat only more substantial mem-berships are reported.

The most common requestsin shareholder proposals on po-litical spending in the US are forthe company to review and re-port on political spendingand/or lobbying. In 2014 sevenshareholder proposals askedthe company to report specifi-cally on climate change advo-cacy, and seven proposalsurged the company to end all

5. What information should be disclosed and what should be the threshold for disclosure?

Are there GRI Indicators for political spending?Within the world of voluntary corporate reporting, the Global Reporting Initiative’s (GRI) current G4 guidelines include an indicatorregarding political contributions:

G4-SO6: TOTAL VALUE OF POLITICAL CONTRIBUTIONS BY COUNTRY AND RECIPIENT/BENEFICIARYnn Report the total monetary value of financial and in-kind

political contributions made directly and indirectly by the organization by country and recipient/beneficiary.

nn Report how the monetary value of in-kind contributions was estimated, if applicable.

Many investors favour the use of GRI indicators to create consistencyand comparability in sustainability reporting. While this GRI indicatoris useful for companies reporting campaign contributions, it does notaddress other types of political spending like lobbying.

GRI’s previous set of indicators (G3) did ask companies to report on“Public policy positions and participation in public policy develop-ment and lobbying.” However Canadian companies that use GRI indi-cators mostly did not report on that indicator.

One difficulty withvoluntary disclosureat a company-by-company level is thatthe scope and qualityof data reported canvary significantly,making analysis by investors more akin toreading tea leavesthan a careful assessment of risksand opportunities.


political spending. A small num-ber of proposals have asked foreither shareholder approval oran advisory vote on politicalspending.115

Proposals related to spendingtend to ask for “a report, withsemi-annual updates, on how[the company] makes direct andindirect contributions to politicalcampaigns and referenda, identi-fying recipients, individual con-tributions, and the titles ofcorporate officials making deci-sions.” Proposals related to lob-bying tend to ask for reports onthe company’s policy, payments,memberships in groups thatwrite model legislation, and in-formation on how these pay-ments occur and howmanagement and the board ofdirectors monitors them.116

Questionsn What range of activities

should be disclosed to share-holders (e.g. campaign contri-butions, lobbying,memberships, advertising)?

n Should contributions to tradeassociations or other thirdparty organizations be in-cluded in reporting, and if so,should this include generalmembership fees or only con-tributions earmarked for lob-bying or other politicaladvocacy?

n Should there be a de minimisexception for reporting and, ifso, what should be thethreshold?

Advocates for disclosure of politi-cal donations note that any cam-paign contributions should bedisclosed prior to the vote inquestion.117 While the argumentthat details of a candidate’s back-ers should be known to the vot-ers prior to the election is strong,the democratic interest for theaverage voter is not the same asa shareholder’s interest in theircorporation’s contributions. Forthe latter, the reason to seek dis-closure is to identify risks to thecompany and ensure manage-ment is representing the com-pany’s best interests, rather thanto decide how to vote as citizensin a particular election.

With regard to reporting on acompany’s lobbying and adver-tising spending, both sharehold-ers and the general public couldbenefit from timely disclosure. Inmany jurisdictions specific lobby-ing activity must be posted inpublic registries shortly after it isconducted, as there is a clearpublic interest in disclosureabout lobbying and influence at

the time laws and regulations arebeing developed.

Shareholders require informa-tion on risks to their investmenton an ongoing basis, but at thesame time do not want to diverttoo many company resources toreporting, and should not beoverwhelmed by excessive infor-mation. A balance is necessary. Incorporate reporting, this is usu-ally achieved by including rele-vant information in thecompany’s annual report toshareholders, or in some cases inan annual sustainability report is-sued at a different time. Howevercompanies also report financialinformation on a quarterly basis,and publish other information inthe form of news releases and/orwebsite postings.

In a recent survey by the CFAInstitute in the United States (seegraph, page 26), 66% of respon-dents felt disclosures of politicalspending should be made in an-nual reports, followed by 46%who favoured quarterly report-ing and 43% who favoured in-

6. How often should informationbe disclosed?

Shareholders require information on risks to their investment on an ongoing basis, but at the same timedo not want to divert too many company resources to reporting, and should not be overwhelmed by excessive information. A balance is necessary.


cluding it in annual proxy state-ments (respondents could selectmore than one option).118

Although annual reportingshould be sufficient to provideinvestors with information aboutpolicies, oversight, and member-ships in outside organizations(none of which is likely tochange on a quarterly basis),would it be sufficient for finan-

Questionsn How often should companies report on political

spending? n Are there different considerations for campaign

contributions, lobbying, advertising, or contributions totrade associations?

n How often should companies report on policies andoversight?

n Should disclosure be included in Annual Reports, quarterly reports, proxy circulars, or in some other form?

cial contributions to specificcampaigns, or lobbying activityrelated to a time-sensitive policymatter? In the Canadian context,would annual reporting still pro-vide shareholders with adequateinformation on the company’sspending and relevant risks asso-ciated with it?

As the chart above demon-strates, some would prefer report-

ing on political donations that ac-companies quarterly financial re-ports. Also, some believe thatdisclosures should be made “suffi-ciently in advance of the com-pany’s annual shareholdermeeting to allow shareholders touse the ‘procedures of corporatedemocracy’ to address the com-pany’s political activity.”119

Source: CFA Institute


7. Are there risks or costs for investors from disclosure?

One argument marshalledagainst disclosure of politicalspending is that it may createrisks for companies by drawingattention to the amounts and re-cipients of their spending.

David Primo, an advisor to theCenter for Competitive Politics120

in the US, wrote recently that“any group, including non-share-holders, can use the informationgleaned from disclosure reportsto attack the company and ad-vance the group’s politicalgoals.”121 For example, the phar-maceutical company Merck wasan early adopter of politicalspending disclosure, and it hasbeen subject to a shareholderproposal by a self-described con-servative think tank regarding itsexpenditures on lobbying in theUS. The organization’s primaryconcern was the company’s sup-port for the President’s healthcare reform in the US, specifi-cally, “prevent[ing] another ca-tastrophe like ObamaCare.”122

The risk of negative attentionfor a company’s political spend-ing is real. The question, how-ever, is whether these risks arebest avoided by keeping contri-butions undisclosed from share-holders, or by having clear anddefensible policies and practiceson political spending that with-stand shareholder scrutiny.

Another concern for investorsis that disclosure may detercompanies from participating inthe political process even wherethey should do so. For example,

a company could refrain fromlobbying related to legislationthat affects their interests, leav-ing the playing field open forcompetitors or other interestswho may influence lawmakingin a manner detrimental to thecorporation’s value.

Or a company may feel theneed to forego a largely benefi-cial membership in a trade asso-ciation because of a relativelyminor position taken by the as-sociation. Membership in a tradeassociation may confer benefitson the company, including thedevelopment of jointly-sup-ported industry advocacy re-garding legislation andregulations that help companiesovercome free-rider problems.123

Activist campaigns to con-vince companies to disassociatewith such associations oncethey are fully disclosed couldcause the company to foregothe benefits to shareholders ofmembership.

Eighteen US companies haveresponded by earmarking con-tributions to distinguish be-tween trade associationmembership dues and contribu-tions which go to political activi-ties. Qualcomm Inc., forinstance, has a policy requiringdisclosure of any portion of duesor special assessments chan-nelled towards lobbying or po-litical contributions by theassociation.124

Lastly, could a disclosureregime create unnecessary costs

or administrative burdens for acompany?

Unfortunately, on this pointthe evidence is not yet clear.After reviewing its own policiesand procedures for politicalspending, Charles Grezlak, VicePresident of State GovernmentAffairs and Policy at Merck,noted that “The administrativeburden wasn’t much of a prob-lem.”125 However there has notyet been a comprehensivestudy of the burden of report-ing political spending, in partbecause the phenomenon isrelatively new.

Questionsn What are the potential nega-

tive consequences of politicalspending disclosure?

n Do the risks of outside pres-sure outweigh shareholderinterests in political spendingdisclosure?

n Are there ways of tailoringdisclosure requirements to re-duce those risks?


Conclusion“A healthy system of corporate governance ensures thatcompanies make proper use of power that is entrusted tothem by their shareholders. This relates to all aspects of acompany’s activities, but certainly includes a company’sinvolvement in seeking influence in the political process.”

- International Corporate Governance Network126

Although the questionof disclosure of politi-cal spending is rela-tively new to the

corporate governance agenda inCanada, questions about corpo-rate spending in the politicalarena are not. Canada’s firstPrime Minister, John A. MacDon-ald, was forced to resign whenthe opposition revealed sub-stantial secret payments madeto the Conservative Party’s 1872election campaign by HughAllan, then-head of the CanadianPacific Railway Company, in ex-change for the contract to buildCanada’s cross-country rail line.Concerns about corruption andcorporate influence have contin-ued ever since.

Canadian jurisdictions haveenacted many rules to lessen theimpact of corporate money inpolitics, and to expose those con-tributing financially and thoselobbying behind the scenes todaylight. Canada’s political sys-tem, in general, has benefittedfrom better disclosure.

Canada’s capital markets havealso benefitted from increaseddisclosure. Many matters notpreviously subject to disclosureunder strict financial materialitytests have been added to the ros-ter of relevant information for in-vestors in recent years, asinvestors increasingly becomeaware of the full range of risksand opportunities that can affectthe value of their portfolios. SHARE’s examination of politicalspending is intended to stimu-late discussion amongst institu-tional investors about theintersection of these two worlds– good public governance andgood corporate governance. Inboth cases, much is to be gainedfrom a better understanding ofthe issues, better policies to gov-ern the relationship of corpora-tions and the political process,and better disclosure of informa-tion relevant to decision-makers– whether voters or shareholders.

We invite your comments andthoughts.

Contribute to this discussion:

1. Take our online survey at:http://ow.ly/HX4ka

2. Contact SHARE at:http://www.share.ca/contact/


Endnotes1 Harper v. Canada (Attorney General),

[2004] 1 S.C.R. 827, 2004 SCC 33 par.72. Available at: http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/2146/index.do

2 Canadian Chamber of Commerce. In-volvement of Foreign Foundations inCanada’s Domestic Affairs. (2012).http://www.chamber.ca/download.aspx?t=0&pid=3dc1b24c-9bae-e211-8bd8-000c291b8abf

3 Peyton, Laura. “Radicals workingagainst oilsands, Ottawa says” CBCNews. 9 January 2012. Available at:http://www.cbc.ca/news/politics/rad-icals-working-against-oilsands-ot-tawa-says-1.1148310

4 Loat, Alison. “Let’s Give Them Some-thing to Talk About” The Philanthro-pist. Vol. 25, No. 4 (2014). p.3.Available at: http://thephilan-thropist.ca/index.php/phil/article/view/988

5 Thomas, Kevin. Are Canadian corpora-tions spending to influence the US po-litical process? SHARE, October 2014.Available at:http://www.share.ca/files/SHARE-US_Political_Spending_by_Cana-dian_Corporations_web.pdf

6 Elections Canada. Compendium ofElection Administration in Canada:AComparative Overview. 27 June, 2012.Available at:http://www.elections.ca/res/loi/com/compoverview2012jun_e.pdf

7 2013 is the most recent full year forwhich public reporting is currentlyavailable.

8 The ruling Saskatchewan Party pulledin over $3 million in corporate contri-butions in 2011 (both publicly-tradedand private corporations) (www.elec-tions.sk.ca/resources/sask-party-fis-cal-period-return-final.pdf )

9 Center for Responsive Politics. 2014Election Overview. Available at:https://www.opensecrets.org/overview/ Figures converted to Cana-dian dollars.

10 Center for Responsive Politics. Ken-tucky Senate Race. Available at:https://www.opensecrets.org/races/summary.php?id=KYS1&cycle=2014

11 Center for Responsive Politics. SenatorMitch McConnell. Available at:https://www.opensecrets.org/politi-cians/summary.php?cid=N00003389

12 CBC News. “SNC-Lavalin exec admitsto illegal party financing in Quebec”,14 March 2013. Available at:http://www.cbc.ca/news/canada/montreal/snc-lavalin-exec-admits-to-illegal-party-financing-in-quebec-1.1323059

13 Noel, Brigitte et al. "SNC-Lavalin staffdonated $15K to Conservative nomi-nee", CBC News, 20 March 2013. Avail-able at: www.cbc.ca/news/canada/snc-lavalin-staff-donated-15k-to-con-servative-nominee-1.1320787

14 Canadian Press. "Riadh Ben Aissa, Ex-SNC-Lavalin Executive, Extradited ToCanada" 15 October, 2014. Availableat: http://www.huffingtonpost.ca/2014/10/15/ben-aissa-snc-lavalin-fraud_n_5993216.html

15 Antle, Rob and Cochrane, David."Leadership donation ‘loopholes’ re-main, despite PC pledge" CBC News, 4February, 2014. Available at:http://www.cbc.ca/news/canada/newfoundland-labrador/leadership-donation-loopholes-remain-despite-pc-pledge-1.2521493

16 Elections Canada. Limits on Contribu-tions. Available at: http://www.elec-tions.ca/content.aspx?section=pol&document=index&dir=lim&lang=e

17 Calgary Herald. "New fundraisingrules for leadership campaigns called‘awkward’" 14 May, 2014. Available at:http://calgaryherald.com/news/new-fundraising-rules-for-leadership-cam-paigns-called-awkward

18 Bell, Sonya. "Brewers poured$100,000 into Ontario Liberal leader-ship race" iPolitics.com. 10 April 2013.Available at: http://www.ipolitics.ca/2013/04/10/brewers-pour-100000-into-ontario-liberal-leadership-race/

19 Ontario Liberal Party. 2013 Leader-ship Contestant Return: KathleenWynne. Available at:http://www2.elections.on.ca/stats/13files/leadership/1st%20filing/13LIBwynne1stcr5.htm

20 Progressive Conservative Party. 2009Leadership Contestant Return: Tim

Hudak. Available at: www2.elec-tions.on.ca/stats/09files/leadership/pcp/09pcplchudak5-1.htm

21 Radwanski, Adam. "Cashed-up On-tario Liberal candidates play with fire"Globe and Mail, 15 January 2013.Available at: http://www.theglobe-andmail.com/news/national/cashed-up-ontario-liberal-candidates-play-with-fire/article7395905/

22 Office of the Commissioner of Lobby-ing. Annual Report 2013-14. Availableat: http://www.ocl-cal.gc.ca/eic/site/012.nsf/eng/00920.html#toc2-1

23 Office of the Commissioner of Lobby-ing of Canada. Monthly Communica-tion Reports by Reporting Period.Available at: https://ocl-cal.gc.ca/app/secure/orl/lrrs/do/cmmnctnsByRprt-ngPrd

24 Fekete, Jason. “Number of federal lob-byists up sharply” Ottawa Citizen. 12June, 2014.

25 Curry, Bill. “Boardroom confidential:What CEOs are asking of Jim Flaherty.”Globe and Mail, August 15, 2012

26 http://www.fin.gc.ca/n14/14-093-eng.asp#notes. Notably there are norepresentatives from organizedlabour, but there are representativesfrom the Fraser Institute, the CDHowe Institute and the MacDonaldLaurier Institute.

27 Lukacs, Martin. “Alberta, Ottawa, oillobby formed secret committee”,Toronto Star, 12 March 2012.

28 Natural Resources Canada. Pan-Euro-pean Oil Sands Advocacy Strategy.March 2011. Accessed under Accessto Information Act request #A-2010-02237.

29 Skelton, Chad. “Lobbying: Oil, gascompanies are the top B.C. Lobbyists”.Vancouver Sun, 21 March 2014, avail-able at:http://www.vancouversun.com/tech-nology/Lobbying+companies+lobby-ists/8264170/story.html

30 Review of lobbyists registered directlyor as consultants to TSX60 companies(TSX60 as of November 25, 2014). Forfederally-registered lobbyists, wehave only included in-house staff whodedicate more than 20% of their timeto lobbying and have therefore ex-


cluded many staff that are involvedmore sporadically in lobbying (e.g.CEOs). Lobbyist registration practicesmay be inconsistent between juris-dictions, with some jurisdictions re-quiring registry of any employee thatis involved in lobbying and other ju-risdictions distinguishing betweenthose that spend a requisite amountof their time lobbying governmentofficials.

31 Not all provinces provide a publicregistry of lobbyists. Saskatchewan,New Brunswick and PEI do not cur-rently have a publicly-available lobby-ist registry.

32 Source: Federal lobbyist registry.Based on number of monthly com-munications registered between De-cember 2013 and November 2014.

33 Meeting between Industry and Gov-ernment Officials on Northern Gate-way. August 29, 2013. Released underAccess to Information request #A-2013-00276.

34 Canadian Association of PetroleumProducers. Atlantic Canada’s OffshoreOil and Gas Industry: Opportunitiesand Challenges. April 30, 2013. Re-leased under Access to Informationrequest #A-2013-00250

35 See, for example: http://www.cn-lopb.nl.ca/abt_mandate.shtml

36 Mark Corey, Natural ResourcesCanada. Memorandum to the DeputyMinister: Meeting with the CanadianAssociation of Petroleum Producers.May 3, 2013. Released under Accessto Information request #A-2013-00250.

37 McCarthy, Shawn. “Ottawa scalesback oversight of offshore drilling.”Globe and Mail, November 6, 2013.http://www.theglobeandmail.com/news/politics/ottawa-scales-back-over-sight-of-offshore-drilling/arti-cle15305924/

38 “Uproar over mining lobbying inChubut” Buenos Aires Herald, 2 De-cember 2014.

39 Office of the Commissioner of Lobby-ing. Annual Report 2013-14.

40 Office of the Commissioner of Lobby-ing. 12-month lobbying summary:Canadian Association of PetroleumProducers. Available at: https://ocl-

cal.gc.ca/app/secure/orl/lrrs/do/clntSmmry?clientNumber=226641&sMdKy=1411153110674

41 Canadians for Responsible Advocacy.In Focus. September 2014, p. 17. Avail-able at: http://responsibleadvocacy.org/wp-content/uploads/2014/01/CFRA-20140915-IF-September-In_Focus.pdf

42 Documents available here:https://drive.google.com/file/d/0B_0MqnZ4wmcMaTFKMjQ0NVZVSDQ/edit?pli=1

43 Notably, now Alberta Premier JimPrentice used almost identical argu-ments when explaining why he de-layed an increase in Alberta’s carbonlevy: “I became convinced that evensmall increments in terms of carboncost can result in pretty immediateand significant changes in terms ofinvestments and jobs and, in particu-lar, that if you layer on costs on theCanadian side of the border that arenot present on the U.S. side, peoplewill make investment decisions thatdrive capital to a U.S. location.”(source: http://www.macleans.ca/po-litics/want-a-frank-discussion-about-climate-change-heres-a-start/)

44 Ganley, Michael. “The Business Casefor Putting a Price on Carbon”, AlbertaVenture. 2 April 2013. Available at:http://albertaventure.com/2013/04/carbon-costs-harper-government/

45 CDP. Global Corporate Use of CarbonPricing. September 2014, p.42.https://www.cdp.net/CDPResults/global-price-on-carbon-report-2014.pdf

46 Canadian Chamber of Commerce. $50Million a Day. Available at:http://www.chamber.ca/media/blog/130917-50-Million-a-Day/1309_50_Million_a_Day.pdf

47 McCarthy, Shawn. “Chamber of Com-merce makes pitch for new pipelines.”Globe and Mail, 17 September 2013.

48 Canadian Chamber of Commerce.http://www.chamber.ca/media/news-releases/140610-five-key-facts-about-moving-oil-by-water-that-need-to-be-part-of-the-national-debate/

49 Goldman, Gretchen and Carlson,Christina. Tricks of the Trade: How com-panies anonymously influence climatepolicy through their business and tradeassociations. Center for Science and

Democracy, January 2014.50 See: http://gotothinktank.com/the-

2013-global-go-to-think-tank-index-ggttti/ . One leading think tank, theNorth South Institute, has been re-moved from Table 4 because it closed.Table 4 lists the think tanks in order ofinfluence (according to the Univer-sity’s ranking).

51 The Fraser Institute. Letter to BritishAmerican Tabacco. 12 September,2000. Available at: http://legacy.li-brary.ucsf.edu/tid/uzb53a99/pdf

52 Atlantic Institute for Market Studies. ABalancing Act. March 2010. Availableat: www.aims.ca/site/media/aims/A%20Balancing%20Act.pdf

53 Atlantic Institute for Market Studies.The Benefits of allowing business backinto Canadian health care. December2002. Available at:http://www.aims.ca/site/media/aims/benefits.pdf

54 Atlantic Institute for Market Studies.The Unintended consequences of CPPexpansion. 13 November, 2013.http://www.aims.ca/en/home/library/details.aspx/3611?dp=aXM9MTU_

55 Atlantic Institute for Market Studies. ABalancing Act.

56 American Legislative Exchange Coun-cil. Right to Work: Model Legislation.Available at: http://alecexposed.org/w/images/c/c8/1R10-Right_to_Work_Act_Exposed.pdf

57 Goldenberg, Suzanne. "Google to cutties with rightwing lobby group overclimate change 'lies'". The Guardian.23 September, 2014. Available at:http://www.theguardian.com/envi-ronment/2014/sep/23/google-to-cut-ties-with-rightwing-lobby-group-over-climate-change-lies

58 Center for Media and Democracy."Coal and Oil Polluters Dominate ALECConference" 31 July, 2014. Availableat: www.prwatch.org/news/2014/07/12557/polluters

59 Canada Elections Act, S.C. 2000, c.960 It is still possible that third-party or-

ganizations using their own reservesto pay for election advertising ex-penses could have received non-ear-marked donations frompublicly-traded corporations, as these


contributions would not be consid-ered for the purpose of election ad-vertising.

61 Source: third party election spendingreports, available at: http://www.elec-tions.ca/content.aspx?section=fin&document=index&dir=thi/advert/tp41&lang=e

62 Elections Canada. Compendium ofElection Administration in Canada:AComparative Overview. p.86

63 Elections Nova Scotia. http://election-snovascotia.ca/candidates-and-par-ties/third-parties

64 Elections Nova Scotia. http://election-snovascotia.ca/sites/default/files/Registered%20third%20Parties_4.pdf

65 Linnitt, Carol. "Postmedia Gets AwayWith Running Unmarked Oil Adverto-rials" DeSmog.ca, 20 June, 2014. Avail-able at: http://www.desmog.ca/2014/06/19/postmedia-gets-away-running-unmarked-oil-advertorials

66 Fawcett, Max. “Reason over passion:CAPP president David Collyer talksabout the energy industry’s PR chal-lenges.” Alberta Venture. 22 January,2014. Available at: http://albertaven-ture.com/2014/01/capp-david-col-lyer-industry-pr-challenges/

67 Dion-Ortega, Antoine and Blin, Pier-rick . “Performance under pressure”,CIM Magazine, September 2013. Avail-able athttp://magazine.cim.org/en/2013/September/feature/Performance-under-pressure.aspx

68 ibid.69 ibid.70 Prystupa, Mychaylo. "Kinder Morgan

TV ads attacked as influencing cityelections in B.C." Vancouver Observer.9 October, 2014. Available at:http://www.vancouverobserver.com/news/Kinder-Morgan-TV-ads-at-tacked-as-influencing-city-elections-in-BC

71 The Canadian Press. “"Kinder Morgandoesn’t need to register as third-partyadvertiser: Elections BC" Globe andMail, 23 October, 2014. Available at:http://www.theglobeandmail.com/news/british-columbia/kinder-morgan-doesnt-need-to-register-as-third-

party-advertiser-elections-bc/arti-cle21277125/

72 Transcanada Corporation. “EnergyEast Campaign Organization: Pro-mote, Respond, Pressure.” 5 August,2014. Available at: https://www.docu-mentcloud.org/documents/1362367-tc-energy-east-campaign-organization.html

73 http://www.energyeastpipeline.com/starting-a-new-discussion-on-en-ergy-east/

74 http://action.energyeastpipeline.com/about-the-action-network/

75 http://www.energycitizens.ca/about-the-movement

76 http://powerofcanada.ca/speak-up/77 See Forest Ethics. Who Writes the

Rules? A Report on Oil Industry Influ-ence, Government Laws, and the Corro-sion of Public Process. December,2013. Available at:http://www.forestethics.org/sites/forestethics.huang.radicaldesigns.org/files/Who_writes_the_rules.pdf

78 Payton, Laura. "Bruce Carson, FormerPMO Staffer, Faces New Charges" CBC.7 December, 2014. Available at:http://www.huffingtonpost.ca/2014/05/12/bruce-carson-charges-lobby-ing-influence-peddling-_n_5310890.html

79 See: http://democracywatch.ca/cam-paigns/money-in-politics-campaign/

80 International Corporate GovernanceNetwork. ICGN Statement and Guid-ance on Political Lobbying and Dona-tions. 2012. p.11 Available at:https://www.icgn.org/images/ICGN/files/icgn_main/Publications/best_practice/PLD/icgn_pld_mar2012_long.pdf

81 See, for instance, http://www.man-hattan-institute.org/pdf/lpr_15.pdfand http://papers.ssrn.com/sol3/pa-pers.cfm?abstract_id=2128608 andhttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=972670

82 See: https://www.ic.gc.ca/eic/site/cilp-pdci.nsf/vwapj/Power_Corporation.pdf/$FILE/Power_Corporation.pdf

83 Full disclosure: SHARE advocated forall three of these items in its submis-sion:https://www.ic.gc.ca/eic/site/cilp-

pdci.nsf/vwapj/SHARE_CBCA_sub-mission.pdf/$FILE/SHARE_CBCA_sub-mission.pdf

84 See, for example, SHARE’s modelproxy voting guidelines:http://www.share.ca/files/SHARE_Proxy_Voting_Guidelines_2014.pdf

85 Bebchuk, Lucian A. and Jackson,Robert Jr. “Corporate Political Speech:Who Decides?” Harvard Law Review,Vol. 124:83, 2010, p.91

86 Igan, Deniz, et al. A Fistful of Dollars:Lobbying and the Financial Crisis. Inter-national Monetary Fund WorkingPaper. December 2009.

87 Walden Asset Management. InvestorsRaise New Set of Issues with Companieson Public Policy and Climate. February3, 2014.

88 We have not included policies onbribery and corruption in this evalua-tion, nor have we included staff poli-cies which address personalcontributions. This number refers onlyto policies which specifically addresslegal political contributions by thecompany itself.

89 These figures are based on an analysisof publicly-available documents pro-duced by the companies in the TSX60index as of November 25, 2014.

90 International Corporate GovernanceNetwork. ICGN Statement and Guid-ance on Political Lobbying and Dona-tions. 2012.

91 Coalition for Accountability in Politi-cal Spending. “Model Policies for Cor-porations to Strengthen Disclosureand Oversight of Political Spending”Available at: http://politicalspend-ing.org/wp-content/up-loads/2013/10/CAPS-Model-Corporate-Policies.pdf

92 Transparency International France.“Déclaration commune des entre-prises membres de Transparency In-ternational France sur le lobbying" 25February, 2014. Availableat:http://www.transparency-france.org/ewb_pages/div/Declara-tion_commune_lobbying.php

93 Freed, Bruce and Sandstrom, Karl. “Po-litical spending: Big risk for boards.”Annual Report of Directors & Boards,2013. p.26


94 As You Sow. DuPont Shareholder Reso-lution, 2014. Available at:http://www.asyousow.org/wp-con-tent/uploads/2014/04/dupont2014gmos_memo.pdf

95 Unlike in the United States, lobbyistsare not required to disclose theamounts spent by their clients on in-fluencing government.

96 A review of UK corporate spendingon political contributions between1993 and 2010 found that aggregatepolitical spending by publicly-tradedcompanies remained fairly steady be-fore and after the reforms. Post-re-form, management-proposedpolitical spending resolutions werealmost all approved by shareholders,but most were for fairly modestamounts (£50,000 to £100,000) andmost companies underspent theirbudget considerably. Further, a num-ber of large companies (like BP)passed resolutions allowing spendingonly as a safeguard against legal lia-bility (should some spending inadver-tently occur), even while holdingpolicies against corporate politicalspending. Total authorized spendingbetween 2001 and 2010 was over£85.6 million, but actual reportedspending by publicly-traded corpora-tions during that period was only£10.2 million. Source: Torres-Spelliscy,pp. 553-567.

97 Canadian Securities Administrators.CSA Staff Notice 51-333: EnvironmentalReporting Guidance. October 27, 2010.http://www.osc.gov.on.ca/docu-ments/en/Securities-Category5/csa_20101027_51-333_environmental-reporting.pdf

98 Atkins, Paul. “Materiality: A bedrockprinciple protecting legitimate share-holder interests against disguised po-litical agendas” Harvard Business LawReview, Vol. 3, 2013, pp363-379.

99 Canadian Securities Administrators.CSA Staff Notice 51-333: EnvironmentalReporting Guidance. October 27, 2010.

100 Bloomberg Editors. "SEC Should MakeCompanies Disclose Political Spend-ing", 8 May 2013. Available at:http://www.bloombergview.com/arti-cles/2013-05-08/sec-should-make-companies-disclose-political-spending

101 One newspaper estimated the loss inmarket value at US$1.3 billion.http://www.twincities.com/business/ci_15671164

102 Welsh, Heidi. “Mid-Year Review: Cor-porate Political Activity Proposals inthe 2014 Proxy Season.” SustainableInvestments Institute. August 28,2014. Available at:https://si2news.files.wordpress.com/2014/08/si2-2014-proxy-season-mid-year-review-corporate-political-activ-ity-excerpt.pdf

103 Center for Political Accountability."New CPA-Zicklin Index Reveals Com-panies Adopting Political Disclosureon Their Own" Available at: www.po-liticalaccountability.net/index.php?ht=d/sp/i/8051/pid/8051

104 Center for Political Accountability. The2014 CPA-Zicklin Index of Corporate Po-litical Disclosure and Accountability. 24September 2014. Available at:www.politicalaccountability.net/index.php?ht=a/GetDocumentAc-tion/i/8642

105 http://www.legislation.gov.uk/ukpga/2006/46/part/14

106 Ibid, section 375107 http://www.legislation.gov.uk/uksi/

2008/410/schedule/7/made108 http://open.nysenate.gov/legisla-

tion/bill/s101-2011109 Bebchuk, Lucian A. and Jackson,

Robert Jr. “Corporate Political Speech:Who Decides?” Harvard Law Review,Vol. 124:83, 2010, p.84

110 http://www.sec.gov/rules/peti-tions/2011/petn4-637.pdf

111 ElBoghdady, Dina. "SEC pressed toabandon corporate political spendingdisclosures petition" Washington Post,16 May, 2013. Available at:http://www.washingtonpost.com/business/economy/sec-pressed-to-abandon-corporate-political-spend-ing-disclosures-petition/2013/05/16/d76b782e-be55-11e2-97d4-a479289a31f9_story.html

112 https://www.govtrack.us/congress/bills/113/s824/text

113 Notably, a bill introduced by RepublicSenators aimed at prohibiting the SECfrom enacting political spending dis-closure regulations was also intro-

duced in April 2013, and sent to Com-mittee. Seehttp://www.newsrecord.co/action-re-action-politics-in-congress-creates-opposition-over-sec-disclosure-regulations/

114 http://www.sec.gov/comments/4-637/4637-11.pdf

115 Welsh, Heidi, p. 11.116 Welsh, Heidi, p. 15.117 http://www.edmontonjournal.com/

keeps+promise+release+monthly+leadership+donor+lists/10109935/story.html

118 CFA Institute. Political ContributionDisclosure Survey Results. August2014. Available at: http://cfainsti-tute.org/Survey/political_contribu-tion_survey_final.pdf

119 Haan, Sarah C. “Which Comes First: ‘In-vestor Accountability’ or ‘(Public) Dis-closure’?” Columbia Law School BlueSky Blog, 3 October 2014. http://cls-bluesky.law.columbia.edu/2014/10/03/9617/

120 The Center for Competitive Politicscampaigns against campaign financelaws in the US. Notably, it does notdisclose its donors.

121 Primo, David. “A Political attack onshareholder value” Wall Street Journal,19 September 2014. Available at:http://www.wsj.com/articles/david-m-primo-a-political-attack-on-share-holder-value-1412032579?mod=Opinion_newsreel_7

122 http://www.nationalcenter.org/PR-Merck_052813.html

123 Copland, James R. “Against an SEC-Mandated Rule on Political SpendingDisclosure: A Reply to Bebchuk andJackson” Harvard Business Law Review,Vol. 3, 2013, pp.381-411.

124 Center for Political Accountability. The2014 CPA-Zicklin Index of Corporate Po-litical Disclosure and Accountability. 24September, 2014. P.17.

125 http://www.corporatesecretary.com/articles/proxy-voting-shareholder-ac-tions/12556/political-disclosures-reaching-tipping-point/

126 International Corporate GovernanceNetwork. ICGN Statement and Guid-ance on Political Lobbying and Dona-tions. p.6

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