In June 2016 ACCR released our research on how ASX top 20 plus three large resource companies spend money on politics. What it shows is that Australian companies don’t tell their shareholders or the public much about what they do with shareholders money to influence Australian politics. You can hear more about what the reaction to the report on Radio National.
ACCR wants to improve transparency and accountability by moving resolutions at company AGMs. In the case of resource companies asking them to review their advocacy about climate change. Our first target company was NAB. However on 20 September it announced a new policy that means it will stop making corporate political donations. ACCR is very pleased NAB has changed and will no longer be lodging a resolution at the 2016 AGM.
Why does this matter?
In the 3 years before the 2013 election, Australian political parties told the Australian Electoral Commission (AEC) that they raised around $300 million privately, including from companies. Public funding via the AEC was a $58.1 million or about a fifth of the private funding that parties disclosed.
The report shows that some resource companies who publicly support strong action on climate change are at the same time funding groups like the Minerals Council of Australia who have been working to reduce Australian action on climate change.
In addition the companies directly donate to the major political parties, donating $3.7 million over the past three years. The Federal government is expected to fund $7.7 billion in subsidies to the fossil fuel industry in the coming financial year. This means that for every dollar donated to the major parties over the past 3 years, the fossil fuel industry will receive over $2000 in Government subsidies.
For shareholders, the important question is when a company spends shareholder money is, is it in the company’s best long term interest? Or is it using company funds to pursue the personal political interests of directors?
Laws in Australia
Australia has weak laws about political expenditure. ACCR's research has compared Australian companies with American companies. Even the most open company (AGL) still scores below the average US S&P 500 company.
In Australia, at the federal level, donations (or direct expenditures in support of) to candidates, parties or associated entities in excess of $13,000 must be disclosed to the Australian Electoral Commission. These are published in the next financial year rather than before the next election.
Direct corporate political donations are not tax deductible in Australia. However, subscriptions and other monies paid to trade associations (which may then be used for donations or political expenditure) are tax deductible.
In the UK shareholder and public pressure has lead to a ban on corporate political donations without shareholder approval. In the USA direct political donations are banned and political expenditure is much better disclosed.
Unlike in the US and the UK there are no restrictions on donations by foreigners in Australia. They are common and provide a way that effectively anonymous contributions can be made to Australian political parties.
How we can make companies come clean on political spending
While our politicians don’t want to act, many shareholders do.
ACCR is coordinating shareholder resolutions calling for specific companies to better disclose their political expenditure and the policy behind them. Our first target was NAB. However on 20 September it announced a new policy that means it will stop making corporate political donations. ACCR is very pleased NAB has changed and will no longer be lodging a resolution at the 2016 AGM. Another company we had proposed to put a resolution to on direct political expenditure was Woodside. However, they changed their policy in December 2016 to preclude political donations.
There is a separate climate change related problem - companies sometimes “walk both sides of the street” - for example, they might join a positive business climate change action group whilst, at the same time, fund a trade association to obstruct policy development on climate change.
Will you join us? It takes 100 shareholders to lodge a resolution at a company AGM so we are looking from support.
If you are a member of an Australian superannuation fund, then you can ask them to support our resolutions with the shares that they own on behalf of their members.
Links for more information