Leading Australian listed companies lag far behind US-listed S&P 500 companies on transparency and governance of corporate political expenditure, a new report published today by the Australasian Centre for Corporate Responsibility (ACCR) has found. The benchmark for the scoring was the CPA-Zicklin Index.
The report, “Benchmarking for change: corporate political expenditure and climate lobbying in Australia,” also assessed leading Australian energy & resource companies on the Global Standard for Responsible and Climate Lobbying. This found significant gaps between what companies commit to on the topic of climate lobbying, and what governance and disclosure they implement.
Key findings include:
- None of the Australian companies scored as high as even the average score of the US companies and the majority scored in the bottom 20% of performance. The majority of US companies scored above 60%.
- None of five Australian energy & resources companies ACCR focuses on (BHP, Origin, Rio Tinto, Santos & Woodside) scored highly on the CPA-Zicklin Index.
- These five energy & resources companies do not generally perform strongly on the Global Standard on Responsible Climate Lobbying. There is, however, a notable range of performance across the five companies: 39.3-75%. Regardless of performance, most companies had a significant gap between their policies on climate lobbying and what governance and disclosure they implemented.
- Investor engagement is key to boosting political expenditure governance. US companies that agree to improve their political expenditure governance after being engaged by investors using CPA-Zicklin’s model perform almost twice as well on the CPA-Zicklin Index than companies that have not been engaged by investors.
- Company size is not an impediment to good disclosure and governance, with small companies in the US and Australia regularly outperforming their largest peers.
Commenting on the analysis, Naomi Hogan, Company Strategy Lead at the Australasian Centre for Corporate Responsibility (ACCR) said:
“While Australia’s major energy and resources companies are big political spenders with large influence on government climate policy, the governance and disclosure of these activities are not up to scratch.
“A clear-eyed look at this data shows Australian companies are lagging far behind their corporate counterparts in the US when it comes to transparency of political expenditure. This issue needs urgent focus via increased engagement from investors.
“Poor governance of corporate political engagement and spending is a material risk for investors. Our research demonstrates there is a huge opportunity for Australian companies to do better on policy, oversight and disclosure of political spending.
“We know that good governance of corporate political engagement and spending is increasingly seen as responsible investment practice.
“Investors need certainty that climate and environmental commitments by the companies they invest in are not simply greenwashing and that any corporate political lobbying and expenditure does not undermine these commitments.
“Direct investor engagement with companies in the US has led to improved political expenditure governance. These gains can also be made with ASX companies through more and concerted investor engagement seeking greater transparency on corporate political spending and lobbying.