Australia’s top listed companies are lagging “far behind” their US counterparts on the transparency and governance of political expenditure, according to a new report.
The Australasian Centre for Corporate Responsibility (ACCR) found that the top 50 ASX companies scored about one-third as high as S&P 500 companies on the CPA-Zicklin Index, “the leading measure of transparency and accountability for corporate political expenditure”.
According to the ACCR, none of the ASX-listed companies scored as high as the average score received by the S&P 500 companies. A majority of the Australian companies scored in the bottom 20 per cent, while a majority of the US companies scored above 60 per cent.
“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,” said Naomi Hogan, company strategy lead at the ACCR.
“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.”
BHP, Origin, Rio Tinto, Santos and Woodside, which have been a focus of recent ACCR engagements, all failed to score highly on the CPA-Zicklin Index.
Further analysis also determined that these energy and resources companies generally did not perform strongly on the Global Standard on Responsible Climate Lobbying, which assesses whether corporate lobbying is aligned with the goals of the Paris Agreement.
“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,” Ms Hogan said.
The ACCR recommended that investors use the CPA-Zicklin Index and the Global Standard on Responsible Climate Lobbying to measure and improve the transparency and accountability of political expenditures and climate lobbying.
The organisation also suggested that investor engagement is key to improving the governance of corporate political expenditure
“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,” said Ms Hogan.
“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.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.