North America’s largest shareholder advisory firms have thrown their support behind a resolution calling on Suncor Energy Inc. to disclose how much it spends on its government lobbying efforts.MARK RALSTON/AFP / Getty Images
North America's largest shareholder advisory firms have thrown their support behind a resolution calling on Suncor Energy Inc. to disclose how much it spends on its government lobbying efforts.
Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co. – the two largest firms in North America that advise major investors on how to vote their shares – have both recommended voting in favour of a shareholder resolution calling on Suncor to disclose how much it pays for lobbying work done on its behalf.
The resolution is the first of its kind to go to a vote in Canada, but at least two other companies – Enbridge Inc. and TransCanada Corp. – also received shareholder proxy resolutions this year calling for greater lobbying reporting, and voluntarily agreed to provide more disclosure. The resolutions were withdrawn as a result.
The campaign for lobbying disclosure has been gaining momentum in the United States and is expected to expand quickly in Canada, especially if it wins significant shareholder support at Suncor's annual meeting on April 28.
The Suncor resolution was submitted by New York-based consumer watchdog group SumOfUs, which says it is trying to bring "international standards of transparency and accountability" to Canada's oil and gas sector.
SumOfUs lead strategist Emma Pullman said she expects the resolution to get strong support now that it has ISS backing, and said her group intends to target more companies with the same request in the future.
"We've never asked for disclosure like this before in Canada, and it's really an issue whose time has come," she said. "There's a potential risk to shareholder value when a company isn't necessarily disclosing how its grassroots lobbying and political lobbying and trade association memberships are working to influence policy."
She said shareholders deserve to know more about lobbying, especially when it is quiet or even secret. Ms. Pullman said the controversy over Exxon Mobil Corp.'s funding for climate change denial groups shows the need for disclosure.
Suncor, however, was not targeted because of any controversial funding but because it is well known by members of SumOfUs and is the largest company involved in the oil sands, she said.
"Suncor kind of positions itself as a green company and a good corporate citizen, so we believe that there's some real value in targeting Suncor on this because it could potentially lead the way and walk its talk and bring global standards to the oil industry," she said.
Suncor has opposed the lobbying disclosure request because it says it is already complying with all laws requiring companies to record their lobbying with federal and provincial registries. Lobbying registries require companies to report which government officials they are lobbying on which issues, but do not require reporting on lobbying expenditures.
Suncor has urged shareholders to vote against the proxy resolution, saying it is "committed to adhering to the highest ethical standards with respect to communications with government officials," and it has rigorous internal policies for lobbying.
"Suncor's board and management believe that shareholders have sufficient information available to determine the nature and scope of Suncor's lobbying activities and that a special report beyond Suncor's current voluntary and mandatory disclosures is an unnecessary and inefficient use of Suncor's resources," the company said.
Suncor spokeswoman Erin Rees said Thursday that the company supports "full transparency about our lobbying efforts" but said the shareholder resolution "could be interpreted to request information that we do not have."
ISS, however, said it supported the SumOfUs resolution because disclosure of indirect lobbying through trade associations allows shareholders to assess potential risks, and said disclosure of the "magnitude" of lobbying expenditures "indicates the intensity of the lobbying effort."
Peter Chapman, executive director of the Shareholder Association for Research and Education (SHARE), said his group helped submit resolutions this year to Enbridge and TransCanada on lobbying disclosure and was pleased both agreed to disclose more information.
Enbridge, for example, said it will report on its lobbying efforts, including providing a list of membership associations to which it contributed $50,000 or more in dues in 2015. The company has not pledged to disclose the dollar amounts it pays for all lobbying, however.
Ms. Pullman, whose group was not involved with the Enbridge and TransCanada resolutions, said Suncor also offered to do similar reporting, but SumOfUs wanted full disclosure about spending.
Mr. Chapman said it is valuable for shareholders to have "a sense of the scale" of money being spent on lobbying, and to know if money is being spent indirectly through trade organizations.
"At the root of it is a desire by shareholders to understand how their companies are interacting with the public policy process and ensure they're doing that in a way that is reasonable," he said. "If a company is publicly supporting one position and also significantly funding an industry association to take a different position, that could be seen as inappropriate."
Janet McFarland