Social Responsibility Emerging as a Governance Issue | Investors

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Social Responsibility Emerging as a Governance Issue

04/11/2012 - FTI Consulting, Strategic Communications

Socially responsible investors are increasingly demanding greater transparency into corporate political spending, especially lobbying. The implied message from this quarter of the investment community is that the large sums of money spent by companies do not bring value to the firm and are drowning out the voice of the ordinary citizen.

According to research conducted by the Sustainable Investment Institute (Si2) and published on the Harvard Law School Forum on Corporate Governance and Financial Regulation, one third of the approximately 350 social policy shareholder resolutions filed for 2012 are seeking greater transparency into the lobbying activities of corporations. What’s more, these resolutions are receiving greater support than in past years.

These results juxtapose somewhat the findings of our second annual Corporate Governance Investor Survey, but nonetheless underscore a broader point, which is the blurring of lines between traditional communications silos. Political lobbying, corporate philanthropy, and issues advocacy are no longer exclusively public affairs issues. Recently, FTI Consulting published “The CEO as Statesman,” which underscores that investors want to know how emerging policy and regulatory issues may impact the financial performance and enterprise value of a company, and how managements are engaging in the political process to protect their businesses from adverse policy changes.

Assuming there will be greater disclosure mandated for companies on their political engagements, when it gets brought to light it had better be something that will reflect well on the company.

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