New investigation into corporate political influence
How effective are corporate donations to political parties? And when does promotion of self-interest step over the line?
These are the key questions that F&C Asset Management is hoping to answer as it begins a new investigation into corporate political donations.
Political donations in the UK are regulated by the Electoral Commission which records all donations from individuals and groups such as trade unions over a set annual threshold – currently £5000 for parties and organisations and £1000 for individuals and local branches of parties.
Companies are not regulated directly by the Electoral Commission, but under the Political Parties, Elections and Referendums Act 2000 are required to publish all details of political donations exceeding £200 to any EU parties in their annual accounts.
F&C’s investigation differs from previous research because it is being conducted from the point of view of the donor.
Karina Litvack, head of governance & socially responsible investment at F&C, said that the research will “will explore where the line should be drawn between the legitimate protection and promotion of self-interest by companies and inappropriate behaviour.”
She added that political donations do not always benefit the company, saying: “The US pharmaceuticals industry is an example of how political influence can go badly wrong: how companies influence the regulatory process has raised questions in the minds of doctors and patients about the safety of the products – and shareholders get caught in the backlash.”
Continuing, Ms Litvack, said: “In an era of increased public scrutiny and transparency there is a risk that companies will be caught out either acting inappropriately, or saying one thing publicly and doing another behind the scenes.
“Getting involved in politics is always a risky business for companies. We want to establish where the boundaries lie.”
The research will comprise of a survey of current company activity in the political field, produce good practise guidelines and attempt to suggest how companies can lobby without “compromising their integrity and reputation”. There will be a strong focus on oil and gas, chemical and pharmaceuticals sectors.
F&C will be publishing the first stage of its research, entitled ‘Political Donations and Lobbying: the ethics of influence’ in May 2005 – which is likely to coincide with a general election. The research is also being undertaken in conjunction with the Institute of Business Ethics.
