Investment specialists RobecoSAM looked at "policy influence" in its Corporate Sustainability Assessment (CSA) for the first time this year, and found that it is a material issue when it comes to investment decisions.
"In situations where the revenues of public companies are larger than the GDPs of the countries in which they operate, these companies may exert tremendous influence over the local political and legislative process. This creates risks and opportunities which are critical inputs into investment decisions," RobecoSAM found.
Analysis of the CSA dataset reveals that companies in the DJSI assessment universe spend an average of 0.02% of total sales annually on policy influence activities (median spending is 0.01% of total sales).
RobecoSAM also found that companies are hesitant to report on policy influence spend that goes beyond legal obligation.
Every year, RobecoSAM assesses the world’s largest companies via its CSA, which uses a rules-based methodology to convert an average of 600 data points per company into one overall score. This score determines inclusion in the Dow Jones Sustainability Indices review, the results of which were announced today. This year, RobecoSAM’s CSA assessed policy influence for the first time to learn more about companies’ lobbying activities. To do so, RobecoSAM evaluated the amount of money companies allocate to organizations whose primary role is to create or influence public policy, legislation and regulations. The evaluation also asked for the largest contributions to such groups, and assessed the public disclosure based on those two aspects.
With investors potentially increasing their emphasis on corporate social responsibility in coming months, public policy influence could be another area companies might consider when it comes to reporting.
