Lobbies, Socially Responsible Investing and Democracy

News that the Swiss insurance group Zurich Financial Services spent Sfr 35 million on political lobbying during the past decade raises a few important points: where should the limit on such lobbying be? Are the shareholders able (and willing) to control such interference with the democratic process? In an age where socially responsible investing has become a significant factor influencing investment decisions this kind of activity must certainly receive priority attention from  investors - many if not the majority are only fiduciaries for the real investors, i.e. private savers in mutual funds, insurance companies, pension funds and the fund management units looking after investment portfolios in private banking departments.
(22/02/2011) 

US Lobbies stonewall increased shareholder influence

Pro-Gov campaigns for a long time to restrain corporate managements from apportioning a disproportionate share of company profits for themselves. Lobbies like the Chamber of Commerce - who does NOT represent the shareholders of large public companies - and corrupt members of Congress are stonewalling legitimate proposals to increase shareholder influence in companies. It is absurd to exclude the real owners from substantial decisions and it is high time that their fiduciaries - esp the large investment institutions - take more responsibility. Non-US shareholders should also take the gloves off and start making their voices heard - just like some US institutions (and 'activists') have been doing for a long time with respect to non-US companies. Finally, regulators and governments outside the US should support interventions in favor of more corporate accountability. At the moment, the executive 'class' has a free hand to help themselves to the fruits of enterprise that should really accrue to the investors/risk takers.

How to restrain political spending by US Corporations

The recent narrow vote of the Supreme Court may have opened the floodgates for unrestrained political spending by corporations in the US. As big money has already too much influence on the political process as it is, there is justified concern about the outlook for democratic debate in the country. We suggest that corporations should only be allowed to get involved in political debate if they receive an explicit mandate from their shareholders. This should be issue-specific. As individual shareholders are a minority on the shareholder register it would be necessary to make institutions (including hedge funds!) responsible to the ultimate investors. This would mean that they in turn would have to obtain a mandate from their investment clients.