Corporations risking 'serious corruption' by failing to disclose political engagement, researchers say

Key Points
  • Campaign group Transparency International U.K. published its Corporate Political Engagement Index on Monday.
  • The report found almost 75 percent of multinationals had failed to adequately disclose how they engaged with politicians in Britain.
  • Softbank, Huawei and Nissan were among the firms graded the lowest for their overall transparency.
The Union Flag flies near the Houses of Parliament in London, Britain, June 7, 2017.
Clodagh Kilcoyne | Reuters

Three-quarters of multinational corporations failed to disclose how they engaged with U.K. politicians last year, with Nissan, Disney and Huawei among the least transparent, according to a report published Monday.

Campaign group Transparency International's 2018 Corporate Political Engagement Index assessed 104 international businesses on their openness with political engagement in Britain. The index looked into areas such as donations to political parties and lobbying of those in power.

Researchers found that almost 75 percent of firms were failing to adequately disclose how they engaged with politicians.

Four in five companies had poor standards in disclosing their lobbying of politicians, while a quarter had no public information available on their political involvement.

According to Transparency International, the companies in the index attended at least 736 meetings with U.K. lawmakers last year.

The report acknowledged that corporate political engagement was a legitimate activity but raised concerns that "when done in the shadows it can be a serious corruption risk."

The average grade given to companies across all categories was an E, signaling poor transparency standards. Companies awarded the average grade included Amazon, P&G, Facebook and BP.

Firms given an overall F grade — the lowest score — included Samsung, Disney, EY (formerly known as Ernst & Young), Huawei and Nissan.

A spokesperson for Nissan told CNBC via email: "Nissan is committed to responsible political engagement and has clearly defined internal protocols governing our political operations. We are reviewing TI-UK's recent analysis of the information that companies publish on their political engagement to identify any improvements to our communications in this area."

Pharmaceutical giant GlaxoSmithKline (GSK) was the only company in the index to receive an A grade.

GSK names transparency as one of its core values, and registers all lobbying costs on the EU Transparency Register — last year, it spent $4.18 million on lobbying activity in the U.S. The company declined to comment directly on the report.

A spokesperson for PwC, which was given a grade D, told CNBC via email: "We welcome this research as it shines an important spotlight on how business engages with policymakers. We believe transparency is important for stakeholders to better understand how our business operates and we will continue to reflect on how we can better report on our activities in the future."

German industrial firm Siemens improved its transparency as the index was being collated, Transparency International told CNBC, bringing its final grade to a B. 

A Siemens spokesperson told CNBC via email: "As a global business, addressing policy challenges such as clean energy, smart mobility and healthcare, we think it is right to engage in discussions with policy-makers. But we also recognize the need to do so in an open and transparent way. The TI report is a welcome initiative, which allowed us to audit and improve what we already do in this area. We are encouraged by our assessment and hope to keep the transparency level high."

Kathryn Higgs, director of Transparency International U.K.'s business integrity program, said the findings were a cause for concern.

"Businesses must be far more transparent in how they engage with politicians or they risk damaging their reputations with the public and in the long run will lose out," she said in a press release published Monday.

"There is a strong business case that companies who are open in how they operate are more trusted by customers, deliver higher shareholder returns, avoid damaging scandals and are more attractive for investment."

Amazon and EY declined to comment on the findings. Spokespersons for P&G, Facebook, BP, Samsung, Disney, and Huawei were not available for comment when contacted by CNBC.

All assessed companies were invited over a nine-month period to submit evidence. During that time a third of the firms actively strengthened their political engagement policies, while 17 percent pledged to improve their political transparency, Transparency International said.

Transparency International has launched an online tool with the index to allow users to search for meetings between U.K. government ministers and lobbyists.