What is shareholder advocacy?
Shareholder advocacy harnesses the power of shareholders as the ultimate owners of companies to change companies’ behaviour. The process starts by researching an issue and then engaging with the relevant company/s on that issue.
If engagement is unsuccessful then shareholder advocates can take their issue to all shareholders, the company and the world at the company AGM. Shareholders can ask questions, distribute statements or move resolutions. If you move a resolution then experience in the USA, UK and Australia shows that it is not necessary to get anything like a majority to have a significant impact. As little as 3% of the shares voting in the first year is usually sufficient to achieve some change, a vote of 10 to 15% will likely result in the change sought being agreed to.
Moving a resolution at an AGM also means that other shareholders will consider the issue. This is especially relevant for large institutional shareholders such as super funds that own a large part of large Australian listed companies. These institutional investors all have members (in the case of super funds) or investors and they are sensitive to their concerns. This means they will probably give your resolution serious consideration and while they may not vote for it, their added concerns may mean that companies respond to your issues.
ACCR has facilitated shareholder advocacy and resolutions about climate change with the big banks, power companies, AGL and Origin. It is now working on corporate political expenditure. Find out more about our issues and resolutions.
Quick Guide to Shareholder Advocacy
- Research your issue and companies involved
- Engage with company (letters, face to face etc). If your issue is not resolved, ask others to engage with the company by contacting other interested people, bodies and the media
- If this does not resolve the issue, you could find like-minded shareholders in the company or become a shareholder yourself, and start to ask questions at an AGM. You could discuss next steps with the ACCR.
- Table a statement or resolution at an AGM. To do this you will need to find 100+ shareholders, to word your statement or resolution in accordance with company law and lodge it before the due date.
- Communicate progress appropriately with your shareholders, the media and ACCR.
Shareholder advocacy is not the same as divestment
Shareholder advocacy and resolutions give those who own shares in companies a way of expressing their desire for change and making companies accountable for their conduct. Divestment (selling your shares), or not investing in the first place, is appropriate where you cannot influence a company to do better.