Money talks: 2022 in shareholder activism
AGMs have become a battleground, with groups of climate activist investors infiltrating large companies and voting for change.
Spring is annual general meeting (AGM) season for publicly-owned companies – a time for auditing, (re)appointing directors and, increasingly, hearing the demands of activists who’ve snuck into the ranks.
We don’t just mean the more headline-grabbing AGM activism championed by the likes of Greenpeace, Friends of the Earth and Extinction Rebellion. This year, this brand of raucous disruption put proceedings on hold at the meetings of Shell, TotalEnergies and UKOG.
We’re talking about discontent from within – from those holding a financial stake in the company they’re protesting against. When this happens, companies have a genuine obligation to listen to concerns.
How does it work? AGMs are the point during the year when executives, who run companies, are most in touch with and accountable to shareholders, those who own the companies.
Shareholders – which can be individuals, organisations or institutions – can vote on proposals regarding the direction of the business and, critically, can also file their own proposals, tied to the business’ commitment to social and environmental justice, for everyone to vote on.
You need to own a sizable number of shares to make a splash with this strategy, so concerned members might band together to suggest something. There are also organisations that have evolved specifically to drive and support shareholder activism, such as ShareAction and As You Sow.
So, does it work? Last year (2021) was a big one for shareholder activism. In one notable victory, a small hedge fund called Engine No.1 succeeded in ousting and replacing three board members at ExxonMobil.
However, Russia’s invasion of Ukraine and resulting anxiety over energy security was, experts argue, one of several factors conspiring to make 2022’s AGM season somewhat lacklustre by comparison.
Two important moments do, however, stand out.
Credit Suisse is Europe’s fourth largest fossil fuel funder, and was also this year the subject of an investigation by the Guardian that shed light on banking secrecy and the bad actors it protects.
This year, ShareAction and 11 other investors filed a resolution demanding clarification on how the bank planned to deal with its exposure to fossil fuel assets. The board recommended shareholders vote against this, but in the end 18.5% voted for the resolution and 4.27% abstained.
This might still seem minimal but, in the UK, when 20% of votes go against the board’s suggestion, the company has to outline its plan for hearing and understanding shareholders’ qualms, and offer an update in six months.
Mining giant Glencore, which plans to expand its existing coal mines and develop new ones, also suffered shareholder dissent this year. 23.7% of shareholders voted against its 2021 Climate Progress Report.
Unlike Credit Suisse, it will have to abide by the above principle. As Naomi Hogan from the Australasian Centre for Corporate Responsibility comments:
“Glencore’s shareholders have been asking critical questions of the company and providing input to help shape the next iteration of the Climate Plan. Investors must see tangible changes to Glencore’s Climate Plan and approach to new and expanding coal.”
With Glencore under fire for corruption offences as well as a predicted emissions rise this year, it has tough questions to answer – and now a responsibility to do so.
According to Kenneth Green, campaign manager at Make My Money Matter,
“In terms of AGM votes – and voting successes – this could be seen as a difficult year for the climate movement. But for essentially the first time, we saw a huge outpouring of energy from activists around the world pushing for their voices to be heard within the boardrooms of these huge companies, demanding that they act with the urgency the planet needs to prevent climate catastrophe.”
“It’s now up to the big shareholders of these organisations, including pension funds, to match this momentum and ensure that they are being effective stewards of the companies they own – and helping build a world we’d actually want to retire into.”
These rumblings of discontent are small but seismic, and will no doubt get louder in the coming years.
Did you know that your pension is invested on your behalf, often in these large companies? This means that your pension fund gets to vote on these decisions, and can be a powerful voice for change. Check out Make My Money Matter for more information.