Sunday, 18 March 2007

Canadian shareholder resolutions thwarted

There's an interesting article on the SHARE website detailing the way that corporate law is being used to thwart attempts by shareholders to put forward resolutions on CSR issues.

Attempts to introduce ownership thresholds as a prerequisite of filing shareholder resolutions are bound to result in less being put forward. It's quite hard work to put a resoltion forward in the UK, because of the required ownership threshold, and the result is that we see very few each proxy season. Some in the UK argue that such resolutions are the 'nuclear option' in terms of shareholder engagement. I would have agreed with this in the past, but having recently been involved with one such campaign I have to say my views have changed.

I think making it easier to file resolutions in the UK would improve shareholder engagement. At the moment it tends to be restricted to discussions between fund managers and companies. That relies on fund managers a) taking the issues that stakeholers raise seriously and b) being effective in their engagement with companies when they do raise such issues. Neither of these are givens. It's a particular moan of mine that even the more 'activist' fund managers have tended to have little interest in labour issues, unless they relate to supply chains, and tend to have more focus on the environment. That makes it quite difficult to rely on even the good (in terms of committment to CSR issues) fund management houses to act as effective advocates.

In retrospect I don't think the FirstGroup campaign would have been as effective as it has been if it had relied on simply briefing fund managers and encouraging them to engage with the company. The resolution gave the issue a lot more traction, and forced fund managers to take a position. This year's TUC Fund Manager Voting Survey will include a list of fund managers' votes on the resolution so it will be interesting to see how the SRI managers measure up.

Finally on this subject, I would also recommend people have a look at the shareholder resolution database on the SHARE site. You can access it here. This is an excellent idea, and the first thing of its kind that I'm aware of, so it's great that it's come from an organisation affiliated with the labour movement.

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