• Shareholder resolutions are a powerful tool for driving campaign wins.
• Overseas, shareholder resolutions are more common and votes of 15% shareholder support will generally push a company to take action on the issue.  
• In Australia, companies aren’t as used to receiving shareholder resolutions - so there’s more work we have to do to get action from the company.
• Shareholder activist groups like SIX can judge campaign success not only by the percentage vote, but also by other factors such as engagement with the board, engagement from big investors, media coverage, and how support for the resolution increases over time.
  

This blog explores these key points while drawing on SIX’s recent resolutions to big supermarkets Coles and Woolworths as a case study.

Submitting a shareholder resolution to a company about an ESG (Environment, Social and Governance) issue helps shareholder activist groups like SIX to open up vital conversations with the company about their performance.

This also starts important conversations between SIX and the company’s institutional investors (big investors, like superannuation funds). If these conversations encourage the company to take meaningful action, we can withdraw the resolution. But if it doesn't, we progress to an Annual General Meeting (AGM) showdown.

That means we discuss the issue in the bright spotlight of the company’s AGM, with the board of directors having to engage with our questions, in front of the company’s shareholders and the media.

In places like the USA and Europe, a vote of around 15% would usually be strong enough to prompt a company to start taking action.

In the United Kingdom, their Corporate Governance Code requires that if 20% or more of votes are cast against the board’s recommendation(s), then the company has to provide a response which explains what action it intends to take to consult shareholders and how it plans to respond to the high shareholder vote.

This means there's more work we have to do to get the company to act. ‍‍

In 2024 so far, more than 550 resolutions have been filed across the world. But only three were in Australia - and all co-filed by SIX!

There are some challenges that groups face in lodging shareholder resolutions, including that:

1. A resolution proposed by shareholders starts on an unequal footing compared to a resolution proposed by the company’s board. The board has unlimited access to shareholders, oversees communications and gets to make a recommendation to shareholders about how they should vote. Most institutional investors and proxy advisors (firms that help investors make decisions about how to vote) will follow the board’s recommendation.
2. When shareholders (like SIX and our campaign partners) propose a resolution, it’s usually against the recommendation of the board. If the company supported the actions we want them to take, they would have acted already! We wouldn’t have had to escalate to a resolution at their AGM.
   

This year SIX and #SavetheSkate campaign partners brought resolutions to the Coles and Woolworths AGMs - to address the companies’ sourcing of salmon from Macquarie Harbour in Tasmania, which is threatening the endangered and unique Maugean Skate.

These resolutions received shareholder votes of 30% (Woolworths) and 39% (Coles) in support, which is historically high for a nature resolution! The Coles vote was the largest supported nature resolution this year, the 4th largest nature resolution in the world ever, and the largest shareholder vote in Australia since 2021.

The SIX team and our campaign partners were energised at this strong result, given it is our first AGM season and the first time we had proposed a shareholder resolution on this issue.  

We’re also aware that there may be other big investors who support the resolutions, but are hesitant to vote against what the board recommended. So actual support for the resolution may be higher than the voting result.

We'll be looking at factors such as: how the resolution gains support over time; how the board engages with the issue; the support big investors give; and how the media covers the issue.

‍‍Rather than a raw, static number marking 'success', the SIX team considers a high vote to be any vote that conveys the strength of shareholder support for action clearly to the board.

When we think about pushing big companies to be better on climate and nature, there are other factors beyond the percentage to consider.

Shareholder activists, like SIX, and our campaign partners are also looking out for factors like:

• How support for the resolution builds year-on-year. Overseas, it’s common to submit resolutions multiple times until you achieve your goal. A resolution that receives 10% in its first year, for example, demonstrates a solid starting point. It could continue to gain support, ideally to 20% in the second year, and maybe 30% in the third year (so for SIX to reach 30% in our first year is encouraging!)
  
• How the board engages before, during and after the AGM: We aim to push the board into having important conversations about the issue, through meetings leading up to the AGM, questioning during the AGM, and then in informal and formal chats afterwards.
  
• How other shareholders respond to the resolution: A resolution pushes large shareholders to engage with the company about the issue. Many large shareholders would have never spoken to Coles or Woolworths about the Skate until it was on the agenda for the AGM.
  
• How the media covers the campaign: We pitch our compelling story to the media - if the media picks up on the story before or after an AGM, it can create added pressure on the company to act.

Shareholder activism is growing in Australia. SIX, as an ethical trading platform, is designed to make it easier for more shareholders who care about ESG issues to come together and access shareholder activism tools. So thank you for being part of our community.

To get involved:

• Sign up to the SIX trading app
• Follow SIX on Instagram, LinkedIn, Facebook and subscribe to our mailing list.