Investor Network Steps up Fight for Inclusive AGMs
New Shareholders for Change Vice-president vows to support 18-strong institutional investor group’s appeals for hybrid and in-person meetings.
The Shareholders for Change (SfC) network’s efforts to preserve shareholders’ rights during the 2024 AGM season, including an appeal against behind closed doors or virtual-only AGMs, which will remain a key focus, according to recently appointed Vice-president Alix Roy.
The campaign builds on the International Corporate Governance Network’s (ICGN) Statement on Post Covid AGM Practices and Shareholder Rights, which called for an “interactive and inclusive” experience for shareholders at meetings. SfC echoed ICGN’s backing for a hybrid approach which permits shareholders both in-person and virtual participation at AGMs.
“Generalisation of this type of practice would be very bad news for shareholder democracy and shareholder rights,” Roy warned ESG Investor. “Some shareholders could find it more difficult to access shareholders’ meetings, particularly those who are not familiar with digital technologies, and the quality of debates could be diminished.”
AGMs being held behind closed doors or virtual-only has become increasingly prominent, with many firms maintaining restrictive approaches introduced during the Covid-19 pandemic. Last year, research by AGM provider Lumi Global found virtual AGMs accounted for 44% of all meetings organised by the company during H1 2023, followed by hybrid meetings at 35% and in-room only meetings at 21%. However, it also noted that hybrid meetings had jumped 26% in 2023 compared to 2021.
SfC is a group of institutional investors involved in active engagement with corporations to enhance sustainable development as an essential element of their role as shareholders. The network was founded in 2017 by seven European institutional investors, including Ecofi where Roy is an ESG Analyst, with more than €22 billion (US$23.7 billion) in AUM. Today, SfC counts 18 members, including Germany’s GLS, Switzerland’s Ethos, and Friends Provident Foundation and WHEB Asset Management from the UK, with more than €35 billion in AUM.
Maintaining constructive dialogues
SfC has argued that AGMs provide a vital mechanism for accountability and an opportunity for a “constructive dialogue in a formal setting”. It added that post-Covid it is no longer necessary to restrict AGMs to a virtual-only format, and stressed to companies and regulators that the choice weakens shareholders’ rights.
The network pointed to virtual-only meetings limiting direct interaction between shareholders and boards or management, as well as preventing the opportunity to ask unmoderated questions. In-person AGMs also offer an opportunity for shareholders and other stakeholders affected by companies’ actions and policies to express dissent face-to-face with decision-makers.
“Physical AGM are an important aspect of a company’s efforts to promote transparency among its shareholders on its strategy,” explained Roy. “Our shareholder network believes it is crucial to maintain face-to-face shareholders’ meetings wherever possible, in order to guarantee transparent, fair and participative corporate governance.”
The 2024 AGM has seen shareholder rights under threat in a number of ways, with US fossil fuel major ExxonMobil suing two investors to submitting a shareholder proposal requesting medium-term carbon emission targets, while firms in the tech sector were able to ignore investor concerns on social and governance issues do the in-built majorities granted by dual class share structures.
In May, several shareholders including Laura Hillis, Director of Climate and Environment at the Church of England Pensions Board, were not able to pose climate-questions at global banking group HSBC’s AGM, despite registering in advance.
In April, SfC joined 38 other institutional investors and service providers representing C$1.7 trillion (US$1.25 trillion) in AUM in signing the Investor Statement on Responsible Virtual Meeting Conduct and Upholding Shareholder Rights, which called on Canada’s largest companies to safeguard shareholder rights at virtual shareholder meetings.
The network is currently mulling next steps for the campaign.
New position, new priorities
Roy was named as SfC’s new vice-president at the network’s recent bi-annual meeting, taking over from Phitrust ESG and Engagement Analyst Alix Ditisheim, who spent just over six months in the role. In the position, Roy will primarily be responsible for supporting SfC Chairman Ugo Biggeri in his duties on the association’s board of directors, including discussing active collaborative projects.
Roy has spent almost two and a half years at Ecofi, largely focused on corporate engagement on ESG themes. She also previously worked at BNP Paribas with a focus on sustainable finance.
Last year, SfC engaged with 128 companies, 17 of which were asset managers, and three institutions, which included the European Investment Bank and Norges Bank Investment Management, the world’s largest sovereign wealth fund. A third of the SfC’s engagement initiatives focused on climate and environment, 22% on ESG policies, and 19% on human and workers’ rights.
“The issues we deal with are very varied and range from questioning climate strategies to protecting human and employee rights, while not forgetting good governance issues, which must not be overlooked as good governance is essential to the development of a sustainable ESG strategy,” said Roy. “As an association, we strive to give equal importance to each pillar in our engagement strategy.”
During the 2024 AGM season, members of SfC filed three shareholder resolutions, including one at Netflix’s AGM from Switzerland’s Inyova which called on the company to revise its code of conduct to further specify issues relating to inclusivity and a respectful working environment.
“My aim is to support and reinforce the quality of our engagements, as well as the sharing of best practices among our members,” said Roy. “Over the last few years, the network has successfully carried out several collaborative commitments [and] I hope to be able to contribute to the development other innovative initiatives of this kind in the future.”
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