Shareholder Advocacy

If the company you are targeting is “publicly traded,” or listed on a stock exchange, you may be able to convince its investors to influence the company’s actions through shareholder advocacy.

A public company usually has a large number of shareholders, and their shares are bought and sold on one or more stock exchanges. This means anyone, including the general public, can own part of the company. For more information on shareholders and how to identify a company’s shareholders, see:

Often, large companies’ shareholders are not individual people but rather institutional investors. There are different types of institutional investors that can act as shareholders in a publicly traded company. Two of the most common types of institutional investors include mutual funds and pension funds.

Funds can be either actively managed — meaning a fund manager makes the investment decision — or passively managed, meaning investment decisions are tied to the performance of a stock market index.

Institutional investors often buy and sell substantial numbers of shares. Because of this, these firms can have considerable influence over company behavior. The more shares an investor has, the more votes it gets on issues raised at shareholder meetings.

There is a growing movement of ethical investors, called “ESG investors” (environmental, social and governance) who seek to only invest in companies with good corporate policies and behavior. Because ESG investors may be more concerned with allegations that the companies they invest in have caused environmental and social harms, they are a significant pressure point.

Pension funds are also strong pressure points for advocacy because the funds act on behalf of individual workers and often place a greater emphasis on environmental and social risks in their investments.

Shareholder advocacy holds a lot of potential as a campaign tool if you are able to convince investors in the company to support your cause. You can use several strategies to influence shareholders to put pressure on the company involved in the problematic project.

After identifying which investors are advocacy pressure points, send letters to each of them setting out the concerns and your request that the investor engage the company. Request a meeting or videoconference with the investor so you can explain the issues and discuss how the investor can support your advocacy goals. If you have any reports or publications relating to the campaign, send those materials to the investors. You can ask the shareholders to engage with the company and express their expectation that the company respect human rights, including by remediating any harms it has caused. For more information on how to engage advocacy targets, including shareholders, click here.

An opportune moment for shareholder advocacy is at a company’s annual general meeting (AGM). At these meetings, directors of the company will often present the company’s annual report, which includes information for shareholders about the company’s performance and strategy. To draw attention to your cause, planning advocacy events, such as a public demonstration, around or at a company’s AGM can be a worthwhile strategy. A company’s AGM is also a good time to attract media attention to the case. For more information on media advocacy, click here.

 Some shareholders are willing to take action by asking a company’s board of directors or CEO questions about the company’s human rights and environmental practices in specific projects at the AGM. Sometimes ‘activist investors’ will buy shares in a company with the sole purpose of influencing companies to improve their human rights or environmental polices and practices. If you identify any of these types of shareholders, it is worth contacting them well before the AGM to inform them about the case and urge them to take action.

Some civil society organizations, listed below, will purchase a few shares in the company, which gives them voting rights and the ability to attend the AGM. It is possible for those shareholders to delegate those rights to you or other community representatives, which would allow you to attend the company’s AGM, pose questions to the company’s directors in front of all other shareholders, and speak informally with other investors in attendance.

One of the most powerful tools that activist investors have at their disposal is the introduction of a shareholder resolution. This is when shareholders make a formal recommendation to the company and put it to a vote of all shareholders at the annual general meeting. Rules for shareholder resolutions differ by country and often require a certain amount of shares to be held by the investors bringing the resolution. Even if a shareholder resolution doesn’t pass by vote at the AGM, introducing a resolution is a great way to raise attention to the issue and attract media attention.

The last resort for shareholders when seeking to influence their portfolio company is divestment, which is when a shareholder sells its stake in a company. This should only be considered as a threat or last resort option — after all, if allied investors sell their shares in the company, you lose the opportunity to influence the company from within. If all else fails, and your shareholder allies are unable to persuade the company to change its behavior or take the actions that you want it to take, then you might consider calling upon them to divest. If a high-profile investor or significant number of investors divest, this can lead to a drop in the company’s value. It can also create reputational damage for the company, which may add to the pressure on directors to change course.

Read about successful examples of how communities have used shareholder advocacy to advance their struggles:

USEFUL RESOURCES

Organizations that specialize in this type of shareholder advocacy and may be able to offer assistance include:

As You Sow (U.S.)

Investor Advocates for Social Justice (U.S.)

Just Share (South Africa)

Market Forces (Australia)

ShareAction (U.K.)

Ceres (U.S.)