Shareholder advocacy is a powerful tool in driving corporate change. When shareholders leverage their voting rights and voice their concerns, they can bring about significant improvements in corporate governance, sustainability practices, and overall business strategies. While institutional investors and activist shareholders often take the lead in shareholder advocacy, ordinary shareholders also play a crucial role in driving change.
One way ordinary shareholders can participate in shareholder advocacy is by making and supporting ordinary resolutions during annual general meetings (AGMs). Ordinary resolutions are proposals made by shareholders on various issues that are put to a vote at AGMs. These proposals can range from requesting greater transparency on executive pay to demanding more rigorous environmental and social policies.
Ordinary resolutions empower ordinary shareholders to express their views and concerns, even if they may not have significant voting power individually. By joining forces with other like-minded shareholders, they can make a collective impact and push for change.
One example of the power of ordinary resolutions is the push for increased board diversity. In recent years, shareholders have increasingly called for greater gender and ethnic diversity on corporate boards. While institutional investors and activist shareholders have been at the forefront of this movement, individual shareholders have also played a crucial role by co-filing or supporting resolutions on diversity.
These resolutions not only put pressure on companies to address their diversity shortcomings but also raise awareness among institutional investors and the wider public. By highlighting the lack of diversity in corporate boardrooms, shareholders are driving the conversation and encouraging companies to take concrete actions to rectify the issue.
Another area where ordinary resolutions have been effective is in holding companies accountable for their environmental impact. Shareholders concerned about climate change, for instance, have successfully filed resolutions urging companies to disclose their carbon emissions, set clear reduction targets, and transition to renewable energy sources. Over time, these resolutions have influenced corporate behavior and driven companies to adopt more sustainable practices.
Moreover, ordinary resolutions act as a tool for engagement between shareholders and management. Through the submission and discussion of resolutions, shareholders have the opportunity to engage directly with company executives and request information, explanations, and actions. This dialogue between shareholders and management is instrumental in fostering transparency and enhancing corporate accountability.
While ordinary resolutions may not always pass, they can still serve as a catalyst for change. Even if a resolution fails to secure majority support, it can generate valuable discussions and attention around important issues. Companies often take notice of resolutions with substantial shareholder backing, even if they do not result in immediate policy changes.
In conclusion, ordinary resolutions are a powerful tool for driving shareholder advocacy and effecting change within corporations. They allow ordinary shareholders to make their voices heard, even if they do not hold significant voting power individually. By joining forces with other shareholders and submitting resolutions on various issues, ordinary shareholders can push companies to adopt more responsible and sustainable practices. Through the power of collective action, ordinary resolutions empower shareholders to play an active role in shaping the corporate landscape and holding companies accountable for their actions.
