A History Of Shareholder Participation

The nature of shareholder participation in Australia has changed significantly over time with developments often reflecting prior events in other jurisdictions, especially in the United States, the United Kingdom and Canada.

The following timeline describes the evolution of shareholder participation over time.

1933 U.S.A – The birth of shareholder rights

Securities and Exchange Commission (SEC) was formed through The Securities Act of 1933 and 1934 to create public disclosure and enforcement mechanisms to protect investors and to promote the dissemination of reliable corporate information to the marketplace. SEC continues to regulate and promulgate rules governing shareholder resolutions.

1970 USA Dow Chemical case

A 1970 US case considered a shareholder resolution filed by the Medical Committee for Human Rights which was opposed to DOW Chemical’s manufacture of napalm, an incendiary gel and petrol mixture that allowed American soldiers to spray flaming sticky gel onto people and buildings during the American invasion of Vietnam. The Medical Committee sought to use shareholders’ rights to pressure DOW Chemical to stop producing the weapon. While DOW continued to produce the product for some time, ultimately it acceded to the pressure and discontinued the manufacture of the product in 1969.  A US appeal court considered an SEC decision supporting Dow Chemical which had refused to put a resolution on its agenda to amend its charter such that “napalm shall not be sold to any buyer unless that buyer gives reasonable assurance that the substance will not be used on or against human beings.” The court found against the SEC:

“the proposal relates solely to a matter that is completely within the accepted sphere of corporate activity and control. No reason has been advanced in the present proceedings which leads to the conclusion that management may properly place obstacles in the path of shareholders who wish to present to their co-owners, in accord with applicable state law, the question of whether they wish to have their assets used in a manner which they believe to be more socially responsible but possibly less profitable than that which is dictated by present company policy.”

See SEC v. Medical Comm. for Human Rights (1972) 404 US 403 ('SEC v. Medical Comm. for Human Rights').

1971 S.A – Socially-oriented shareholder activism

ICCR’s founder Paul Neuhauser drafts the first religious shareholder proposal with a social theme on behalf of the Episcopal church and filed it at General Motors in March of 1971: The proposal requested that until such time as apartheid was abolished, GM withdraw its business from South Africa. ICCR starts using the shareholder proposal process as a way of working for peace and social justice.

1989 U.S.A – An investor-environmental alliance

In the wake of the Exxon Valdez disaster, investors and environmentalists banded together to form the Coalition for Environmentally Responsible Economies (CERES), which used the power of share ownership to persuade companies to adopt a set of environmental principles and produce public standardised annual environmental reports.

1997 U.S.A – A rise in shareholder activism

The Social Investment Forum reported that three-quarters of a trillion dollars are controlled by investors who play an active role in shareholder advocacy. During the same year, the shareholder activist community successfully fought proposed SEC rules that would have severely limited the ability of shareholders to introduce social resolutions.

2011 Australia’s first climate change resolution considered at Woodside AGM

ACCR files a resolution to Woodside Petroleum regarding their disclosure of assumptions about future carbon emissions permit pricing. This resolution achieves 5.7% support.

2014 AU ACCR vs CBA case

ACCR lodged an advisory resolution with the Commonwealth Bank of Australia (CBA) in 2014 but it was rejected as invalid and this rejection was confirmed by the courts.

2015 ACCR lodges first  ‘double barrel’ approach

The ANZ AGM notice of meeting included 2 resolutions lead filed by ACCR. The first sought to amend the constitution to allow for advisory resolutions, the 2nd dealt with an advisory resolution on climate change disclosure. All proxies were allowed to vote on both resolutions however formally, the 2nd resolution wasn’t put to the meeting.

2020 AU – Woodside shareholders slam climate inaction

At Woodside Petroleum’s 2020 AGM, shareholders voted in unprecedented numbers for the shareholder resolutions filed by the ACCR, with 50.16% of shareholders voting FOR the shareholder resolution which called for the company to set climate targets in line with the Paris Agreement.

2021 AU – For the first time, the board of an Australian company (Rio Tinto) supports a proposed shareholder resolution.

Rio Tinto’s board supports ACCR’s resolution calling for improvement to its annual review of industry associations and suspension of membership of groups found to be lobbying against climate action.

For an overview of Australian ESG shareholder resolutions, see our open dataset of shareholder resolutions and statements on environmental or social issues that have been put to Australia's largest 200 public companies.

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