Insight,

Shareholder ESG resolutions

AU | EN
Current site :    AU   |   EN
Australia
Belgium
China
China Hong Kong SAR
Germany
Italy
Japan
Singapore
Spain
UAE
United Kingdom
United States
Global

This article was written by Michael Robertson.

Increasing shareholder support for ESG resolutions

Although individual shareholders themselves can do comparatively little to mitigate the long-term effects of climate change, there is increasing recognition that the companies they own (whether directly or indirectly through their superannuation funds) can have a much greater impact on whether or not Australia plays its part in achieving global climate change goals.

Requisitioned resolutions with respect to environmental, social and governance (ESG) issues are one way we are seeing activist-led investor groups continue to push listed companies to act, and an area where we are seeing increasing levels of shareholder support.

These type of requisitioned resolutions typically follow the standard formula of: 

  • an initial constitutional amendment to allow the advisory resolution to proceed; and
  • a subsequent advisory resolution (conditional on the initial constitutional amendment being passed).

Recent climate-related ESG resolutions in particular, have attracted significant shareholder support at the AGMs of Rio Tinto, Woodside and Santos held earlier this year (see the table below). 

Rio Tinto Limited

(AGM held on
7 May 2020)

Requestioned resolution to amend the Company's constitution

Lead filer was Market Forces

8.79% support

Requisitioned resolution on emissions targets

36.93% support

Woodside Petroleum Ltd

(AGM held on
30 April 2020)

Requestioned resolution to amend the Company's constitution

Lead filer was Australasian Centre for Corporate Responsibility (ACCR)

6.28% support

Requisitioned resolution on Paris Goals and Targets

50.16% support

Requisitioned resolution on climate-related lobbying

42.66% support

Santos Limited

(AGM held on
3 April 2020)

Requestioned resolution to amend the Company's constitution

Lead filer was ACCR

6.68% support

Requisitioned resolution on Paris Goals and Targets

43.39% support

Requisitioned resolution on Climate-Related Lobbying

46.35% support

Despite the constitutional amendments on which the advisory resolutions were contingent receiving votes ranging between 6.28% (for Santos) and 8.79% (for Rio Tinto), it is clear from these figures that shareholders are increasing supporting climate-related ESG resolutions.

Where to from here?

A number of listed companies face requisitioned resolutions in the October/November AGM cycle, and although a majority of these are climate-related, there is an increasing number focusing on cultural / world heritage protection and on COVID-19 given recent events in Australia, and around the world. We will be watching closely to see if COVID-19 has a noticeable impact of the support for these type of requisitioned ESG resolutions and whether this trend continues to be reflected in upcoming AGMs.

Finally, with last week's SEC reforms to Rule 14a-8 in the United States increasing the value thresholds for shareholder requisitioned proxy statements or ballots (from current requirements of a holding of at least US$2,000 or 1% for at least a year, to alternative thresholds requiring continuous ownership of at least US$2,000 worth of securities for at least 3 years, US$15,000 for at least 2 years or US$25,000 for at least one year), we will also be watching with interest whether listed company boards continue to push for similar reforms to change the "100 member rule" here in Australia. The Federal Government may require some persuading given the growing strength of shareholder support for ESG resolutions to date.

LATEST THINKING
Insight
On 2 August 2022, the Aged Care and Other Legislation Amendment (Royal Commission Response) Bill 2022 was passed (Aged Care Bill), introducing important regulatory changes to Australia’s aged care sector. The Bill makes numerous legislative amendments, including to the Aged Care Act 1997 (Cth) (Aged Care Act) and the Aged Care (Transitional Provisions) Act 1997 (Cth) (Transitional Provisions Act), and responds to various recommendations made by the Royal Commission into Aged Care Quality and Safety (Royal Commission) Final Report (Report). The Report identified the provision of substandard aged care services and perceived systemic failures in the aged care sector.[1]

08 August 2022

Insight
The Federal Court has refused an application to stay proceedings to quantify compensation for patent infringement (quantum proceedings) pending the outcome of separate parallel proceedings challenging the validity of the infringed patent on new grounds. The case is significant as intellectual property cases are regularly bifurcated with liability determined separately damages or an account of profits. A patentee may also bring consecutive infringement cases and therefore have two separate cases considering invalidity issues for the same patent running in parallel.

03 August 2022

Insight
Since the introduction of a nationwide Marketing Authorization Holder (MAH) system in 2019, licenses have linked directly to therapeutic products rather than manufacturers.

03 August 2022