Shareholder activism is an activist tool used to get companies to change their harmful policies or unsustainable practices.
What is shareholder activism?
Buying stocks and shares is the equivalent of buying a small part of the company, meaning that shareholders own pieces of that company. As someone who owns a small amount of the company, you get a say in the company policies, aka your shareholder rights.
Shareholders can use their shareholder rights to vote in AGMs or submit shareholder proposals.
What is a shareholder proposal?
Shareholder proposals are changes that shareholders wish to see within the company. Shareholders can research, write and submit their proposals to be on the ballot at the next AGM.
There are a few hoops that shareholders need to jump through before proposals make it onto the ballot. These depend on where the company headquarters are.
The great thing about shareholder proposals is if they pass, then the company is legally obligated to implement the proposal. hiughjnigguuyy
Can anyone be a shareholder activist?
In short, yes, but you need enough shares to submit your proposal. You can reach this threshold either individually or by joining together with other shareholders until you have enough to meet the minimum threshold.
For US companies, you need to either own:
- $25,000 worth of shares for one year
- $15,000 worth of shares for two years
- $2,000 worth of shares for three or more years
Ways to support shareholder activism when you do not meet the minimum threshold
While the thresholds are high, the good news is there are other ways you can support a shareholder’s proposal without being the person to submit the proposal.
You could:
- Vote in the AGM for the proposals you support.
- Write to your asset manager or other large shareholders and tell them why they should vote for the proposals you believe should be passed.
- Contact the company and tell them why you think they should pass a proposal.
- Raise awareness by sharing information about the proposal online.
- Join with other shareholders until you meet the minimum threshold.
Sustainability and Shareholder activism
Shareholder activism is becoming a popular tool to push corporations to change their ESG policies, and in 2022, there has been a 22% increase in ESG related shareholder proposals. ESG topics are varied but focus on three core pillars; Environment, social and governance. You can read more about ESG here.
ESG related campaigns could include:
- Third-Party Audit of diversity, equity and inequality at company X
- Reduction in the company X’s greenhouse gas emissions
- Introduce sustainable materials into packaging
- Stop practices that are harming the communities where they operate
- Improve gender equality within the company