You may have seen the headline a few weeks ago – ‘HSBC agrees to phase out funding of coal industry due to shareholder pressure.’ This was big news, not only as it signifies a commitment by one of the largest institutions to a net-zero carbon future, but also as this commitment was brought about by shareholders – businesses, people and organisations owning shares in the company.
But how did this happen? An organisation that was rather pivotal in this is the focus of this week’s article…ShareAction.
The goal and vision of ShareAction is one that many of us can identify with – ‘to build a world where the financial system serves our planet and its people’. However, their mechanism of initiating action is somewhat unique.
This week’s article is a profile of this impactful organisation, providing you with an insight into who they are, how they work, and why they are curiously successful in bringing environmental and social issues to the forefront!
Thanks to ShareAction for providing us with a thorough insight into their exciting work!
Who is ShareAction?
ShareAction is a small charitable organisation working within the Responsible Investment (RI) sector to drive positive change in how all of our money is managed, ensuring it delivers a long-term benefit (not only short term return). To quote ‘We see ourselves as ‘the independent voice of responsible investment’.
Their work is mainly a mixture of research and activism. Their research helps to define the highest standards of responsible investment. Their activist campaigns help to drive change and ensure that these standards are adopted by large investors.
Often, investors are driven by short term profit, without considering how these actions may have wider, more drastic implications in the long term for us all – a classic example is investing in fossil fuels, which ultimately increases climate change and contributes to the ongoing climate emergency.
ShareAction works to change how large investors make investment decisions, ensuring they give weight to environmental and social issues, as well as financial return. Ultimately, they are working to create a responsible and sustainable investment system that values all, not only those with power within the system.
Ok, so what do they actually do?
ShareAction sees the investment system as an opportunity to drive change, ultimately being a force for good. This is enacted by three, interrelated methods:
- Building a movement for, and transparency within, responsible investment e.g.ranking investors from the most to the least sustainable on issues such as climate change and biodiversity, enabling others to see who is living up to their claims of sustainability.
- Reforming the rules, governance, and incentives inside the investment system; and
- Unlocking the power of investors to catalyse positive social and environmental change.
This can take a variety of forms, but something which is quite unique (and has been particularly effective in recent times) is their use of shareholder power to drive change, termed ‘Shareholder Activism.’
How does ‘Shareholder Activism’ work?
ShareAction owns one share in every FTSE 100 company, providing them with the right to attend AGMs and ask companies difficult questions about their impact on people and the environment.
Being a shareholder enables ShareAction to file shareholder resolutions – proposals for a change in the way a company operates. Resolutions are voted on by all shareholders at companies’ annual general meetings (AGMs) and if they pass, the company is forced to change.
However, its not that simple, one share isn’t enough to file a resolution – you need at least 100 shareholders, with at least £10,000 in share capital between them. ShareAction persuade other shareholders – from ordinary people to some of the largest investors in the world – to join our campaigns. Part of the work ShareAction do is therefore to train ordinary people to become AGM activists, helping them understand how the system works and how they can use their voice to influence companies.
Get it, so what impact has it had?
The HSBC story is one of their latest, and probably one of their most high-profile, success stories.
ShareAction mobilised some of the biggest investors in the world, encouraging them to join their campaign against HSBC.This collaboration proved successful – HSBC has just announced that it will end financing for coal companies by 2030 in OECD countries and by 2040 globally.
The organisation’s research work has had big impacts too. Last year their Voting Matters report showed that BlackRock (the world’s largest asset manager) consistently failed to use its shareholder votes to support resolutions on climate change. Nine days later, BlackRock announced a new voting policy, committing to support more climate resolutions.
And why is that so curiously cool?
This organisation is a true example of changing the system from within. Often charities act as outside lobbyists, influencing powers and policy by raising awareness of misbehaviour to the public. This work is the opposite, working within the areas where decisions are made to highlight the need for, and the benefits of change, to those that hold power!
“We’re a tiny charity, but we’re taking on some of the most powerful companies in the world – and we’re winning!”
Follow the work of ShareAction by following them here
Support the work of ShareAction by donating to them here
Read more about the CEO of ShareAction, Catherine Howarth, one of a cohort of women making a significant contribution to sustainability!
Put your money where your mouth is – read our other finance articles to see how you can make sure your money is being invested in a climate-friendly future.