Australian investor body calls for an ‘ordinary’ shareholder proposal system

ACSI says current shareholder resolution regime needs be reformed

Australia’s corporate governance framework is “flawed”, “restrictive”, and “needs to be reformed”, according to the Australian Council of Superannuation Investors (ACSI), the investor membership body whose 37 members collectively manage over A$1.6tn (€1trn) in assets.

Under the current system, investors wishing to file a shareholder resolution first have to attempt to amend a company’s constitution.

Now ACSI has called for the introduction of “an ordinary non-binding shareholder resolution framework” as in other countries. This would provide shareholders with a more “nuanced mechanism” for engaging with companies on ESG issues, ACSI argues.

Currently, shareholders who want to raise an issue at an Australian annual general meeting must also propose a supplementary “constitutional amendment” – with a high threshold of 75% – that must be passed or the original resolution will be withdrawn. This situation, ACSI argues, is why so few “ESG resolutions are proposed and even fewer are included on the agendas of Australian general meetings”.

ESG issues have gone to the vote at just 19 Australian AGMs since 2012, according to ACSI, with the only one to win majority support being the 2016 improved climate-related disclosure resolution filed with mining giant, Rio Tinto. The only other alternative available to shareholders to voice dissent is the “blunt” method of voting against the re-election of directors.

ACSI hopes that its paper Shareholder Resolutions in Australia: Is there a better way? will “stimulate an informed policy debate”.

Meanwhile, there is an ESG resolution set to go to the vote at Woolworths on human rights safeguards in supply chains.

Co-filed by LUCRF, the A$5.9bn superannuation fund, and the Australian Centre for Corporate Responsibility (ACCR), the resolution – along with constitutional amendment – is calling on the retailer to report annually to shareholders on the company’s due diligence process for “identifying, analysing and addressing potential and actual adverse human rights impacts…throughout the group’s operations and supply chains”.RI understands that an agreement to work collaboratively on the issue – including the development of new safeguards – could potentially be announced in advance of the AGM by the company. It may be sufficiently robust to result in the resolution being withdrawn.

Woolworths’ AGM is on November 23 in Melbourne.

Proxy advisors ISS and Glass Lewis have advised shareholders to vote against both the constitutional amendment and the human rights resolution, saying Woolworths’ current policies and practices are sufficient.

But Pensions & Investment Research Consultants (PIRC) advocates a vote in favour of the constitutional amendment and an “abstain vote” on the resolution.

Speaking to RI, Susheela Peres da Costa, Head of Advisory at Australian ESG research and engagement firm Regnan, said that the resolution on human rights reporting “addresses gaps we identified in our assessment of Woolworths’ management response to human rights risks”.

She continued, “the materiality of supply chain human rights risks is escalating as related legal obligations evolve, so we see merit in shareholders clearly confirming, via an advisory vote, their support for continued corporate progress on the issue”.

Supply-chain human rights abuses at Australian companies have been in the spotlight in recent years. The government is currently exploring the option of introducing a Modern Slavery in Supply Chains Reporting Requirement that would mean entities operating in Australia with total annual revenues of at least A$100m would be obliged to report annually on their efforts to address modern slavery in their operations and supply-chains.

Staying in Australia, the Responsible Investment Association of Australasia (RIAA), which held its annual event last week, has also recently launched a new website – – making it easier for investors to find ethical funds and financial products.