Published: 8 July 2021

Published: 8 July 2021

Shareholders take over to drive board activity on human rights.

Ten years ago when business leaders were asked about what was driving their company activity to protect human rights the answer would usually revolve around an epiphany which began with ‘a conversation I had with my daughter’, a foundation would ensue and everything would continue with business as usual.

Fast forward to today and board directors are being driven to act on human rights by shareholders. A recent ShareAction Voting Matters report found that in 2020 just 15 out of 102 ESG resolutions received majority support, with the two largest fund managers, BlackRock and Vanguard, voting for just 12% and 14% of proposals, respectively. All eyes have been on the 2021 voting season to see how investors would vote after a year of very public investor commitments to ESG.

In March this year, ShareAction published a list of the 13 most important ESG resolutions to watch, all categorized as high quality, high-impact proposals, encouraging asset owners to ask their managers to vote for the resolutions on the list, to publicly pre-declare their voting intention, and to publish a rationale for any deviations in voting outcomes, two of those 13 had a focus on human rights in the supply chain.

The first of which involved US Fast Food Chain Wendy’s where shareholders approved a proposal asking the company to disclose evidence of whether its existing policies effectively protect workers in its food supply chain from human rights violations, including harms from COVID-19 – as well as whether Wendy’s mandates Covid-19 safety protocols for these workers. The second involved US retailer, Kroger which responded in advance of the AGM with an ambitious set of commitments, and the resolution was withdrawn. Outside of those on the ShareAction list 2021 has also seen Boohoo pressured by shareholders to link a £150m bonus scheme for its top managers to improvements in conditions at the factories it uses.

With only 14.7% of all ESG resolutions receiving a majority and a similar percentage supported by BlackRock and Vanguard, it does beg the question, are those proposing shareholder resolutions actually letting perfection be the enemy of good. On the other hand, there has been a steady increase over the past 5 years of resolutions and pass rates. If the trend is for more pragmatic resolutions, it would suggest that company’s Boards should be taking stock and 1. Ensure the Board has at least one member with human rights and sustainability competencies. 2. Review your current responsible sourcing program through the additional lens of human rights due diligence and capacity to provide information to “tell the story”, 3. Develop and measure internal commitments, report on progress, and 4. Be prepared to go public and pre-empt ESG resolutions (and listen to your daughter).


These blogs are written by ELEVATE staff members or associates and the views and opinions expressed are not necessarily those of ELEVATE.

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