Shareholder activists targeted Tesco, the UK’s biggest retailer, at the company’s AGM on 29 June. The anti-poverty campaigners were led by Ben Bimberg, company secretary for the charity War on Want. Protesting about the treatment of workers making clothes for the retailer in the developing world, they put forward a resolution calling for Tesco’s supplier factories to undergo independent auditing to ensure decent pay and conditions.
The vote received the support of 9.3% of shareholders while a further 10.1% refused to endorse the company’s present policy. It was claimed that garment workers in Bangladesh, the majority of them women, were being paid just 5 pence an hour and regularly worked 80 hours a week. In response, Tesco chief executive Sir Terry Leahy told the meeting there was no easy answer to social and economic problems in the developing world and he believed trade was the way to a better life for millions of people.
Most reports of shareholder activism focus on institutional investors who mount challenges on such issues as board level leadership, changes in rights issues and capital expenditure plans. Some even call for radical restructuring programmes and companies to be de-merged to create greater shareholder value.
However, as Tesco recently experienced, shareholder activism can also be directed towards the ethical, social and environmental responsibilities of a company. While it is very rare that such a resolution in a shareholder meeting actually passes, they do allow social responsibility investors and NGOs to generate media attention for their cause.
There have been some high profile shareholder campaigns in the recent past, including those involving J.P. Morgan Chase, ExxonMobil and the pharmaceutical company, Abbott Labs.
In the USA, the Social Investment Forum recently reported there were 359 social and environmental resolutions proposed for this season’s round of shareholder meetings.
The Tesco experience is likely to be repeated in the UK as social and environmental resolutions become a more common feature of corporate AGMs. They are effective vehicles for concerned investors to let companies know what shareholders think is important. Those in the corporate responsibility function would be well advised to work closely with investor relations to ensure they are on top of shareholder concerns.
Blood diamonds
According to a survey conducted by Amnesty International and Global Witness, diamond retailers in the UK are failing to uphold the integrity of the Kimberley Process by not putting effective policies in place. Of those asked to participate, eleven refused to do so, including top companies like Cartier, Graff Diamonds and Fraser Hart. John Lewis and House of Fraser also failed to provide information on their diamond sourcing policies. The remaining companies generally adopted international industry imposed regulations, though only two – Tiffany & Co and Signet – went beyond these measures.
The survey was accompanied by a report – Broken Vows – that urged diamond retailers to go beyond industry minimum standards and for the international community to ensure that the controls around the Kimberley Process were strong enough to ratify its aims.
The first Sino-European CSR cooperation agreement has been signed to strengthen responsible ties between Chinese textile suppliers and European retailers. The pact was signed between China National Textile and Apparel Council and the Foreign Trade Association of Europe to encourage cooperation on sharing best practice, evaluating suppliers and retailers and developing more uniform training guidelines for people working in supply chains.
Contact Foreign Trade Association of Europe 0032 2 732 0551 www.fta-eu.org
Conflict chocolate
Cocoa is one of the commodities allegedly used to fuel conflict on the west coast of Africa according to a report from Global Witness, an international NGO that highlights the link between natural resource exploitation and human rights abuses.
The report – Hot Chocolate – estimates that £60m from cocoa trading has been siphoned off into war funds in the Ivory Coast alone.
The campaign is calling for confectioners such as Nestlé and Mars to display the cocoa’s country of origin on labels.
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