Shareholder Advocacy as a Tool for Change
World Animal Protection is working to transform the global food system through increasing pressure on companies to improve conditions for and treatment of farmed animals in their supply chains.
You may know of our petition, call-in, and email action opportunities, but you may not know that we are also leveraging shareholder advocacy as a means to affect lasting change for animals in food supply chains.
Shareholder advocacy – or shareholder activism – is a powerful tactic for pushing companies to change from within and address key issues facing their businesses. Public companies are vulnerable to any factors that might negatively impact the value of their stock and, for this reason, they are beholden to the individuals and institutions that own shares in a company. Stockholders have significant rights and power to hold companies accountable for their practices or behavior.
Shareholder advocacy can be as simple as a stockholder establishing a dialogue with the company, making executives and the Board of Directors aware of issues for which they feel strongly. There are also regular touchpoints throughout the year for companies to update shareholders and field questions, including quarterly investor calls and the annual shareholder meetings.
The tactic that generates the most buzz and impact is a shareholder resolution. A resolution is a formal request submitted by a shareholder or group of shareholders that is then put to a vote before all persons and institutions that own stock in the company at the annual meeting. Each share owned represents one vote.
Shareholders owning at least $2,000 worth of stock for at least one year can introduce a resolution. In some cases, the submission of a resolution alone can lead to action by the company to address the issue of concern without requiring a full vote. It is in the interest of the company to avoid a public vote, and it can project a progressive image to shareholders ahead of the annual meeting.
Shareholder resolutions typically call for the company to issue a report or other form of disclosure that assesses a specific risk to its reputation or bottom line and identifies opportunities to address this risk and protect the stock value. Resolutions push for the company to act responsibly and formally discourage unsustainable, unethical, or risky practices.
For example, earlier this month at Walmart's annual meeting, shareholders, including World Animal Protection, voted in favor of strengthening the company's policy on antibiotic use for farmed animals. The move to prohibit or restrict the routine use of medically-important antibiotics by the company's meat suppliers follows months of campaigning by World Animal Protection and our U.S. pork and the superbug crisis report, which documented the presence of antimicrobial-resistant bacteria in pork purchased at several Walmart stores. In fact, the shareholders behind the proposal directly referenced the report in their presentation during the meeting.
The proposal, which received 3.8% of shares voted in favor, sent a clear signal to the company that its investors are concerned about the risks associated with allowing the overuse of antibiotics in farmed animals and reflects the growing recognition in the investment community that poor animal welfare is bad for business. According to shareholder advocacy group As you Sow, resolutions receiving 10% support are difficult for companies to ignore, and those with 20% support clearly convey that inaction is too risky.
By surpassing 3% support, the same resolution is allowed to be submitted again for next year's meeting. With shareholders now familiar with the issue, advocates can work to build greater support year-over-year until Walmart makes a change.
Additionally, while the percentage of shares voted in favor of some proposals may appear low, the power of low numbers is often hidden. In most cases, a single large institution – think major firms like BlackRock, Vanguard, or JPMorgan – own significant amounts of shares in a company. This can mean that a low percentage of shares in favor nevertheless represents a significant percentage of individual stock owners. A proposal before Tyson’s board this year regarding labor rights at the company, for example, had 14.58% of shares voted in favor. When looking just at independent shareholders, though, the proposal had 59.68% support.
Addressing antibiotics can be a first step in alleviating the worst animal welfare practices in a company’s supply chain. Many cruel practices like confining animals in cages or crates, housing them in barren concrete environments, and subjecting them to painful physical alterations, are associated with the routine administration of antimicrobials. Approximately 70% of all medically-important antimicrobials sold in the U.S. are for farmed animals.
World Animal Protection's scientific testing of pork products purchased from several Walmart locations, which was conducted by Texas Teach University, found that 80% of the bacteria isolated from Walmart’s pork were resistant to at least one antibiotic. Following the release of our report, almost 10,000 of our supporters wrote to Walmart urging the company to commit to sourcing higher welfare pork to protect animals and public health. World Animal Protection has also been engaging Walmart shareholders directly about the business risks of continuing to rely on the overuse of antibiotics to make up for poor welfare standards in the company’s supply chain.
Stay tuned for more updates on our shareholder advocacy work. You can also become an activist shareholder for companies in which you have investments. Check out As You Sow for some tips on ways you may be able to utilize your investments.
Charitable donations from people like yourself are the reason we are able to continue our shareholder advocacy work.