Responsible investment charity ShareAction has today written to the Treasury’s Digitisation Taskforce to warn that its proposal to reform the UK's shareholder system will harm shareholders' ability to exercise their rights and reduce their ability to hold companies to account on social and environmental issues.
ShareAction is concerned that the recommendations in the proposal to require all shares owned by individuals to be held on their behalf through a nominee could result in increased costs and a loss of autonomy for shareholders, who may find it harder to exercise their rights.
The charity, which convenes public and institutional shareholders to push companies to tackle climate change and ensure a decent standard of living for workers, is warning this will dilute investors’ ability to drive urgently needed action.
Lewis Johnston, ShareAction Director of Policy, said: "Modernising the UK's shareholder system shouldn't come at the expense of people's rights or weaken their ability to challenge corporate practices that harm people and planet.
"The Digitisation Taskforce's proposal to require shareholders to rely on a nominee instead of being able to directly exercise their rights – such as voting on policies and attending AGMs – will make it harder and more expensive for people to make their voice heard.
"Shareholders play a hugely influential role in pushing companies to improve their policies to tackle the climate crisis and protect low paid workers – it's vital that this power isn’t diluted.
"We've written to the Taskforce to ask for a meeting to discuss how the proposals can be improved to ensure shareholders can easily hold companies to account for how their operations affect people and the environment.”
The Taskforce is expected to publish its final recommendations in January 2024.
ShareAction has a long track record of supporting thousands of members of the public to register as shareholders in order to co-file resolutions urging companies to improve their policies on social and environmental issues. This has resulted in real-world progress - for example last year 19,000 Sainsbury’s workers got a pay rise to the Real Living Wage following a shareholder resolution coordinated by ShareAction.
The charity is warning that the Treasury’s proposal could jeopardise this kind of action, as using nominees adds many practical barriers to participation.
Notes to editors
ShareAction’s submission to the Treasury as part of the Taskforce’s consultation process is available here.
The Digitisation Taskforce’s recommendations can be found here.
In 2022 ShareAction co-filed a resolution urging Sainsbury’s to pay workers the Real Living Wage, which led to the supermarket announcing a pay uplift for London staff. More information here.
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