Legal & Regulatory Advocacy
Just Share’s advocacy work includes submissions on proposals for and amendments to policies, regulations and legislation relevant to responsible investment and shareholder activism.
- Submission to National Treasury on the Draft Technical Paper on Financing a Sustainable Economy (20 July 2020)
Inequality, diversity & transformation
- Submissions on the Companies Amendment Bill 2018: fair and responsible remuneration (26 November 2018)
- Response to the JSE’s “Consultation Paper on possible regulatory responses to recent events surrounding listed issuers and trading in their shares” (19 October 2018)
These are the AGM dates for the JSE TOP 100 companies for 2021.
The AGM dates listed below are provisional, based on currently available public information.
Recently, the impacts of COVID-19 have meant that some companies are opting to postpone their AGMs and/or to hold virtual AGMs, and the situation is changing regularly. Please confirm any dates directly with the company concerned.
Nedbank (AGM: 22 May 2020)
Nedbank is the first South African company to table its own shareholder resolution on assessment and disclosure of climate risk. This move sends a clear message to the financial sector, shareholders and regulators that climate risk is real, important and urgent.
The following ordinary resolutions, which require 50% of shareholder votes to pass, have been proposed by Nedbank’s board:
Ordinary resolution 6.1 – To adopt and publicly disclose an energy policy
Resolved that the company will adopt and publicly disclose on its website, by no later than April 2021, an energy policy aimed at playing our part in enabling the transformation over time of the energy system by making finance flows consistent with low-emission and climate-resilient development, in a manner that supports the stability of the energy systems of the countries in which we operate. The policy will include a framework on the financing of fossil-fuel-related activities (including thermal coal, oil, and gas) and will also include commitments to intensify our financing of alternative energy solutions such as renewable energy and other technologies as they emerge.
Ordinary resolution 6.2 – To report on the company’s approach to measuring, disclosing and assessing its exposure to climate-related risks
Resolved that the company will report to shareholders, at a reasonable cost and omitting confidential and proprietary information, on its approach to measuring, assessing and disclosing its financial exposure to climate-related risks (transition and physical) by no later than April 2021. This will inform shareholders of the group’s journey in assessing its lending activities, investment practices and own operations to climate-related risks and opportunities over time as standards, guidelines and principles on climate risk mature, including appropriate alignment to global best practices including, inter alia, the Taskforce on Climate-related Financial Disclosure (TCFD).
In relation to measuring and disclosing its financial exposure to climate-related risks, Nedbank resolves to disclose its exposure to oil- and gas-related activities as a percentage of total advances, as part of the 2020 year-end reporting cycle to stakeholders by no later than April 2021. This builds on the group’s existing disclosure of its exposure to thermal-coal-related activities that is available in the Nedbank Group 2019 Integrated Report published on 22 April 2020.
Absa (AGM: 4 June 2020)
In its Notice of AGM released on 1 April 2020, Absa has voluntarily included a “Non-binding advisory vote on climate change risk and opportunity disclosure”, which reads as follows:
Resolved that the Company, in its integrated report next year, provide shareholders with an assessment of its exposure to climate change risk in its lending and financing portfolios, and of the opportunities to finance climate change mitigation and adaption, including:
a) the quantum of its loans to carbon-related assets and the percentage to total loans;
b) a description of any significant credit concentration to carbon-related assets and how it manages the associated risks; and
c) its financing of climate-related opportunities.
While it is encouraging that Absa has taken this step to acknowledge climate risk, is unclear on what legal basis the bank has made this vote a “non-binding advisory vote”. The only non-binding advisory shareholder votes provided for in South African law are those in terms of JSE Listings Requirement 3.84(k), on remuneration policies and remuneration implementation reports. Just Share will be seeking clarity from the JSE on the issue.
Standard Bank (AGM: 26 June 2020)
Standard Bank has refused to table a climate risk-related shareholder resolution co-filed by the RAITH Foundation and Just Share ahead of its AGM on 26 June 2020. This move marks a perplexing about-turn: in 2019, Standard Bank became the first South African company to table a climate risk-related shareholder resolution. Standard Bank’s justification for not tabling the resolutions mirrors Sasol’s previous refusals to do so, i.e. its reliance on a legal opinion that climate change is a management prerogative and not something that shareholders have the right to weigh in on.
The proposed updated resolution recognises that the bank has taken steps to acknowledge the material financial risks posed by climate change, and to improve its disclosure and management of those risks. However, it also seeks to address the significant gaps in disclosure, in particular in relation to oil and gas (Standard Bank is Africa’s biggest lender to the oil and gas industry), and the lack of alignment between Standard Bank’s recognition of climate risks and its actions to mitigate these risks.
Sasol (AGM: 27 November 2019)
On 21 October 2019, a group of six South African institutional investors co-filed another climate risk shareholder resolution with the Sasol board, which sought to compel Sasol to report on how its greenhouse gas emission reduction strategy aligns with the goals of the Paris Climate Agreement. The six investors – Old Mutual Investment Group, Sanlam Investment Managers, ABAX, Coronation, AEON Investment Management, and Mergence Investment Managers – were supported by Just Share in the early stages of this process. The co-filers, which consider these matters a material risk to the organisation, submitted their resolution to Sasol’s board for voting on at the company’s AGM on 27 November 2019, but the tabling of this resolution was also rejected by the board. Sasol’s continued resistance to shareholder attempts to hold it accountable via the tabling of shareholder resolutions is regrettable, especially from a board looking to restore trust. The institutional shareholders have indicated that they are planning further engagements with Sasol’s board on the company’s emission reduction strategy.
FirstRand Limited (AGM: 28 November 2019)
FirstRand’s Notice of Annual General Meeting, released on 8 October 2019, includes two climate risk shareholder resolutions proposed by the RAITH Foundation and Just Share. FirstRand is the second South African company to table climate risk-related shareholder resolutions. The first was Standard Bank in April 2019 (see below). Like the Standard Bank resolutions, the FirstRand resolutions call for improved disclosure on FirstRand’s exposure to climate-related risks, and for it to adopt and publicly disclose a policy on lending to fossil fuel-related projects. Both resolutions would require more than 50% of shareholder votes to pass.
Standard Bank “TCFD shareholder resolution” (AGM: 30 May 2019)
In April 2019, Standard Bank tabled a resolution submitted by two shareholders, the RAITH Foundation and Theo Botha, with support from Just Share. This was the first climate-related resolution to be tabled at a JSE listed company. The resolution was in two parts (10.1 and 10.2). The first required the bank to prepare a report on its exposure to climate risk in its lending, financing and investment activities, and the second part required the bank to adopt and publicly disclose its policy on lending to coal-fired power projects and coal mining operations. Both 10.1 and 10.2 needed more than 50% vote to pass.
While the first part of the resolution did not pass, it received significant support with 38% of shareholders voting in favour, indicating strong shareholder demand for climate risk-related disclosure. The second part of the resolution was passed with 55% of shareholders voting in favour. Resolution 10.2 is therefore binding on the company.
After engaging with the bank as to when it would publically disclose its policy on lending to coal-fired power projects and coal mining operations, as a date had not been stipulated in the resolution, Standard Bank announced the release of its Coal-Fired Power Finance Policy on 31 July 2019. This partly discharged the obligation imposed on Standard Bank by the 55% of shareholders who voted in favour of Resolution 10.2. Shareholders can assess whether Standard Bank’s position on lending to coal-fired power stations is sufficiently transparent and accessible, and whether it adequately addresses the severe climate and financial risks posed by the financing of new coal-fired power infrastructure. There are, however, several areas in which shareholders might consider the Policy to be disappointing.
On 5 March 2020, Standard Bank became the first South African bank to publish a Thermal Coal Mining Policy. While doing so fully discharged the bank’s obligations in relation to the 2019 shareholder vote, the policy fails to provide meaningful leadership on the climate crisis.
Sasol Limited “2 degree scenario” shareholder resolution
In June 2018, Sasol informed the shareholders who proposed this resolution – the RAITH Foundation and shareholder activist Theo Botha, with support from Just Share – that the company would not be tabling the resolution at its 2018 AGM. At the time, Sasol’s refusal was based on a legal opinion it had commissioned, but refused to share. It also claimed that it would be addressing all the matters raised in the 2018 resolution in its 2019 Climate Change Report. (However, a review of the Report quickly reveals that this is not the case.)
Responsible investment is an investment strategy that aims to generate both financial and sustainable value. It is focused on long-term value creation, and consists of a set of investment approaches that integrate environmental, social and governance (ESG) and ethical issues into financial analysis and decision-making.
The Code for Responsible Investing in South Africa (CRISA) came into effect in February 2012. CRISA was drafted, like the King Report on Corporate Governance, under the auspices of the Institute of Directors, together with the Association of Savings and Investments in South Africa (ASISA). CRISA was developed in response to the King III Report, as a result of the recognition by institutional investors that failure on their part to engage with the companies they invested in would diminish the impact and effectiveness of King III.
CRISA provides guidance to institutional investors, in the form of five “principles”, in relation to how they should execute investment analysis and investment activities, and exercise their shareholder rights to promote good governance by the companies they invest in.
The principles of CRISA are aligned with those of the Principles for Responsible Investing (PRI). Launched in 2006, the six Principles for Responsible Investment “are a voluntary and aspirational set of investment principles that offer a menu of possible actions for incorporating ESG issues into investment practice”. There are currently 1834 signatories to the UNPRI, including 44 South African asset owners and asset managers.
Shareholder activism is the use of the rights held by shareholders in listed (publicly traded) companies to bring about changes in the way the company is operated. Traditionally, activist shareholders focused mainly on governance and financial performance. More recently, however, shareholder activism has grown in prominence as a strategy to influence change in the way companies address and respond to the impacts of their operations on people and the environment.
Institutional investors which claim to be “active owners” in relation to the companies they invest in, usually mean that they engage with company management by discussing issues that are of concern or interest to them. This type of engagement is usually done in private, and its outcomes are often difficult to discern.
In recognition of the power and influence of large corporations, civil society organisations around the world are increasingly using shareholder activism to expose the impacts of big companies on people and the environment. These organisations campaign to raise awareness amongst shareholders of their powers and responsibilities to ensure that companies are behaving lawfully, and in a socially and environmentally responsible way. They do this with public campaigns, AGM attendance and activism, and the presentation of shareholder resolutions dealing with important environmental, social and governance (ESG) issues.
In South Africa, shareholder activism has been limited, and thus far mostly confined to issues of governance and financial performance. Just Share is one of the first civil society organisations in the country dedicated to shareholder activism and responsible investment. However, a number of NGOs and some philanthropic organisations incorporate in their work, to varying degrees, elements of responsible investment and shareholder activism. Some of these are listed below:
- Bench Marks Foundation
- Black Sash
- Centre for Applied Legal Studies
- Centre for Environmental Rights
- Earthlife Africa Johannesburg
- Fossil Free South Africa
- Greenpeace Africa
- The RAITH Foundation
A number of NGOs in the United States, England and Australia have pioneered the use of shareholder activism to effect social and environmental change. Some of these are listed below:
“Sustainable finance” refers to the consideration of environmental, social and governance (ESG) criteria in the decision-making processes of the financial services industry.
Disclosure Frameworks & Reporting Codes
The first King Report on Corporate Governance was released in 1994, introducing a comprehensive summary of corporate governance best practice which has become a global reference point. The King Report has been updated a number of times, with “King IV” being released in November 2016. Many of the King Report’s principles have been incorporated into the JSE’s listings requirements.
The JSE acts as the frontline regulator that sets listings requirements and enforces trading rules for listed companies in South Africa. The JSE is supervised by the Financial Sector Conduct Authority (FSCA).
Companies listed on the JSE must apply all of the principles in King IV, and only the King IV practices that the JSE’ Listing Requirements (LR) make mandatory. These include:
- Appointment of a company secretary (LR 4.8(c) and 3.84(h))
- Appointment of a chief executive officer and a chairman (LR 3.84©)
- Appointment of an audit committee (LR 3.84©)
- Appointment of a social and ethics committee (LR 3.84©)
- Appointment of a committee responsible for remuneration (LR 3.84©)
- Development of a policy on the promotion of race and gender diversity at board level and disclosure of this policy in annual report their policy in their annual report
- Introducing mandatory non-binding advisory shareholders’ votes on the remuneration policy and implementation report, respectively, at the annual general meeting (LR 8.63)
- Disclosure of implementation of the King Report through the application of the King Report disclosure and application regime
The Global Reporting Initiative (GRI) is an independent international organisation, which has developed the GRI Sustainability Reporting Standards. The GRI Standards are used by many of the world’s largest listed companies for reporting on their sustainability performance.