Discussions remain heated with respect to the questions raised by the government regarding corporate missions. The question of a possible change in the legal framework, to allow companies to include a mission statement in their articles of association, particularly fuels tension.
Many company managers and lawyers fear that this will open the door to a large number of legal actions. Although we understand these misgivings, several experiences as a committed minority shareholder lead us to believe that there is an urgent need to include a corporate or environmental mission in the articles of association.
We are shareholders of Total (and of all CAC 40 companies) since 2003. The creation of our shareholder engagement fund was directly linked to the Erika oil spill and the difficulty to round up investors to put pressure on Total’s Board of Directors to take account of environmental factors. When we wanted to submit a shareholder resolution concerning an environmental theme in 2011, the company’s legal counsel and advisors told us it was not the right place to do so, as, in accordance with the Commercial Code, the GM is meant to decide on financial and governance issues only. We were very surprised to see that the majority of lawyers we consulted with agreed with this position.
On several occasions, we were unable to submit resolutions concerning social or environmental topics, which had been rejected by the boards. To overcome this strict vision held by most legal advisors and lawyers, it is necessary that the legislator enable companies who wish to do so, or their shareholders who request it, to be able to submit resolutions that concern the corporate mission. It is important that this possibility be made available to all companies, with no limiting factors. Due to their business or culture, not all companies can “invent” themselves a mission.
This has two significant advantages: the first being to allow shareholders to open a debate on the corporate mission, which at present cannot take place unless the chairman and board of directors accept it. The only argument that shareholders can use is the dismissal or non-renewal of directors, a “bomb” that is unsuited to the question asked.
The second advantage is that it reconciles all stakeholders with company managers and their strategy by enabling general meetings to vote on current strategic subjects. It is up to shareholders to take position!
Refusing to open the debate in general meetings may signify that the board of directors does not consider that the shareholders have the necessary competency, or that it does not feel that it is elected by them or owe them anything. In these two cases, this shows that shareholders are not truly considered as such and that it is urgent to broaden exchanges in the general meetings to real social debates so that companies realise the need to participate, as much as they can, in improving our world.
The legal debate is thus a fundamental one: do companies have a role to play within civil society, and if so, is it not the responsibility of each shareholder to participate by giving their opinion at the general meetings?
This is fully in line with the active role advocated by the UN (with the PRI) and the Shareholder Rights Directive adopted by the European Parliament in 2017 and that will be transposed into French law by 2019. These two initiatives (engagement of the parties for the PRI and regulation for the directive) were set up so that shareholders can take back their rights and implement them, as asset managers, insurers and pension funds have a fiduciary duty toward their principals.
Let us hope that the government will have the will to bring these debates right to the heart of the general meetings so that companies who wish to do so can adopt a positive social approach.