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Interview: Tracey Davies on Just Share
Interview: Tracey Davies on Just Share
Published Date: 2018-06-04 | Source: Sponsored | Author: Stephen Gunnion
South African shareholders are becoming increasingly vocal about the way the companies they invest in behave. Breaches of financial governance, such as those that have been revealed at Steinhoff International, is just one area that shareholder activists are focusing on. Just Share is also trying to change the way that companies behave around social and environmental issues. Stephen Gunnion spoke to executive director, Tracey Davies, to find out more about Just Share.
Stephen: What is Just Share?
Tracey: Just Share is a non-profit shareholder activism and responsible investment organisation that promotes the use of investor power for a fairer South Africa. We work with institutional investors, individual savers and civil society, to drive good corporate citizenship through active ownership and responsible investment.
Stephen: Why the need for an organisation like Just Share? Are these principles not being followed by companies?
Tracey: Well, we would argue that they are not, as I think would much, if not all, of the social and environmental justice sector in South Africa. There are two components that make up the need for an organisation like Just Share - because there are other civil society organisations in South Africa that do some work on responsible investing and active ownership, but this is the first one that really focuses on this kind of work. The first component is that, of course, the funders who fund social justice in South Africa derive much of their income from their investments in listed companies. A number of the organisations that are being funded by those funders are actually actively working to try and address some of the impacts of those same listed companies. So, there's a disconnect there which I think some funders, particularly the RAITH Foundation, felt it was necessary to address. Secondly, there's a huge amount of work that gets carried out by civil society in South Africa at the grassroots level, around key issues and challenges facing our society, but the information about that work very seldom reaches investor audiences in a way that they can use to drive good corporate citizenship. So, we thought that it was necessary for an organisation to exist that focused on bridging that gap.
Stephen: We have seen the emergence of shareholder activism in South Africa, but focused on the financial aspects of a company. Do you think that this sometimes comes at the expense of social and environmental aspects?
Tracey: I'm not sure it comes at the expense of them, I think there just hasn't been a focus on those elements from a shareholder activist point of view. Shareholder activism in South Africa is extremely limited and, as you say, when it does take place it's really about finance and governance, so I think there is just an overall neglect of social and environmental issues in our corporate discourse. There is also a lack of information and a lack of understanding of how those factors actually affect company performance and the society that we live in.
Stephen: Does good governance in a company go beyond financial aspects? Should it include other elements such as social and environmental issues?
Tracey: Absolutely. There is a growing body of research that shows how companies that are good corporate citizens, that take environmental and social issues as seriously as they take financial issues, are more sustainable and better performers in the long term. And of course, on top of that, there's no question that companies have an obligation to mitigate their impact on the environment and on people, and that there is a growing global awareness now that it can't just be about profit to shareholders.
Stephen: Apart from grabbing newspaper headlines, have activist shareholders had any success in driving change within corporate South Africa, in your view?
Tracey: In my view, not much, but that's really not something you can blame them for on an individual level. As I said before, there are very few shareholder activists in South Africa and most of the time they really are on their own. And of course, shareholder activism is not something you can do as an individual; you can raise awareness of issues, but you need momentum behind you from other shareholders in order to effect change, and that certainly is something that is missing in South Africa. We also don't have any culture of AGM engagement, or submitting resolutions for consideration by shareholders. This is something that Just Share aims to change, to start putting shareholder resolutions on the table that will force shareholders to engage with some of these issues, and hopefully have more success at driving change.
Stephen: How do you plan to start this Tracey?
Tracey: Our strategic plan is based on three elements of work: expertise, engagement and activism. Those of us who work in the social justice sector in relation to corporate accountability and transparency have come to understand that a big part of the problem is that there is very little understanding amongst shareholders of the issues that are facing companies when it comes to social and environmental questions, how to deal with those issues and what kind of questions to ask. We want to be able to provide shareholders with clear, evidence-based information that gives them the tools to engage with companies robustly, so that companies are not always able to have the upper hand and dismiss any queries about their impacts. We then want to engage with shareholders and with companies; we want to raise awareness using public advocacy and strategic communication campaigns; and, ultimately all this will culminate in activism. Things like attendance at AGMs and asking difficult questions, as well as the presentation of resolutions for shareholders to vote on.
Stephen: Will Just Share have to become a shareholder in these companies so that it can attend AGMs to make its representations?
Tracey: That's part of the plan. At the moment, we are also working with existing shareholders of some of the companies that we are focusing on, and supporting them in doing this kind of activism and that is something that we will continue to do. But absolutely, we will have to purchase shares in the companies that we are focusing on so that we can engage directly as a shareholder.
Stephen: How are you funded, Tracey?
Tracey: The initial funding for Just Share came from the RAITH Foundation, which is a South African philanthropic foundation that has its own extraordinary programme of active ownership in the companies that it is invested in on the JSE. They are a social justice donor and they fund many civil society organisations in South Africa. We are now in the process of submitting proposals and discussing our work with potential future funders.
Stephen: Is this a win-win situation for companies, because I'm sure climate change is a potential financial risk for corporate South Africa?
Tracey: It's a huge potential risk and, unfortunately, I think it's a potential risk that corporate South Africa is either not taking seriously or actively avoiding. As many people will know, this is a huge topic of conversation; people like Mark Carney, the governor of the Bank of England, and Michael Bloomberg have made it clear that climate change poses a serious financial risk to companies -- that's why we have groups like the Task Force on Climate-related Financial Disclosures and other such initiatives. It should, therefore, be a win-win situation, but carbon-intensive companies need to make serious changes, often to their core business models, and that poses a threat. So, the initial engagement is very difficult, as can be seen with the kind of activism that's going on around the world with the likes of ExxonMobil and Shell. I think that, in South Africa, climate change is still viewed as something that isn't a fundamental concern to companies or shareholders and that's something that we aim to change.
Stephen: Are you also speaking to government because it can nudge companies in the right direction with things like the carbon tax?
Tracey: Yes, that is part of our mandate, although it is not the primary focus of our work. Engagement with regulators will certainly form part of it where it makes sense. One of the main drivers behind the establishment of Just Share was the recognition that, in South Africa, civil society tends to focus almost exclusively on government and its failings and its lack of implementation and all of the many, many problems there are; but we focus far too little on the corporate sector. So, we will engage with government where it makes sense to do so, but primarily we want to raise awareness of corporate obligations to deal with these issues without government intervention and nudging.
Stephen: I know it's still early days Tracey, but what response have you had so far?
Tracey: We certainly have come to understand from the responses we've had thus far, that there is a great need for this kind of initiative in South Africa and that this is a good time for it. We're hoping to capitalise on a lot of the progress that has been made in relation to responsible investment and shareholder activism around the world, and we are trying to learn lessons from other organisations like Just Share in places like Australia, Europe and the United States. So, we think the timing is right -- we've had a very positive reception -- and, we're hoping that we will be able to engage proactively and positively with companies to try and improve the situation that we have in South Africa.