Share Ownership
This page is for people who already have direct investments in company shares or are thinking about buying some. It explains the various options open to people who wish to build a portfolio of shares according to their social, environmental or ethical principles. It also covers shareholders rights and what is involved in active share ownership.

Introduction

Your concerns

Finding a broker with expertise in ethical investment

Active share ownership

Links to other organisations


Introduction
More and more people are now taking ethical considerations into account when making decisions about what to do with their money, fuelled by the awareness of issues raised by the media and campaign groups. Socially responsible investors (both individuals and organised groups such as pension funds) are increasingly becoming more involved in active share ownership as a way of influencing corporate behaviour.

Shareholders have been campaigning on specific issues for many years. Back in the 1960s there were campaigns against British companies’ involvement with the apartheid regime in South Africa. This took the form of protesting at and outside the annual general meetings of companies such as Barclays Bank. Campaigners would buy just one share in the company and then as a member be able to attend annual meetings. In more recent years the exercise of shareholder power helped to persuade Shell to rethink its human rights’ policy on its activities in Nigeria and elsewhere.

Your concerns
There is no such thing as a perfect company. All are involved in activities that someone somewhere may object to. For example, one investor may wish to avoid companies that test cosmetics on animals, while seeking out businesses that have a good track record on the environment. Another investor may be more concerned about human rights issues and armaments.

To find suitable companies for you to invest in, you must first identify your own concerns. Many companies may not meet all of them. Because of this, it is worthwhile to prioritise your concerns and decide which issues concern you most. To give you an idea of the types of issues that you might want to consider go to Social, environmental & ethical issues. It contains information on some of the common issues that are of concern to ethical investors.


Finding a broker with expertise in ethical investment  
The two easiest ways for individual investors to choose which companies meet their own concerns are to use a fund manager or stock broker who will adhere to their ethical constraints. It is possible to do it yourself, but it can be time consuming and difficult to check up on the ethical performance of every company you are interested in. You could also easily miss out on a good investment prospect simply because you aren't up to date with the latest changes in a company's activities. You can download a list of brokers with expertise in offering ethical investment services to individual investors here.


Active share ownership
Being a shareholder is not just about putting money into a company that you think will give you a good return for your investment, or a company that you feel deserves support. As a shareholder you have certain rights and powers. Active share ownership is all about employing those powers to make a company take notice of issues that concern you.

As a direct shareholder (holding share in your own name) with voting rights you are effectively a member of the company in which you have invested and you have rights to a voice in the company's activities. You are entitled to attend, vote and have the chance to speak at annual meetings or other meetings arranged for shareholders. You can vote in members of the board of directors, vote in the financial auditor and vote on resolutions brought by the board.

If you do not hold shares directly in your own name, you still may have shareholder power depending on the nature of your investment. For example, institutional shareholders such as charities, church bodies and pension funds still have all of the rights of direct shareholding. The institution simply appoints a representative to attend the AGM and that person may vote and speak at the meeting the same as an individual investor.

As an individual investor who owns shares indirectly through a financial institution you can lobby them to take action on your behalf.

Shareholding through nominees
There are two types of nominee accounts. The first usually involves a single investor, such as a charity, which has delegated its share dealing to a fund manager. The second is an account that holds shares on behalf of a number of people or groups. The legal owner of the account is the nominee, normally the fund manager. The investor, whether an individual, group or institution, is the beneficiary and receives the dividends. The nominees have the legal right to attend the AGM and to speak and vote there. The beneficiaries do not, and often only receive company information through the nominee. Beneficiaries who wish their voice to be heard have to persuade their nominee to vote or speak on their behalf. The nominee is also only regarded as a single shareholder, even if he or she is representing a group of several people.

At the end of the day the greatest power any shareholder has is that of buying and selling. If dissatisfied with a company's actions, supporters of an issue may buy shares so as to have a voice at the AGM. Alternatively, dissatisfied shareholders may sell their shares and publicise the reasons behind their desire to disassociate themselves from a company.

Further details on active share ownership along with case studies see the EIRIS Guide to active share ownership.


Links to other organisations

The Ecumenical Council for Corporate Responsibility (ECCR) was founded in 1989 to raise the profile of corporate responsibility within churches. ECCR is an ecumenical organisation and it includes within its membership representatives of many Christian denominations, corporate agencies of the churches, religious communities and orders, and many interested individuals. ECCR may have actions or campaigns around particular companies and encourages networking amongst shareholder members. Joining ECCR can help you link with other concerned shareholders. www.eccr.org.uk

The Shareholder Action Handbook was written by Craig Mackenzie and published in 1993. It explains what a company is; the relationship between the shareholders and directors; the scope for constructive dialogue, pressure and direct action; the strategies that individuals and groups can employ to influence corporate decision-making, and provides details of the legal background, information sources and resources available. www.ethics.fsnet.co.uk

The UK Shareholders Association (UKSA) is the leading independent organisation representing the individual shareholder in the UK. It was established to promote a greater understanding of the benefits of share ownership and to represent the views of individual investors to the Government, the London Stock Exchange, the chairmen of British companies, regulatory bodies and the media. Individuals can join UKSA and as a member you get a quarterly newsletter, the opportunity to meet and exchange views with fellow shareholders and the opportunity to influence and endorse UKSA’s position on policy matters and contribute to its campaign for better corporate governance. www.uksa.org.uk