One large company will be named and shamed for aggressive tax evasion by new industry body Shareholders for Change (SfC) in the second half of this year.
At a media presentation in Vienna the group – formed last year by a group of smaller European institutional investors – said it was still deciding which company to highlight for this offence.
The announcement kicked off the actions of SfC, which consists of Italian, Austrian, Spanish, German and French institutional investors comprising around €22bn in assets under management.
The group aims to give a voice to smaller investors on environmental, social and corporate governance (ESG) issues.
In the first six months of 2018 the group has already engaged with 15 large listed companies on topics ranging from coal-based energy production to humanitarian issues, to a lack of plans for a more sustainable future.
“We want to cover ESG topics that are not as much in the spotlight, including human rights, workers’ rights and also aggressive tax evasion,” said Tommy Piemonte, head of sustainability research at Germany’s Bank für Kirche und Caritas, one of the founding members of SfC.
“We are not only doing engagement for engagement’s sake, but because we perceive topics like tax evasion as a financial risk to our investments,” he added.
Group representatives either visited companies’ annual general meetings or arranged separate talks with management.
“The companies suddenly hear you when, as a small investor, you not only represent your own shares but that of several other investors,” said Mauro Meggiolaro, responsible for shareholder engagement at the Italian Fondazione Finanza Etica.
He added that, for small institutional investors, it was also important to be represented by like-minded investors.
“Some of the shareholder engagement platforms have become too big and too bureaucratic – that is why we joined with others to set up Shareholders for Change,” Meggiolaro said.
At SfC, each member “has the same voice” and all make proposals for engagement that are taken on if a consensus is reached and the resources are available.
Decisions on measures to be taken at AGMs, voting proxies or divestment suggestions are not binding for all members.
Meggiolaro confirmed the SfC was looking for new members, with the aim of having one in each European country – and not just within the EU.
However, the group is careful in choosing new entrants and the founding members agreed that very large investors would not fit the group dynamics.
SfC also said it engaged with companies in which it did not invest, but where it saw a necessity to take action and inform shareholders about certain issues.
This was the case in the first half of this year with two defence companies, Leonardo and Rheinmetall, over bomb production.