“We would like to engage H&M on living wage, as shareholders. Would you like to help?” asked Deborah Lucchetti, the coordinator of Clean Clothes Campaign Italy. She knew that Fondazione Finanza Etica helps NGOs and campaigns by engaging companies as shareholders, and not only as consumers or concerned citizens. That conversation was the beginning of what will soon be a vote on a living wage resolution at the H&M’s shareholder meeting.
Our Foundation has been involved in critical shareholding activities since 2008. We attend Annual General Meetings (AGMs), primarily of Italian listed companies that are targeted by grassroots campaigning due to their poor environmental or social performance, or because they are allegedly involved in international corruption, mostly in poor countries.
Even though H&M is not based in Italy, we were immediately on board. Deborah and I discussed various possible strategies, and then brought our proposals to the broader group with activists from Sweden, Switzerland, the Netherlands, Norway and Italy.
We jointly decided to adopt a multi-strategy approach, using all possible means that the Swedish legislation, which applies to H&M, offers: submitting shareholder proposals, sending written questions prior to the AGM, and asking questions directly by picking the microphone during the general meeting.
And now we’re almost there, with the AGM just days away.
Clean Clothes Campaign submitted a shareholder proposal: an additional point on the agenda of H&M's meeting, on which all shareholders will be asked to vote.
It asks the Board of Directors to pay no dividend for this financial year but to instead transfer the company's earnings into a special "living wage fund" aimed to finance "the company's efforts to increase wages of workers in H&M's supply chain", making them "human rights compliant".
Our Foundation, together with the French investor Meeschaert Asset Management (holding 34,100 shares of H&M), submitted a second proposal, asking the company to fully disclose the sustainability targets that must be fulfilled to trigger variable remuneration of senior executives, including precise targets on the improvement of worker health, safety and wage practices along the group's supply chain.
We are basically asking the same thing, though from two different perspectives (dividend and remuneration) and two different styles: a more radical stance, typical of an NGO, and an institutional one, typical of institutional investors, such as FFE and Meeschaert AM.
The two approaches are complementary and both valid.
Our Foundation will support CCC's resolution, because the promotion of human and workers rights is part of our mission to support social justice, sustainability and economic democracy through the responsible use of financial instruments.
And we will bang the drums for our resolution and for the questions on a number of other issues (logistics, destruction of returned clothes, etc.) that have been sent ahead of the AGM. They were also submitted on behalf of SfC - Shareholders for Change, a new European network for shareholder engagement dedicated to institutional investors, representing assets worth €140bn, of which FFE and Meeschaert AM are founding members.
Altogether, this is a way to inform H&M that issues such as the living wage and other human rights, which are traditionally the focus of NGOs, are increasingly becoming a source of concern for investors as well.
A company that does not care enough for human rights along its supply chain exposes itself and its shareholders to higher risks with potential negative impacts on its revenues and profits.
responsible for shareholder engagement
at Fondazione Finanza Etica