The Australasian Centre for Corporate Responsibility (ACCR) has filed Shareholder Resolutions to Fortescue Metals Group Ltd (ASX:FMG) on the protection of cultural heritage.
This page contains the resolutions and their supporting statements, and will be updated with links to news and additional briefings about this engagement.
Special resolution to amend our company’s constitution
To amend the constitution to insert a new clause 7.8:
Member resolutions at general meeting
The shareholders in general meeting may by ordinary resolution express an opinion, ask for information, or make a request, about the way in which a power of the company partially or exclusively vested in the directors has been or should be exercised. However, such a resolution must relate to an issue of material relevance to the company or the company's business as identified by the company, and cannot either advocate action which would violate any law or relate to any personal claim or grievance. Such a resolution is advisory only and does not bind the directors or the company.
Supporting statement to Resolution 1
Shareholder resolutions are a healthy part of corporate democracy in many jurisdictions. As a shareholder, the Australasian Centre for Corporate Responsibility (ACCR) favours policies and practices that protect and enhance the value of our investments.
Our company’s Constitution, combined with the Australian Corporations Act 2001 (Cth) (the Act), as interpreted by courts, is not conducive to the right of shareholders to place ordinary resolutions on the agenda of the annual general meeting (AGM) . While s249N of the Act sets out a general right of 100 shareholders or those with at least 5% of the votes that may be cast at an AGM propose resolutions for discussion at the company AGM, courts have interpreted this provision to restrict these rights to the proposal of special resolutions, i.e., resolutions amending the company constitution.
In our view, this is contrary to the long-term interests of our company, our company’s Board, and all shareholders in our company.
Australian shareholders wishing to have a resolution considered at an AGM have dealt with this limitation by proposing two part resolutions, with the first being a ‘special resolution,’ such as this one, that amends the company’s constitution to allow ordinary resolutions to be placed on the agenda at a company’s AGM. Such a resolution requires 75% support to be effective, and as no resolution of this kind has ever been supported by management or any institutional investors, none have succeeded.
It is open to our company’s Board to simply permit the filing of ordinary resolutions, without the need for a special resolution. We would welcome this. Permitting the raising of advisory resolutions by ordinary resolution at a company’s AGM is global best practice, and this right is enjoyed by shareholders in any listed company in the UK, US, Canada or New Zealand.
We note that the drafting of this resolution limits the scope of permissible advisory resolutions to those related to “an issue of material relevance to the company or the company's business as identified by the company” and that recruiting 100 individual shareholders in a company to support a resolution is by no means an easy or straightforward task. These factors act as powerful safeguards against ‘opening the floodgates’ to a large number of frivolous resolutions.
In combination, the restrictive Australian legal environment under the Act, and the conservative method proposed by ACCR, are deferential to the management powers of a company board (as per s198A of the Act). Shareholders should have no concern that any resolution proposed by ACCR will legally compel or constrain the activities of our company’s Board, nor limit the Board's capacity to make decisions in the best interests of our company.
ACCR urges shareholders to vote for this proposal.
Ordinary resolution on cultural heritage protection
Recognising that legislative review processes are underway in relation to the extent of Indigenous cultural heritage protections in Australia, in order to manage immediate risks to cultural heritage and shareholder value, shareholders recommend that our company take the following interim steps, until such time that relevant laws are strengthened:
- a) adopt a moratorium on undertaking activities which would disturb, destroy or desecrate cultural heritage sites in Australia, to be reviewed annually by the Board;
- b) commit to non-enforcement of any relevant contractual or other provisions that limit the ability of Aboriginal and Torres Strait Islander Traditional Owners to speak publicly about cultural heritage concerns on their land; and
- c) disclose its expectations in relation to any lobbying on cultural heritage issues by any industry association of which it is a member.
Nothing in this resolution should be read as limiting the Board’s discretion to take decisions in the best interests of our company.
Supporting statement to Resolution 2
This resolution is filed by the Australasian Centre for Corporate Responsibility (ACCR) and over 100 co-filing shareholders, and enjoys the support of the First Nations Heritage Protection Alliance, a coalition of more than 25 Aboriginal and Torres Strait Islander organisations and leaders from across Australia.
Our peer company, Rio Tinto, recently detonated a 46,000 year old site known as the Juukan Gorge rock shelters, to facilitate the expansion of the company's Brockman 4 iron ore mine in the Western Pilbara region of Western Australia.
This occurred with legal approval. News of the blast was met with immediate, near-universal condemnation, and an intense period of public, media and investor scrutiny has followed. Consequences for Rio Tinto have included: company executives facing a public Parliamentary Inquiry; the Corporate Human Rights Benchmark (CHRB) and the World Benchmarking Alliance (WBA) condemning Rio Tinto's actions; many institutional investors expressing their disappointment publicly, and directly to Rio Tinto’s CEO and Board.
This kind of attention would be extremely unwelcome for our company.
The co-filing FMG shareholders are concerned to protect our company, and shareholder value, from the risk of similarly severe reputational damage. This resolution is intended to guide our company in navigating the risks associated with its operations in the permissive legal environment that facilitated cultural heritage destruction.
We affirm the statement in our company’s human rights policy that it “acknowledge[s] the UN Declaration on the Rights of Indigenous Peoples [(UNDRIP)] and respect[s] the human rights principles it embodies including the principle of Free, Prior and informed Consent (FPIC).” However, gaps between local laws and international standards can create risk. Australian laws are plainly insufficient, in general, in upholding the cultural heritage-related standards contained in the UNDRIP and are out of line with community expectations. In addition, our company is subject to the UN Guiding Principles on Business and Human Rights, which demand adherence over and above compliance with lower local legal standards.
Our company has emphasised, in engagement, its role as a significant employer of Indigenous people, and while this is to be commended it is not directly relevant to the issue of our company’s involvement in cultural heritage destruction.
Shareholders do not know how many culturally significant sites exist on land our company intends to mine. We note that our company does not as a matter of process disclose to the public information about cultural heritage sites it plans to disturb. In engagement, ACCR requested disclosure, at a high level, of sites our company intends to disturb. This request was declined.
Reports emanating from the Pilbara over recent months demonstrate that the legal framework under which agreements between our company and Native Title holders have been negotiated is one of unconscionable power imbalance. Further, the state of Western Australia has acknowledged the deficiencies of its existing cultural heritage protection legislation. In these circumstances, it cannot and should not be assumed that FPIC is present under any agreement negotiated in accordance with the current legal regime.
The proposed resolution is intended as an interim measure, proportionate to the risks at hand, to assist our company while legal standards are reviewed, and until such time as they are strengthened. Importantly, the resolution does not call for a moratorium on all mining activities. Instead, it calls for a moratorium on cultural heritage site destruction.
Clause a. of the resolution is intended to manage risk by providing shareholders with comfort that sites will not be disturbed without Board approval, while a regulatory reform process is ongoing. It is not intended to impede the agency of any Aboriginal or Torres Strait Islander group/s who have given their Free, Prior and Informed Consent to any activity.
We also note that it is common in land use agreements between mining companies and affected Native Title holders to restrict the rights of those Native Title holders to publicly air concerns about activities planned on their land via confidentiality provisions and ‘non-disparagement’ clauses. Our company has stated in engagement that it does not intend to restrict the speech of Native Title holders on cultural heritage matters, however, our concern is that, given the commercial terms of its agreements are subject to confidentiality provisions, affected Native Title holders may be under the genuine apprehension that they are prohibited from publicly raising concerns. Clause b. of the resolution is intended to assist in risk management by creating an environment in which affected Native Title holders do not labour under the apprehension (or misapprehension) that they will face adverse legal or other consequences for raising concerns arising under agreements with our company.
The WA Aboriginal Heritage Act (1972) has been slated for review since 2012. The Commonwealth Environmental Protection and Biodiversity Conservation Act (1999) is currently under review. The delays in reviewing and modernising these laws to better protect Indigenous cultural heritage and in particular the human rights standards contained in the UNDRIP, has posed, and continues to pose, significant risks to mining companies operating in Australia.
Industry associations are extremely active and influential in regulatory reform processes in Australia. Clause c. of the resolution is intended to ensure that our company’s expectations of its industry associations in the present context are clear and transparent to stakeholders.
ACCR, the co-filing shareholders, and the First Nations Heritage Protection Alliance urge shareholders to support this proposal.