Power of SIX: New door opens for activist investing

A soon-to-launch investment platform known as SIX is aiming to encourage shareholder activism, and it is already keen to exert influence on the major supermarket chains.

SIX co-founders Adam Verwey and Sophie Hall.

A new avenue for activist investing is soon to launch in Australia, with the Sustainable Investment Exchange, also known as SIX, already keen to exert its influence on the major supermarket chains.

SIX is currently in fundraising mode, looking for $1.2m-$1.8m to add to a $575,000 pre-seed round closed in December, with the money to be used to launch its share trading platform.

The company is also signing up retail shareholders interested in using its platform, which will initially encompass a share trading portal as well as a way to get involved in shareholder activism.

Further features, including a trading platform for shares in B Corp companies, will potentially be added at a later date.

SIX aims to select a number of causes across various fields, from climate to gambling and specific environmental issues, where it sees the possibility to engage with companies in a bid to achieve a change in their business practices.

Should engagement with the companies fail to deliver on the desired outcomes, SIX will also seek to use the ability under corporate law to put resolutions to a company’s annual meeting, if 100 like-minded shareholders back the resolution.

Such strategies have been used in recent years to successfully demand votes on resolutions at companies such as Santos and Woodside, in those cases calling for climate-related outcomes.

SIX co-founders Adam Verwey and Sophie Hall say the scope of their campaigns will be broader than climate, as evidenced by a current push to have Coles and Woolworths change their buying practices around salmon, in a bid to draw attention to salmon farming in Tasmania’s Macquarie Harbour, which opponents believe is endangering the already at-risk Maugean Skate.

Mr Verwey, who co-founded the ethical investment-focused Future Super in 2013 and is a former director of the Australasian Centre for Corporate Responsibility, said there was a role for shareholders to play in urging companies to be good corporate citizens.

Mr Verwey said his background, as well as his observations of what was happening overseas, led him to launch SIX in collaboration with Ms Hall.

“I saw two big opportunities I wanted to tackle,’’ he said.

“One of them, which is the thing that we’re launching with, is how do we create that culture of shareholder activism in Australia, and importantly, how do we get more NGOs and advocacy groups involved in it?’’

Mr Verwey said there were only two advocacy groups currently running such campaigns – the ACCR and Market Forces.

“And we’re at the point where Amazon had 18 shareholder resolutions on its own last year, while the whole ASX just had six,’’ he said. “It’s because the barriers are just too high, one of which is being able to organise at least a minimum of 100 shareholders in a company and being able to formulate resolutions that fit the shareholder requirements in Australia.’’

The model is to initially recruit users who are interested in campaigns, which they can sign up to support, but who can also use the platform to trade shares.

The goal is for the trading platform to be financially sustainable based off a $9.90 brokerage fee for trades of less than $10,000.

They are also talking with two ethical advice firms with assets under management of almost $2bn, that would use the platform to trade.

Further down the track the goal was to look at building a trading platform for Australian B Corps – for-profit corporations certified for their social impact.

Mr Verwey said B Corps and other impact-focused companies sometimes struggled to get access to aligned investors and also for exits or liquidity in their stock, so there was an opportunity there.

“Over time, as we build out the platform we’ll look to have unlisted investing opportunities and hopefully a secondary trading market as well, where the margins on those products are a bit higher,’’ Mr Verwey said.

SIX is aiming to close its current funding round at the end of May and Mr Verwey said they would probably do an equity crowd-funding round later in the year.

Ms Ball said the company was soon to launch a lean version of its platform, focused around activist investing.

“We’ll offer filtering on a bunch of ESG criteria, in a lot more depth than any other brokerage platform currently ­offers in Australia,’’ she said.

One of the ways SIX is aiming to attract users is by working with NGOs to spread the message.

“A certain percentage of their supporters will want to engage in these campaigns, and a certain percentage of those will want to pledge to buy shares in the company, and then go on to buy shares in the company to help support the campaign,’’ Mr Verwey said.

While shareholder resolutions will be in the SIX arsenal, Mr Verwey said the preference was to engage early and drive change in that way. “The best outcomes will come when we can negotiate something with the company, outside of the resolution,’’ he said.

“The idea is that through our engagement work with the companies we can get somewhere.

“I think the important thing is giving a voice in the room to NGOs and advocacy groups who are currently excluded from those environments.

“Most of the engagement at the moment is done by large fund managers who are not necessarily a part of these communities which are impacted directly by the issues they’re engaging on.”

Mr Verwey said the platform also sought to democratise activist investing, which was often dominated by high-net-worth investors.

“At the moment the people who call themselves impact investors are usually exceptionally wealthy people,’’ he said. “How do you make this something that’s more accessible to everyday, regular people who don’t have huge amounts of money?

“One of the things we’ve been pushing for is that shareholder advocacy is one of the most accessible forms of impact investing.”