Latest

Bringing the brains together – shareholder activism for sustainability

How can shareholder activism be harnessed as a force for global sustainability? This was the challenge facing representatives of corporations, investors, government, academia, NGOs and foundations, brought together by the Luc Hoffmann Institute recently to exchange knowledge and discuss a potential way forward.

‘Shareholder activism’ when shareholders influence a company’s decisions by exercising their rights as owners is on the rise. Typically, an individual or institution buys a small stake in a company and uses it to push through changes in governance, or achieve short term financial gain. A minority of these ‘activist investors’ have a disproportionate influence on corporate decision-making and this can hamper a company’s longer-term sustainability plans.

There are also many institutional investors who hold large shares in companies that do not exercise their rights (known as passive shareholders) or outsource decisions to proxy companies with little accountability. With millions of people as owners and active shareholders, there is significant potential to collectively decide on corporate strategies, particularly on environmental, social and governance (ESG) issues.

Meeting participants felt that corporations are crucial partners in sustainability efforts and shareholder activism, as one instrument to influence decision making, is worth investigating. Yet there is a clear need to address the gap between the sustainable philosophy and public rhetoric of many corporate leaders and decisions taken in boardrooms.

To date there has been no concerted or coordinated attempt to determine the connection between active shareholding and long-term global sustainability. There was a feeling that the time is ripe for an initiative that accelerates an opportunity surrounding shareholder activism which is rapidly opening up.

Participants suggested a number of activities and focus areas to take the topic further, potentially by the Luc Hoffmann Institute and other actors. These include building a coherent and compelling narrative around the issue; examining ways to strengthen the policy framework; convening a platform for NGOs to amplify the voice of asset owners; creating links between the communities involved in shareholder activism, both current and potential; and promoting collaboration between value and non-value driven activists.

This meeting was a culmination of six months’ work the Luc Hoffmann Institute has been undertaking to investigate the state of knowledge on shareholder activism for sustainability and to ascertain whether there may be a future role for the institute in this area. This included interviewing dozens of stakeholders and producing a report Shareholder activism: standing up for sustainability that was presented at the meeting. In collaboration with the institute, SustainAbility have produced a follow-up report Exploring the impacts of shareholder activism on sustainability the key findings of which were also presented.

Luc Hoffmann InstituteBringing the brains together – shareholder activism for sustainability

Related Posts

Community-led wildlife conservation – beyond hunting and tourism

Call for proposals If wildlife is to survive, especially iconic animals on communal lands, support for sustainable wildlife management must diversify beyond hunting and tourism. And for communities to choose to manage wildlife on their land, they need to receive the social, economic and cultural benefits. Only by identifying and delivering these benefits can people

Shareholder activism – unleashing people power

By Elisabeth Losasso, consultant with the Luc Hoffmann Institute When delving into the issue of shareholder activism – the practice of shareholders exercising their rights as owners to influence a company’s decisions – one aspect emerged prominently: the huge but untapped potential of individual shareholders in promoting sustainability. The most visible form of shareholder activism are

Rethinking non-profits

Faced with a rapidly changing operating reality and highly competitive funding landscape, how can non-profit organisations adapt their business models to survive, thrive and achieve their mission? A diverse group of representatives from national and international NGOs, the banking and finance sectors, business, think-tanks, philanthropic organisations and UN agencies, were brought together recently by the