Are Shareholders becoming activists?

Is there a growing
concern and interest of individual and institutional investors in
Environmental, Social, and Governmental (ESG) issues? If this is the case, what
kind of strategies should development organizations invest in to engage shareholders
(investors) in terms of ESG issues?

 Or better said; 

how can civil society organizations better engage in dialogue with investors in order to enforce companies to
have a more positive impact in Environmental, Social, and Governmental (ESG)
issues?

Source: http://freerangeeconomics.com/calpers-and-shareholder-engagement/

At

Shell’s most recent
Annual General Meeting (AGM), a decision requiring the evaluation of the
company’s business against the international goals to limit climate change
(Guardian, 2015) took place. At this meeting, more than 95% of the shareholders
voted to support a call for Shell to report on whether its activities were
compatible with a pledge by governments to limit global warning to a 2C rise. However,
this outcome is incompatible with Shell’s lobbying activities. The Dutch-Anglo
company is member of the American Legislative Council (Alec), a political
organization that opposes policies that try to tackle climate change.

Moreover, in a recent
interview with the newspaper The Guardian, Shell CEO’s Ben van Beurden
mentioned that his company would continue to look for new oil reserves, and
that investment in renewable energies would not increase since this kind of
investment does not produce enough financial return. In response to Shell CEO’s
announcement, it can be expected that responsible shareholders (investors) at
Shell Company can implement a divestment strategy by selling or removing their
investments in the Dutch-Anglo company with the aim to protest and confront the
company’s business model. However, the divestment strategy can be limited to
have the desired impact (which is enforcing the company to tackle climate
change), since other investors (globally) are willing to buy and keep their
stocks in fossil fuel companies such as Shell.

Therefore, how can civil
society organizations create and enlarge a higher number of responsible
investors globally and locally? An example of this kind of initiatives is the
Association of Investors in Sustainable Development in The Netherlands (VBDO) whose mission is to increase sustainability
awareness among companies and investors. Giuseppe van der Helm – VBDO’s
director- highlights the importance of discussing sustainability policies and
implementation between financial institutions, civil society organizations, and
shareholders. Although this association is mainly implemented in The Netherlands,
and focuses and on the national agenda (within the Dutch context), there is potential to further develop similar organizations and shareholder platforms in
other economies.

Ideally, and in order
to implement these kind of initiatives, it would be necessary to create and
join forces between the Central Bank, the National Stock Exchange Market, the
investors, and civil society organizations. This multi-stakeholder engagement could
potentially form a national platform from which companies can be approached
jointly -by different actors, including investors- with the aim to enforce
these companies to better policies and practices towards ESG issues.  

Opportunities and
existing initiatives such as VBDO can be an example of what can be implemented
in other economies. And as a result, shareholders can also become activists if
they are willing to collaborate and join forces with other actors towards the
same objective: companies should have in their policies and practices a more
positive impact in ESG issues, a so called triple-value
added
.

Lucia Lopez Pineda

Lucia is currently working on Corporate Accountability mechanisms and the Behind the Brands Campaign at Oxfam Novib. She is born and raised in Mexico but has a strong affinity to everything Chinese.

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