Reimagining Shareholder Advocacy on Environmental and Social Issues: The promise and pitfalls of ‘E&S stewardship’
August 2024
Shareholder advocacy to protect the environment and society must seek real-world impact – rather than settling for aspirational reports or non-binding promises.
For decades, proponents of corporate reform have pursued a form of advocacy known as “stewardship” or “engagement,” which typically entails pushing for shareholder resolutions or directly lobbying companies in hopes of curbing corporate excesses on environmental and social (E&S) issues.
But stewardship campaigns often aim low, and they tend to be scored a success if they merely achieve that low goal. The only criterion that matters should be real-world change. E&S stewardship campaigns should be prioritized – and evaluated – accordingly.
Shareholder advocates seldom seek to alter profit models, least of all in the name of global human rights. But they can succeed when they reinforce the pressure exerted on business by other constituencies – like the media, consumer activists or union organizers. The crucial role of E&S stewards is to translate shifting more into boardroom decisions that yield tangible improvements for people and the planet.
KEY RECOMMENDATIONS FOR SHAREHOLDER ADVOCATES
- Capitalize on broader social currents, compounding pressure from the media and civil society to translate shifting sentiment into meaningful corporate action.
- Give greater attention to social issues – especially the well-being of workers in global supply chains. This is an area where shareholder activism now falls woefully short of its potential.
- Support new sustainability laws – and engage with responsible companies to fill their gaps.
- Hit companies where it hurts – in the boardroom. Director-based strategies are among the most neglected tools in the stewards’ toolkit, yet also the most robust.
- Large financial institutions should continue to engage quietly, ideally in powerful coalitions that target broad economic sectors.
- Socially responsible asset managers ought to embrace stewardship fully by designing funds whose unique strategy is to engage intensely on a certain theme – for instance, on supply chain human rights.
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