Call for information, examples, case studies and analysis: votes and shareholder resolutions v.s. divestment for social and environmental outcomes

Ty­pol­ogy: since not el­se­where dis­am­biguated, di­vest­ment will be con­sid­ered a form of share­holder ac­tivism in this ar­ti­cle.

The aim of this call for in­for­ma­tion is to iden­tify un­der what con­di­tions share­holder ac­tivism or di­vest­ment is more ap­pro­pri­ate. Share­holder ac­tivism refer­rers to the ac­tion and ac­tivi­ties around propos­ing and ral­ly­ing sup­port for a re­s­olu­tion at a com­pany AGM such as re­in­state­ment or im­peach­ment of a di­rec­tor, or a spe­cific ac­tion like re­nounc­ing a strate­gic di­rec­tion (like in­vest­ment in coal). In con­trast, di­vest­ment in­fers to with­drawal of an in­vest­ment in a com­pany by share­hold­ers, such as a to­bacco or fos­sil fuel com­pany. By iden­ti­fy­ing the im­por­tant vari­ables that de­ter­mine which strat­egy is most ap­pro­pri­ate, ac­tivists and share­hold­ers will be able to choose strate­gies that max­imise so­cial and en­vi­ron­men­tal out­comes while com­pa­nies will be able to max­imise share­holder value.

Very lit­tle pub­lished aca­demic liter­a­ture ex­ists on the con­se­quences of di­vest­ment. Very lit­tle pub­lished aca­demic liter­a­ture ex­ists on the so­cial and en­vi­ron­men­tal con­se­quences of share­holder ac­tivism other than the im­pact on the fi­nan­cial perfor­mance of the firm, and con­ven­tional met­rics of share­holder value.

Con­tro­versy (1)

One item of non aca­demic liter­a­ture, a man­i­festos on a so­cially re­spon­si­ble in­vest­ing blog (http://​​www.so­cialfunds.com/​​me­dia/​​in­dex.cgi/​​ac­tivism.htm) weighs up the op­tion of di­vest­ment against share­holder ac­tivism by sug­gest­ing that di­vest­ment is ap­pro­pri­ate as a last re­sort, if con­sid­er­able sup­port is ral­lied, the firm is in­ter­ested in its long term fi­nan­cial sus­tain­abil­ity, and re­sponds whereas vot­ing on share­holder re­s­olu­tions is ap­pro­pri­ate when groups of in­vestors are in­ter­ested in hav­ing an im­pact. It’s un­clear how these con­texts are dis­t­in­guished. DVDivest, a di­vest­ment ac­tivist group (dc­di­vest.org/​​faq/​​#Wouldn’t share­holder ac­tivism have more im­pact than di­vest­ment?) con­tends in their man­i­festo the share­holder ac­tivism is bet­ter suited to chang­ing one as­pect of a com­pany’s op­er­a­tion whereas di­vest­ment is ap­pro­pri­ate when re­jected a ba­sic busi­ness model. This an­swer too is in­ad­e­quate as a de­ci­sion model since one com­pa­nies can op­er­ate mul­ti­ple si­mul­ta­neous busi­ness mod­els, own sev­eral busi­nesses, and one el­e­ment of their op­er­a­tion may not be eas­ily dis­t­in­guished from the whole sys­tem—the busi­ness. They also iden­tify non-re­spon­sive­ness of com­pa­nies to share­holder ac­tion as a plau­si­ble rea­son to side with di­vest­ment.

Con­tro­versy (2)

Some have claimed that re­s­olu­tions that are turned down have an im­pact. It’s un­clear how to enu­mer­ate that im­pact and oth­ers. The enu­mer­a­tion of im­pacts is it­self con­tro­ver­sially and of course method­olog­i­cally challeng­ing.

Re­search Ques­tion(s)


Pop­u­la­tion: In pub­li­cly listed companies

Ex­po­sure: is share­holder ac­tivism in the form of proxy vot­ing, sub­mit­ting share­holder re­s­olu­tions and ral­ly­ing sup­port for share­holder resolution

Com­para­tor: com­pared to share­holder ac­tivism in the form of divestment

Out­come: as­so­ci­ated with out­comes - share­holder re­s­olu­tions (votes and re­s­olu­tions) and/​or in­di­ca­tors or even­tu­a­tion of fi­nan­cial (non)sus­tain­abil­ity (di­vest­ment) and/​or me­dia at­ten­tion (both)

Po­ten­tial EA ap­pli­ca­tion:

Ac­tivists could nudge cor­po­ra­tions to do the rest of their ac­tivism for them. To illus­trate: Tel­stra, Pay­pal UPS Dis­ney, Coca Cola, Ap­ple and plenty other cor­po­ra­tions have ob­jected to spe­cific pieces of leg­is­la­tion and com­manded poli­ti­cal change in differ­ent in­stances, in­de­pen­dently and in uni­son, in differ­ent places, as de­scribed [here](http://​​www.on­li­neopinion.com.au/​​view.asp?ar­ti­cle=18183). This could be a way to lev­er­age just a con­trol­ling share of in­fluence in an or­gani­sa­tion to lev­er­age a whole or­gani­sa­tions lob­by­ing power and mag­nify im­pact.