The phrase “shareholder activism” refers to shareholders using their power to improve company policy and practice. The phrase is used in a number of different ways, which can be confusing.
The most common forms of shareholder activism:
- A group that happens to own shares in a company may engage with the board or staff to seek changes of policy on ethical grounds.
- A group or individual may deliberately buy shares in a company for the sake of seeking to influence it and change its policies, for example by attending its annual general meeting (AGM) and asking questions.
- A group or individual who object to a company’s core activity may buy single shares in order to attend the AGM so that they can stage a protest or ask probing questions that may be reported in the media.
While these three activities can seem similar at first glance they are not the same.
Buying shares to change a company is different to seeking to change a company in which you already own shares for financial reasons.
Attempting to change a company’s policies through constructive engagement implies you believe that its core business is not unacceptable. When anti-oil activists buy token shares in oil companies they do so to gain access to AGMs and to protest. Most of them do not believe that oil trading can be ethical. On the other hand, campaigners might try to persuade a company to adopt the Living Wage without objecting to its main activity.