Exploring ESG Shareholder Activism in the UK

Due to a combination of factors such as environmental risk awareness and enhanced shareholder rights, there has been a noticeable increase in interest in how prepared corporate organisations are, in addressing climate change and other environmental hazards. There has also been a remarkable rise debate surrounding the role of asset owners and how they engage with investee companies. Many previous researchers have focused on the roles of Pension Funds with less focus on the emerging powers of Proxy Advisors, Shareholders Associations and Social Investors, all with differing goals.

Fiduciary responsibility to integrate ESG issues into asset ownership is an area that is yet to be fully clarified in English Law, and there are diverse interpretations and widespread variations in the understanding and application by economic agents in the investment chain, even as many asset owners, especially Pension Funds now appoint proxy advisers on governance matters.

This work therefore investigates the role of asset owners, proxy advisors and shareholders’ associations in the UK, in entrenching ESG shareholder activism. One rationale underlying this study is the limited existing research focused on shareholder activism around emergent ESG risk in the UK. The focus on the UK is due to the propensity to produce new corporate governance codes. Moreover, the UK is seen as a net exporter of corporate governance globally (Black and Coffee, 1994).

This thesis has adopted a qualitative approach integrating diverse data collection methods. This research contributes to the body of knowledge by deepening the understanding of ESG shareholder activism which may have practical implications for corporate governance in other jurisdictions, as many research findings from the UK have been replicated in other jurisdictions in the past.

Keywords: Active Investment Ownership, Corporate Governance, ESG, Shareholder Activism, Responsible Investment.