Shareholder activism - ESG revisited

In January 2020, we predicted that environmental, social and governance (ESG) issues would bring greater pressure to bear on companies to explain their purpose and culture. Although the pandemic had an impact on shareholder activism in 2020 (there were less activist campaigns as activists allowed companies to adapt to the situation), several of the predictions from last year have proved accurate. And, for 2021, ESG looks set to remain at the top of the agenda for corporates and others.

“COVID-19 had a profound effect on the way activism was conducted in 2020………The pandemic slowed the volume of activism worldwide, with 810 companies targeted by activist investors, down around 10% from 2019. The number of companies targeted in so called “impactful” campaigns, i.e. by dedicated and occasional activists, were down 13% to their lowest level since 2014.” (The Activist Investing Annual Review 2020)

As the world adjusts to the impacts of the pandemic, activists are likely to step up their activities, including urging companies to pursue new strategies or to speed up existing strategies.

The focus on the ESG agenda continues to provide shareholders with another metric on which to judge boards and voice their concerns, including through voting against resolutions at general meetings.

“ESG funds have grown rapidly. Increased regulation and stakeholders’ concerns provide activists, in the widest sense, with additional ways to engage with companies. Activists will use them.” (Edward Baker, Simmons & Simmons)

Please read the full article below which considers how the increased focus on ESG issues will impact companies and shareholder activism in 2021.