Responsibility, Ownership, and the Role of Shareholders

Abstract

Since the financial crisis of 2008, the influence of shareholders on companies has been severely criticized. For example, shareholders are accused of putting a short-term perspective on companies in order to serve their own financial interests. However, they are also criticized for not participating enough in the good governance of listed companies. By their passivity, shareholders would thus allow companies to break ethical rules and neglect social and environmental issues. On the one hand, shareholders intervene too much, and on the other, not enough! To overcome this impasse, a common answer is coming from both policy makers and professional associations: shareholder engagement. In the broadest sense, shareholder engagement refers to the way in which shareholders monitor the companies in which they invest; engage with them on environmental, social, and governance (ESG) issues; and vote in general meetings. As regulations have emerged in Europe and internationally to promote shareholder engagement, it is increasingly seen as a responsibility for shareholders. In this chapter, we propose to define shareholder engagement and to discuss these new “responsibilities” that are allocated to shareholders.