Tag Archives: ethical investment

New Research on the Political Influence of Proxy Advisors

This article presents a framework for examining the role of proxy advisors in campaigns for ethical investment. We argue that advisors have historically been assumed to be neutral and technical experts, when in fact they wield significant political influence, and can serve as gatekeepers or allies in campaigns for ethical investment. To substantiate these claims, we examined the role of proxy advisors as agents for disseminating norms of business behaviour. We first traced the ecosystem of actors in campaigns for ethical investment, highlighting the pivotal role that proxy advisors play in such movements and the market control of the two key players, and the implications of their potentially influential position. In doing so, we challenged some of the key arguments in favour of shareholder activism, predominately that it widens opportunities for political engagement. We introduced a norm contestation framework for analysis and applied this to proxy advisors as key actors in the ecosystem of market-based activism. Lastly, we explored this political influence through two case studies that illuminate proxy advisors’ role in judging companies on their ESG performance. We also detailed the backlash to the proxy advisory market, which affirms the arguments we regarding the political influence of proxy advisors, highlighting that this is recognised by regulators, and justifies further scholarly scrutiny.