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.
Tag Archives: shareholder activism
Research on Political Investorism and Market Lobbying
New research out today on political investorism and insider/outsider market lobbying, which analyses shareholder activism and lobbying of market actors. We argue that political investorism in Australia is shaped by our corporate governance rules and market power of superannuation (pension) funds. We identify a category of ‘unnatural insider’ to describe the tactic of traditional outsiders acquiring insider status for political aims. Case studies analysed include market lobbying and threatened boycotts of banks/insurers over the Adani Carmichael coal mine, shareholder targeting of Coles over modern slavery, and superfund divestment campaigns.
Political investorism: Conceptualising the political participation of shareholders and investors
This article establishes a new basis for examining the participation, mobilisation and impact of investors at a time when market-based activism for social change is rising in prominence. Existing terminology describing the expression of political values through investment decisions lacks conceptual clarity. Political participation by shareholders and other investors is variously described as shareholder activism or socially responsible investment, and currently conceptualised under the banner of political consumerism. However, this term fails to capture the unique political role and diverse actions of investors. We put forward ‘political investorism’ as a cohering term for investment-based political participation to remedy existing conceptual confusion, to distinguish between investors and consumers as political actors and to set an agenda for the future study of market-based activism. This article defines and develops the concept of political investorism, drawing upon illustrative cases from Australia to identify hallmarks, actors and tactics of this form of political participation.