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Vassar College

Publication Date

Fall 2012

Program Name

Australia: Sustainability and Environmental Action

Abstract

Given that the single driving force behind our current myopic markets is their pursuit of maximal profits, there is a dire need for increased shareholder activism to hold these corporations accountable for the social and environmental repercussions of their single-bottom line modus operandi. This study analyzes the effectiveness of shareholder activism as a tool for changing corporate behavior, and makes a more in-depth assessment of the extent to which Australian Ethical’s Climate Advocacy Fund impacts corporate behavior.

The data collected and analyzed from five interviews was used to supplement the data collected through literature review. Two interviews were conducted on corporate board members. The other three interviews were conducted on ethical investors at the head of current Australian shareholder activism issues, and the data collected from these three interviews was used to illustrate the opposite perspective to that offered through the first two interviews. The dichotomy between interviewees was used in congruence with the studies literature findings to create a balanced assessment of the effectiveness of shareholder activism.

The study concluded that while current Australian legislation on shareholder rights and their rights to resolution proposals makes it unusually difficult for shareholders activists to create concrete changes in corporate behavior, shareholder activism is one tool among many that is creating a systematic shift in corporate behavior as corporate transparency is increasing, and awareness on environmental, social, and corporate governance issues are spreading. Though the Climate Advocacy Fund has been dormant for over a year, it has recently opened up engagements with corporations and has already effectively changed corporate behavior. In short, while shareholder activism is an effective tool for creating responsible corporate behavior, it can’t be the only tool as corporate social responsibility continues to improve.

Disciplines

Business Law, Public Responsibility, and Ethics | Organizational Behavior and Theory

 

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