Climate and Human Rights Activists Turning Themselves into Shareholders

Abstract

In Europe, certain NGOs  have over the past few years tried to exercise shareholder rights in order to further their ESG agenda against companies (eg. putting pressure on companies to decarbonize their activities more quickly). In  a very limited number of cases, they have been joined by investment funds, usually pension funds, that act as “halo actviists” (engaging in activism which cannot be readily explained by a desire to increase financial returns).  Tabling shareholder proposals is one of the tactics the NGOs use. Some have also launched “shareholder”  litigation against companies about ESG and especially climate  change issues, such as filing a derivative claim against the company’s directors.  I first briefly provide some empirical data on especially  the use of shareholder proposals by NGOs.  Secondly, I discuss whether  such NGO-shareholder activism is compatible (and if so, under which conditions) with continental European legal doctrines on the exclusive power of the board to determine a company’s strategy.  (I suggest German and Dutch courts have been too radical in their rejection of such NGO-shareholder proposals). Third, I offer some thoughts on the legitimacy/desirability of these  actions of external stakeholders who use shareholder rights and tactics to further their ESG goals.