Shareholder Sustainability Activism in the Netherlands

Companies have a large impact on our society and play a large role in achieving sustainable goals. Today’s evidence suggests that also shareholders are becoming more aware of the importance of corporate sustainability in the US, while previous research stated that shareholder primacy has a negative impact on corporate sustainability. Nonetheless, recent empirical data on shareholder proposals that are submitted to the Annual General Meetings of shareholders (AGMs) of listed companies in European member states confirm the stylized fact that shareholder proposals are not commonly used as a shareholder activism tool in Europe. Dutch listed companies serve as an illustration: during the last five years, only seven shareholder proposals were submitted to their AGMs. None of these proposals concerned corporate sustainability matters. Does this mean that shareholders in the Netherlands simply do not care about corporate sustainability?

In our paper we find strong indications that this is not the case. In fact, shareholders have other tools to actively voice their interests and concerns too, including the right to ask questions in AGMs. Since Dutch companies publish full transcripts of their general meetings following principle 4.1.10 of the Dutch Corporate Governance Code, we investigated the questions and remarks shareholders made in a sample of 763 AGMs of 69 Dutch listed companies over a 2004-2017 period. Using a categorization framework of corporate sustainability keywords, we identified those questions and remarks of shareholders related to corporate sustainability. 

The total amount of questions and remarks in the sample is 29,744 and around ten per cent is related to corporate sustainability.  We find that the average number of questions per AGM remains relatively stable in the 2004-2017 research period with around 40 questions per AGM. However, the share of questions and remarks related to corporate sustainability issues actually increases from around five to twelve per cent. When considering institutional investors we see a similar trend; the share of corporate sustainability questions significantly increases from around two to twenty per cent, which is substantial given the large variety of topics in corporate governance. When comparing industries, we find that most corporate sustainability questions are asked by shareholders in the Basic Materials industry; in the Technology and Financials industries significantly less corporate sustainability questions were asked. Obviously, sustainability is entrenched in the shareholder community and companies should integrate sustainability in their business strategy.