Increase of shareholder activism in 2008: it’s ESG stupid!
9 januari 2008
The initial response of some “sustainability believers” may be negative. Ours is not. We applaud shareholder activism; it is a sensible form of stakeholder dialogue. Our support is growing even more because the dialogue between investors and corporations is increasingly covering “Environmental, Social and Governance” (ESG) aspects. This is confirmed by Roderick Munsters, Member of the Board of Directors and Chief Investment Officer of ABP (one of the world’s largest pension funds). He wrote in the Dutch Financieele Dagblad (“Niet financiële criteria zijn relevant”, January 7 2008) that ESG factors will be integrated ever more in their regular investment process. Moreover ABP will use its position as investor to address investee companies about the quality of their governance and other ESG factors. With its ESG policy ABP wants to optimise the risk-reward profile of its portfolio. He concludes by stating that this policy is a signal to all companies that sustainability is high on ABP’s wish list.
So, we applaud the trend towards more shareholder activism. Painful situations will occur and some investors will (continue to) tilt towards short term gains. However, the year 2008 may well be the year that more and more mainstream institutional investors will translate their good intentions on ESG into real actions. Thus we will hear more often: “it’s your ESG, stupid!” If money talks, then companies will act.
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