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A New politics of engagement: shareholder activism for corporate social responsibility

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A commonly agreed definition of 'Corporate Social Responsibility' (CSR) is currently being battled out in many arenas. One of the most interesting of these is in the interaction between corporations and one of their most powerful stakeholders: the shareholders. Shareholders groups are going beyond the decision to invest, to not invest, or to divest by proposing and voting on company specific CSR issues at annual shareholder meetings. This activity is joined by an increasingly sophisticated 'strategy of engagement' which exploits their rights as shareholders to engage companies on particular issues. In the process, a new model of 'responsible' ownership is being forged, based on the ideals of corporate citizenship and democratic shareholder decision-making powers. What can be expected from such activism? What are its main impacts? This paper reviews the current trends towards shareholder activism for CSR. It asks: is such shareholder activism likely to influence corporations in being more oriented towards CSR? The paper first gives some background to growth and spread of shareholder activism, it describes the key actors involved, the CSR issues being raised, the process of preparing resolutions and entering into dialogue, and assesses some of the results gained so far. Two short cases are then presented on shareholder activist campaigns (BP Amoco on climate change and biodiversity; and on the financial implications of environmental risks in US Forestry companies and related SEC rules of disclosure). The relative effects of these activities are then discussed including the opportunities and limitations this method of pressuring for CSR brings.

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