Activist Investing & Shareholder Activism: What Are They?

Shareholder activism and activist investing sees people invest their money into publicly-traded companies on the stock market. Then, they use their shares within that company in order to influence the way the corporation is governed. 

Why is activist investing important? 

A cursory glance at the news will tell you everything you need to know: when unmonitored, the private sector can cause irreparable damage to the environment, fuel rising inequality, and be more concerned with lining the pockets of greedy individuals than with social responsibility.

For example, regardless of the multiple promises made regarding the use of recyclable plastic in the company’s production line, Coca-Cola has time and again fallen short of its targets and continues to be one of the world’s biggest polluters. Similarly, Apple continually shows contempt for corporate social responsibility by masking its device repair policies under difficult rules to understand, which leads to more waste from its customers. From a slightly different – but equally as worrying viewpoint – Amazon is developing a reputation for ignoring workers’ rights.

Collectively, we’re aware that we’re not doing enough to meet our climate-change-related targets. At the same time, we’re acutely aware that a well-remunerated, socially mobile workforce makes society as a whole more productive, happier, and safer. What’s more, financial stability is inexorably linked to the environment, while the majority of the issues outlined above are controlled by those operating within the private sector.

What power do individuals really have? 

 So, what should we understand from this? Well, it shows that conventional activism has its limits. If we truly want to see companies commit to real, sustainable change, pressure needs to be applied from within, not from the outside. But from a positive viewpoint, we live in a world where individuals can influence the private sector by coming together. This is possible because publicly held companies must listen to the issues raised by their shareholders.

Essentially, if you have the funds, you can purchase shares in publicly held companies that you want to influence. The next step is to purchase sufficient shares to be entitled to a seat at the corporation’s annual general meeting, which then enables you to cast your vote on various matters relating to the company’s governance. Not so long ago, an activist investment advisor – Engine No.1 – went up against ExxonMobil and unseated three of its current board members. This was a direct result of the company failing to satisfactorily amend its policies and processes in relation to the global climate crisis, which exemplified the power that shareholders can have when they come together.

Altering attitudes towards investing 

When you consider the words ‘wall’ and ‘street’ together, they make you think of wolf-like scenarios. This is because investing has historically been regarded as a competitive pursuit undertaken by individuals looking to enrich themselves and their investors. But what would happen if we altered the way we look at investing? Perhaps we could improve the efficiency of the third sector, particularly large charities and activist organisations, by utilising the present system to force through changes.

Ultimately, investing needs to transcend the individual level and be seen as a way of investing in society and contributing towards a better future. As an investor, you could seek to make your money work for everyone by investing with a conscience rather than simply hoping it makes you rich. And fortunately, you don’t need to be wealthy to be able to have an impact. Rather, it takes a concerted effort from many people with a small amount of money.

Innovative solutions such as Tulipshare’s investment platform have been designed to enable activist investment. Ultimately, this makes it much easier for people to invest collectively and ramp up the pressure on corporations who aren’t pulling their weight in the world. You have the capacity to drive the changes that you want to see by backing one of our campaigns, and we will ensure we can get past the corporate blockades and force them to realign their priorities.

Corporations should be investing for the good of the future of the planet, not just to enrich themselves and their shareholders in the short term.

    Leave a Reply