You don't need to go to protests to be a
Put simply, activist investing (or shareholder activism) is the act of
investing your money into publicly traded companies held on the stock
market, and then using your shares to influence their corporate
As opposed to the passive act of refusing to buy shares in specific
companies, activist investing looks to leverage shareholder power to
This approach has the potential to effect real change, even within the
Activist investing is nothing new, US-based Carl Icahn’s been doing it
since the eighties, while Paul Singer’s Elliott Management hedge fund
was started in the late seventies has gone on to become one of the
most prolific activist investors on both sides of the Atlantic.
Even the end of the international apartheid movement in the nineties
can, in part, be credited to shareholder
Last year, activist investment advisor Engine No.1 challenged
ExxonMobil, unseating three of its board members for failing to
sufficiently adjust its strategies in response to the climate crisis.
It was a big win for shareholder democracy and an exciting display of
how an activist investing approach can work.
I hope that this is only going to grow throughout 2022.
For institutional investors, fighting for change at a corporate level
is set to become easier – catalysed by the support of some of the
world’s largest institutional investors including BlackRock
Vanguard and State Street, and spearheaded by recent policy
For example one of the largest asset managers recently announced that
beginning in 2022 they are taking the first in a series of steps to
expand the opportunity for clients
to participate in proxy voting decisions where
legally and operationally viable.
These voting choice options will first be available to institutional
clients invested in index strategies – within institutional separate
accounts globally and certain pooled funds managed by BlackRock
the US and UK.
This is down to the ever-growing importance of environmental, social
and governance (ESG) issues for investors.
In 2022, we expect 148 companies are expected to be targeted by
activist investors, based on recent research, which would be a 10%
increase on last year.
Power is starting to shift - but needs a bigger push
While good corporate governance has historically been a primary focus
of shareholder engagement, nowadays investors are increasingly turning
their attention to ESG and demanding evidence of ‘environmental and
As a result, managers are now expected to actively demonstrate how
they are satisfying this demand.
We’re also in the midst of a retail
Look no further than the Reddit effect
on Gamestop and you will see an example of how
the power is shifting.
Big corporations are tuning in to this shift and responding to the
In comparison to the growth of the voice of institutional investors,
we cannot ignore the failure of public markets when it comes to
recognising the interests and concerns of retail investors.
According to Broadridge’s ProxyPulse report, in the 2020 proxy
28% of individual investors voted their
shares, meaning that votes at AGMs were left mainly to institutional
Last year there was just one shareholder proposal on Coca-Cola’s proxy
statement at its AGM. This was around sugar and public health, which
the company suggested investors voted against.
We think it is questionable that one of leading global plastic
polluters did not have a single proposal around its pollution impact.
It’s difficult to believe that none of Coca-Cola’s shareholders care
about the company’s pollution impact. By not addressing one of the
public’s greatest concerns (plastic pollution) it suggests that, by
leaving influence to institutional investors, something isn’t quite
working in the public markets system.
This is where private investors come in.
Given the opportunity, retail investors could be the ones to push,
propose, and vote for these changes.
We know they care about these issues and are ready to invest - just
this year thousands have shown interest in supporting our campaigns
on Apple, Amazon and Coca-Cola,
and tens of thousands of dollars have been invested in these
Retail investors want their voice to be heard at a company level – but
more needs to be done to make their shareholder rights fully
accessible so their concerns are represented at annual meetings.
To allow this to happen an enormous amount of structural change is
needed, but we are confident that investment platforms and
stockbrokers will adapt.
Already, they are making it easier for retail investors to provide
evidence of their shareholding, and educating investors on how they
can submit and vote on proposals, to ensure their voice can finally be
We can expect more of this to come.
It is an exciting time for retail investors across the UK jumping on
the activist bandwagon. If you combine the voice of institutional
investors with that of retail investors and the public, just think
what could be achieved.
About the author: Antoine Argouges is the founder and CEO of Tulipshare
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