Everything, Everywhere, All at Once : Can the UK’s Version of Shareholder Stewardship Drive Shareholder Engagement Promotive of Corporate Sustainability?

Savva, Rafael (2023) Everything, Everywhere, All at Once : Can the UK’s Version of Shareholder Stewardship Drive Shareholder Engagement Promotive of Corporate Sustainability? In: Conference on Human Rights and Sustainable Development, 2023-06-09 - 2023-06-09, Lancaster University. (Unpublished)

Abstract

Policymakers in the UK have traditionally supported shareholder engagement by institutional shareholders, with the introduction of the regulatory concept of shareholder stewardship and regulation aiming to realise its advent being policymakers’ most recent venture of ‘normifying’ its frequent and responsible undertaking. In addition to the continuous support it enjoys, it is possible for one to observe that policymakers have gradually expanded the matters engagement practices are sought to be occupied with under the banner of shareholder stewardship to encapsulate ESG considerations, largely thanks to developments in policy and regulation in the UK and abroad. But in addition to that, policymakers now envisage shareholder engagement adhering to shareholder stewardship’s advent to become a major vehicle for guiding decision-making auspicious to corporate-sustainability-related matters. The paper principally asks whether policymakers through shareholder stewardship are advancing a normative rationale for shareholder engagement which can lay the foundations advising institutional shareholders to periodically engage with investee companies with a view to promote corporate sustainability. It argues that despite the changes in its nature, narrative, and scope since its inception, policymakers through shareholder stewardship endeavour to cultivate a standard for shareholder engagement that is ultimately leaned upon a conceptual trestle informed by a tripartite rationale. This rationale advocates that a) shareholder engagement should ultimately aim to improve corporate performance viewed from a contractarian/aggregate outlook of companies and corporate governance; b) with a commitment to their clients’ and beneficiaries’ needs; and c) with the overall aim to use said engagement to promote governance structures and affairs ultimately beneficial for clients and beneficiaries while springing additional social benefits, including now the more recent call to address ESG considerations as issues that can potentially affect investments, expose investee companies to risks, or impact others adversely. As benevolent as the effort seems to be, the paper questions the extent to which shareholder stewardship can be an effective paean for regular engagement practices supportive of corporate sustainability. Both its rhetoric and conceptual trestle echo the confidence policymakers put on taking action signalled by the quest for creating shareholder value and estimates made around it as being competent to uphold obliquely investee companies’ longevity and social welfare generally, including the facilitation of corporate sustainability. Promoting engagement to be adopted in the vigour of this understanding mainly offers a normative proxy for promoting corporate sustainability whenever it can be reflected in, or being reflective of, the creation of shareholder value. Finding a ‘business case’ advantageous for institutional shareholders to indorse corporate sustainability can be a powerful motivator for engagement promoting of it to transpire, but it should not be surprising that the same ‘business case’ can prove at odds with corporate sustainability’s multiple and hyper-complex prognostications.