Shareholder Activism on Sustainability Issues

56 Pages Posted: 7 Jul 2016 Last revised: 4 Sep 2016

Date Written: July 6, 2016


Shareholder activism on sustainability issues has become increasingly prevalent over the years, with the number of proposals filed doubling from 1999 to 2013. We use recent innovations in accounting standard setting to classify 2,665 shareholder proposals that address environmental and social issues as financially material or immaterial, and we analyze how proposals on material versus immaterial issues are related to firms’ subsequent environmental or social performance and market valuation. We find that 42 percent of the shareholder proposals in our sample are filed on financially material issues. We document that filing shareholder proposals are related to subsequent improvements in the performance of the company on the focal environmental or social issue, even though such proposals nearly never received majority support. Improvements occur across both material and immaterial issues. Proposals on immaterial issues are associated with subsequent declines in firm valuation while proposals on material issues are associated with subsequent increases in firm value. We show that managers increase performance on immaterial issues in companies with agency problems, low awareness of the materiality of sustainability issues, and poor performance on material issues.

Keywords: sustainability, shareholder activism, corporate performance, corporate social responsibility

JEL Classification: G3, M1, M2, M4

Suggested Citation

Grewal, Jyothika and Serafeim, George and Yoon, Aaron, Shareholder Activism on Sustainability Issues (July 6, 2016). Available at SSRN: or

Jyothika Grewal

Joseph L. Rotman School of Management - University of Toronto ( email )

105 St. George Street
Toronto, Ontario M5J 2Z6
6172060366 (Phone)

HOME PAGE: http://

George Serafeim (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States


Aaron Yoon

Northwestern University - Department of Accounting Information & Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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