Shareholder Sustainability Activism in the Netherlands

Abstract

Corporations play a crucial role in achieving a sustainable world. In achieving corporate sustainability, the current regulatory frameworks generally emphasize the role of the corporate board, but today’s media suggest that institutional investors are becoming more involved. In this study, we explore the actual role of shareholders as an important class of corporate actors in promoting corporate sustainability in the Netherlands. It is common practice for Dutch companies to disclose full transcripts of their meetings on their websites, including shareholder questions. We studied shareholder activism on corporate sustainability in 763 AGMs of Dutch listed companies and found that, despite the lack of mandatory regulation and the use of shareholder proposals, shareholders in the Netherlands, including institutional investors, seem to increasingly care about corporate sustainability issues. We found that the share of questions and remarks of institutional investors related to corporate sustainability matters increased from close to two percent in 2004 to over twenty percent in 2017. Taking into account the large variety of topics shareholders may ask questions about, including remuneration matters, the corporate strategy, board elections, dividend policies, auditing, and so on, twenty percent is substantial. Despite the increasing interest of institutional investors regarding corporate sustainability matters, institutional investors’ use of the forum right in AGMs is still low. Since these investors and larger shareholders often make use of other, private activist tools, further research as to whether the use of other shareholder tools for advocating corporate sustainability goals has increased too is important.

Keywords: shareholders, shareholder activism, corporate social responsibility, corporate governance question right, general meeting

JEL Classification: A13, D22, D23, G34, G38, K22, M14, O16