New Paper: Does Shareholder Signaling Matter for Corporate Strategy?

Can a simple shareholder proposal change corporate strategy? Yes – even if it’s withdrawn, omitted, or gets voted down!

A new paper by Timo Busch, Lisa Scheitza, Tobias Baukloh and Christian Klein shows that firms targeted by ESG- or climate-related shareholder proposals significantly improve their ESG scores and reduce their carbon intensity in the years after the proposal – regardless of its outcome. Just filing the proposal already seems to matter. That’s both surprising and encouraging.

A few more things the authors find:

• Proposals by non-SRI investors are more effective than those from SRI funds – possibly because they’re seen as more “financially serious”.

• The more proposals a company receives, the stronger the effect. Think of it as cumulative pressure.

• Firms respond particularly on environmental and governance issues.

 The paper is now published in Organization & Environment and available here.