SRI, shareholder activism and corporate governance: an efficient triptych?

Abstract

Corporate governance has shown flaws both in the United States and in Europe, which is due in part to a weakness of shareholder activism. Corporate social responsibility allows new avenues to be considered. Amongst these avenues, socially responsible investment (SRI), particularly when backed up by corporate governance criteria, makes it possible to consider the issue of shareholder activism from an angle that is both more prospective and more practical. The rapid expansion of SRI in Europe, and its consideration notably by Paris Europlace in France is a strong sign. Through the rapid expansion of SRI, shareholder activism can serve to correct flaws in corporate governance, particularly regarding the behaviour of company officers. Indeed, EU directive 2007/36/EC of 11 July 2007 relating to certain rights of the shareholders of listed companies can be considered as truly to encourage shareholder activism. The flexibility introduced in the choice of a proxy holder, and in particular the cost of these proxies, can result in the emergence of true shareholder activism.