Regulating Shareholders to Stimulate Sustainable Corporate Behavior

Sustainability is vital to our society’s future, but it is becoming increasingly clear that many sustainability initiatives are deficient. Large corporations need stimuli to use their major potential for ensuring sustainability. Shareholders, with their controlling powers, can play an important role here. Whereas some regulatory initiatives focus on shareholder stewardship and sustainable investment, actual shareholder motives and impact are often unclear and controversial. Some research suggests shareholders can be prosocial, refuting the prevalent belief that shareholders are only interested in financial gains, but this is still embryonic evidence. Moreover, the emerging but small literature is primarily US-centered, neglecting European shareholder rights. Therefore, major steps in research are needed to enrich the current literature by investigating the direct impact of formal and informal shareholder actions on corporate sustainability in the Netherlands. This project takes up this challenge using a rigorous multi-method approach to answer the research main question ‘How and to what extent can shareholder actions increase corporate sustainability and which regulatory initiatives can stimulate these actions?’. Shareholder meeting transcripts will be analyzed using text analytics to investigate the formal sustainability dialogue between shareholders and companies. Case studies entailing corporate documents, media and interviews will enable suggesting causal mechanisms between shareholder actions and corporate sustainability improvements in concrete cases. A qualitative process approach is used to study the sequence of (informal) engagement events of a Dutch shareholder association and its important international institutional members. The research will develop effective regulatory strategies and corporate governance best practices for sustainable corporate behavior through shareholder actions in the Dutch and European context to meet ambitious societal goals. Stakeholders, including shareholders, corporations and other relevant organisations and practitioners, will be directly involved and consulted to optimize knowledge utilization. Finally, through its methodology the project also contributes to the emerging research field of legal analytics.