What Do We Know About Shareholders\u27 Potential to Solve Environmental and Social Problems?

Securities regulators around the world are attempting to assist socially conscious shareholders in driving changes in the way corporate America operates. At a time when legislative solutions to some of our most pressing social and environmental problems seem far away, many market actors have come to hope that shareholders can succeed in regulating and reforming corporate practices. This paper summarizes the empirical evidence regarding the behavior of shareholders with explicit ESG mandates, the difficulties outsiders experience in evaluating ESG performance, and the outcomes generated by the limited tools available to shareholders under corporate law. It concludes there is little evidence that material improvements in environmental and social outcomes will be produced through shareholder power. The energy and resources of reformers would be better deployed somewhere other than corporate governanc