There’s a New Brand of Activist Investors

By: Anneken Tappe · June 14, 2024 · Reading Time: 2 minutes

Activist investors buy shares in a company to try to influence corporate decision-making. They may push for leadership changes, new strategies, spin-offs or a sale of the whole business. But there’s a new kind of shareholder activism in town, and it’s targeting ESG.

ESG stands for environmental, social, and governance, and is a set of non-standardized and non-financial criteria to help investors put their money where their values are. Many report on their progress toward their ESG goals as well. But this has received pushback. The SEC has also distanced itself from ESG targets.

Anti-Woke Activists

In 2021, just 18 shareholder proposals opposing ESG initiatives were voted on, per a report from the Harvard Law School Forum on Corporate Governance. By 2023, that number jumped to 67. In the year so far, it has already increased to 82 proposals.

They challenge a range of progressive ESG targets, such as emissions goals, which activists argue are detrimental to companies and the broader economy. Despite the growing volume of these anti-ESG proposals, their overall support has been limited so far.

While it remains to be seen if this new brand of shareholder activists is changing the face and impact of ESG targets, protests against certain progressive company policies have hit consumer brands like Bud Light (BUD) and Target (TGT) in the past. It highlights an increasingly politicized side of corporate America.

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