Influence strategies in shareholder engagement: a case study of all Swedish national pension funds

Abstract

Investors spend money and resources trying to reduce the environmental, social and governance risks in companies they own. If unattended, these risks may cause reputational damage not only to the portfolio firm but also to its owner. In this article, we study five Swedish national pension funds and the influence strategies used in shareholder engagement. Knowledge about influence strategies is important because successful shareholder engagements can lead to more sustainable corporate behaviour and a lower risk to the investor. In addition to the traditional power and legitimacy dependencies that have been reported as influential in deciding stakeholder salience, our findings reveal five additional factors useful for determining influence strategies in shareholder engagement. We provide a conceptual model showing how these factors interlink with choices of influence strategies, offering a practical use of this study. Stakeholder theory has been used as our theoretical frame of reference, based on existing influence strategy literature using a stakeholder-firm perspective.

Sustainable financing practices through green bonds: What affects the funding size?

“…The bridge between finance and sustainability at firm‐level links financing and investment practices to the environmental, social, and corporate governance performance (Alm & Sievänen, ; Hebb, ; Nikolakis, Cohen, & Nelson, ). Corporations are increasingly inclined towards building a “green image,” which can be translated into real value for the firms (Hamilton & Eriksson, ). The role of private sustainable finance has immense potential, as a substantial funding gap exists in sustainability projects, which cannot be funded through public sources alone (World Bank, ).…”

Pension funds: guarantors of international legality in Western Sahara? Evidence from Norway and Sweden

“…Investors apply a number of instruments of influence from SRI (for example, regulation-based research, positive or negative evaluations, stakeholder participation, impact investing), allowing companies to voluntarily contribute to socially positive development through actions related to the environment or to human rights (Crane and Matten 2007). In fact, stakeholder participation is commonly used as a strategy in socially responsible investment to influence corporations in a desirable way (Hamilton and Eriksson 2011;Ivanova 2017). A company's commitment to CSR, therefore, suggests that its strategy fulfils its social responsibilities as expected by the stakeholders (Maignan and Ferrell 2004).…”

Does Pension Funds' Fiduciary Duty Prohibit the Integration of Environmental Responsibility Criteria in Investment Processes?: A Realistic Prudent Investment Test

“…First, he argues that fiduciaries are required by law to ensure a sustainable balance between short-and long-term risks and returns. Second, fiduciary duties, including the sole purpose test are dynamic fiduciary laws (evolved and re-interpreted over time) with the purpose of guiding rather than prescribing trustees' investment decisions (Hawley et al, 2011). More recently, proponents of the sole purpose test conclude that it is not seen as a major barrier to ESG integration, however, calls for more guidance on how to integrate ESG issues, from institutions such as the Australian Prudential Regulation Authority (APRA), have been voiced (Carlisle, 2011).…”

“…In the Carhart model, the financial performance assessment measure is α p . It represents the systematic financial performance differential between the portfolio and the investment universe benchmark controlling for the known equity portfolio performance drivers size (SMB t ), intangible assets (HML t ) and share price momentum (MOM t ) (Carhart, 1997;1992, 1993. β p denotes the portfolio's systematic exposure to the investment universe's equity market benchmark, while where γ p , δ p , and λ p measure the exposure of a portfolio to the respective driver of equity performance.…”

“…It should be noted though that a few countries exist worldwide, whose pension funds legislation includes (some) support of the integration of ESG criteria in pension fund investment processes. Examples are the Netherlands and Sweden(Freshfields Bruckhaus Deringer, 2005;Hamilton and Eriksson, 2011;Renneboog et al, 2008b).…”