IMPACT INVESTING Q2 2023 | Page 6

The Need for Activist Investors

Is Increasing

A combination of low rates, passive investing, and ESG concerns has opened the door for more opportunity among active shareholders.

While often viewed as a negative amongst the C-suite executives, shareholder activism is a necessity for shareholder capitalism.

Over the recent months, there has been an increase in activism campaigns targeting some of the world's biggest names, such as Alphabet and Disney. These campaigns are proving to be more important than ever for a few reasons, namely passive investing, interest rates, and the demand for addressing ESG (environmental, social, and governance) concerns.

"Only one in three dollars invested by institutions in America’s thousand largest public companies is actively allocated, according to Man Group, an investment firm."

Shareholder Activism Campaigns

US, Companies With Market Cap > $500m

Read the full Economist article: Activist Investors Are Needed More Than Ever

Sources: The Economist, BakerAvenue

Sources: Lazard, The Economist

As shareholders campaign in today's environment, these activist investors will be important influences in improving a firm’s operations. Contrary to the belief that these activists cause more problems, their push to demand complacent managers to respond to key concerns may instead help drive efficiency. 

And, luckily, the job of activists is getting easier, as new rules may allow them to gain board seats by letting shareholders vote for candidates individually.