lnu.sePublications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
ESG risk management by Nordic institutional investors
Linnaeus University, School of Business and Economics, Department of Management Accounting and Logistics.
Umeå University.
2016 (English)In: 28th Asian-Pacific Conference on International Accounting Issues : Program & Proceedings: November 6-9, 2016, Maui, Hawaii, 2016, p. 73-73Conference paper, Oral presentation with published abstract (Refereed)
Abstract [en]

Investor engagement, as a private dialogue with companies on Environmental Social and Governance (ESG) risks, is a growing Sustainable and Responsible Investment (SRI) strategy in the financial markets. Institutional investors have become less silent in their external ESG risk management of companies in their investment portfolios. This study examines private ESG dialogues by Nordic institutional investors with global companies and their subsequent implications. The decision of institutional investors to engage with companies is associated with the financial risk inherent in ESG incidents.

In this paper, social movement theory and the theory of rational activism provide the theoretical underpinnings for social pressures and investors’ decisions to execute their voice by means of active engagement in the form of private dialogues in relation to ESG risks. Legitimacy theory explains the need for companies to respond to ESG activism of investors and regain their legitimacy in terms of risk management.

The aim of the study is to model the process of investor engagement, examine the characteristics of ESG engagements and the characteristics of companies that lead to activism and whether active engagements affect governance, sustainability reporting quality and financial performance of target companies. The areas of engagement are corruption, environment, human rights and labor rights. The study employs a proprietary database of 858 ESG engagements in a sample of MSCI World companies targeted by Nordic institutional investors since 2005.

Results show that engagements are driven primarily by ESG risks and not current financial underperformance. 29 % of target companies have adopted ESG changes at the end of period. Successful engagements receive good response and progress ratings by the professional engagement services. The engagement processes tend to take 10 subsequent dialogues and require 3.73 years of engagement duration. We find that companies targeted for activism tend to be larger, more profitable and have lower market value than the control group. Results confirm that ESG policy; performance and reporting quality improve after activism.

Place, publisher, year, edition, pages
2016. p. 73-73
National Category
Business Administration
Research subject
Economy, Business administration
Identifiers
URN: urn:nbn:se:lnu:diva-74546OAI: oai:DiVA.org:lnu-74546DiVA, id: diva2:1210053
Conference
28th Asian-Pacific Conference on International Accounting Issues : November 6-9, 2016, Maui, Hawaii
Available from: 2018-05-25 Created: 2018-05-25 Last updated: 2018-08-10Bibliographically approved

Open Access in DiVA

No full text in DiVA

Other links

Abstract (Program & Proceedings)

Authority records BETA

Semenova, Natalia

Search in DiVA

By author/editor
Semenova, Natalia
By organisation
Department of Management Accounting and Logistics
Business Administration

Search outside of DiVA

GoogleGoogle Scholar

urn-nbn

Altmetric score

urn-nbn
Total: 24 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf