Katinka C. van Cranenburgh, secretary general of the International Interfaith Investment Group and researcher at ESADE’s Institute for Social Innovation.
When the Quaker based Joseph Rowntree Charitable Trust (UK) decided to divest from Reed Elsevier after having tried to convince the company to sell its arms fairs division, it couldn’t have imagined that its action would have such a significant impact.
The Quaker-based trust’s decision became not an end of the two-year shareholder engagement process but the tipping point. While all the letter writing and C-level meetings did not change the company’s standpoint that its business was legal, publicised divestment resulted in the public opinion turning against the company, and made Reed Elsevier switch from focusing on a strictly legal approach to more of a stakeholder approach.
While an exit – a shareholder selling all the shares in the company – might be perceived as an end to the engagement process with the management of the company, it seems that threatening divestment, or divesting itself, actually forms part of an ongoing process for socially engaged shareholders. Investors concerned about the social and environmental impact of companies are increasingly choosing to use voice – or advocacy – over exit as a strategy. Read the rest of this entry »