Session Runs 1:45 - 3:00 pm

Breakout Session: Shareholder Voice and Activism

Our central goal is always to seek to improve the pedagogy of sustainable and impact finance. How do we teach this? How should we teach it?

I'd like to begin with a few words on framing.

I've posted a link to Albert Hirschman's Exit, Voice, and Loyalty (1970), a book that I think offers a succint and useful (and teachable) framework for thinking about these issues.

Hirschman's motivating comment:

"Economists have paid little attention to /repairable lapses/ of economic actors."

What do we do when an organization we are associate with is going in the wrong direction, engaged in misguided behavior?

Well, we can complain and work for change (Voice), or try something else.

EXIT - That something else, for Hirschman, is Exit. Jaap and I are from the economic / finance tradition, and Exit seems to be the natural economic solution to these sorts of problems. If I don't like Starbucks coffee, I try a different brand.

This used to be known as the Wall Street Rule. If you don't like the company, sell the stock.

VOICE - What about voice?

Hirschman notes that voice has some disadvantages. Generally, it's more complicated (expensive) than exit. It's harder to work for change than it is to give up.

So why bother?

Because if change is what you want, Exit is not going to deliver that.

Moreover, you may not have the opportunity to Exit. As Jim Hawley has said, if CalPERS cannot sell, they must care.

So for institutional investors, activism and engagement - particularly on systemic issues - have become prominent and active in their use of voice.