Emerging ESG-Driven Models of Shareholder Collaborative Engagement

How can collaborative shareholder engagement be made more efficient?

Regulation is key in supporting value-driven and impact-driven investors' collective engagement efforts.

In their paper « Emerging ESG-Driven Models of Shareholder Collaborative Engagement », Peter Mülbert and Dr Alexander Sajnovits analyse how collaborations are established and managed in shareholder engagement.

Rather than focusing on outcomes, they examine the processes to identify obstacles and bottlenecks in these initiatives. They come to several conclusions:

• Regulation facilitates collaborative engagement, as investors require legal certainty before participating in ESG-driven initiatives.
• Critical topics to clarify at the national and European levels include the admissible extent and content of collaborative engagement to avoid room for interpretation.
• Insider regulation and antitrust rules also need to be better defined in the context of collaboration on sustainability topics, for which several national authorities have already issued relatively permissive guidelines.
• These issues are better addressed at the EU than at the national level in Europe. As suggested in their Sustainable Finance Roadmap 2022-2024, the ESMA could be responsible for these issues.

Collaboration has great potential for conducting meaningful and efficient engagement, which responsible investors increasingly use to build ESG-compliant portfolios.

Regulators must not miss the opportunity to create a level playing field for investors who are willing to join forces to bring sustainability-related opportunities to the forefront.