No 2010/8: Influence Strategies in Shareholder Engagement: A Case Study of Five Swedish National Pension Funds

Abstract: Investors spend money and resources trying to reduce the environmental, social, and governance risks in companies they own. If unattended, these risks may cause reputational damage not only to the portfolio firm, but also to its owner. In this paper, we study five Swedish national pension funds and the influence strategies used in shareholder engagement. Knowledge about influence strategies is important because successful shareholder engagements can lead to more sustainable corporate behaviour and a lower risk to the investor. Our findings show that, besides traditional power and legitimacy dependencies which have been reported as influential in deciding stakeholder salience, we present five additional factors in determining influence strategies in shareholder engagement. We provide a conceptual model showing how these factors interlink with choices of influence strategies, offering a practical use of this study. Stakeholder theory has been used as our theoretical frame of reference, based on existing influence strategy literature taken from the stakeholder–firm perspective.

Keywords: case study; ESG directive; influence strategy; pension funds; reputation risk; responsible investment; shareholder engagement; shareholder salience; stakeholder theory

30 pages, June 12, 2010

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