However, while shareholder activism is often an effective means of disciplining the management, it has the capability to be misused and can become a nuisance to founders and the management. In this article, we discuss the good, the bad and the ugly of shareholder activism and its impact on companies from an environmental, social and governance (“ESG”) perspective. In fact, investors’ growing preoccupation with ESG standards across the world is also giving rise to significant shareholder activism. There have, typically, been two streams of shareholder activism. In addition, the management should also keep an eye on certain red flags that may invite shareholder activism.

Source: New York Times June 11, 2022 00:38 UTC