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Brooklyn Journal of Corporate, Financial & Commercial Law
Climate change; ESG; corporate governance; diversified investors; fiduciary duty; hedge fund; index fund; institutional investors; proxy contest; systematic risk
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Full-Text Articles in Commercial Law
The Coming Shift In Shareholder Activism: From “Firm-Specific” To “Systematic Risk” Proxy Campaigns (And How To Enable Them), John C. Coffee, Jr.
The Coming Shift In Shareholder Activism: From “Firm-Specific” To “Systematic Risk” Proxy Campaigns (And How To Enable Them), John C. Coffee, Jr.
Brooklyn Journal of Corporate, Financial & Commercial Law
This article distinguishes two types of shareholder activism: (1) firm-specific activism, which has a long history and focuses on changes at a specific target company, and (2) systematic risk activism, which seeks to reduce the systematic risk in a portfolio and thereby benefit diversified investors. Typically, such a systematic risk campaign may force a portfolio company to internalize negative externalities to benefit the other companies in the portfolio (such as by reducing carbon emissions or undertaking climate risk reforms). But, systematic risk activism faces an inherent difficulty: the party that leads this campaign and invests in the target company may …