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Shareholder Stewardship in a Controlling Shareholder and ESG World
from Part III - Comparisons
Published online by Cambridge University Press: 28 April 2022
UK-style shareholder stewardship is a global legal misfit because it was designed for a jurisdiction with dispersed shareholding where institutional investors collectively control a majority of the shares but has been transplanted into jurisdictions where controlling shareholders predominate. What ought to be the role of shareholder stewardship in a world dominated by controlling shareholders? This chapter analyzes the effectiveness of shareholder stewardship in advancing ESG in controlled jurisdictions then evaluates the effectiveness of the only stewardship code – the Singapore Family Code – to have attempted to reorient UK-style stewardship to a controlling shareholder environment. It concludes that prospects for shareholder stewardship in jurisdictions where controlling shareholders predominate are likely limited. Although a reoriented approach may help nudge controlling shareholders towards ESG, hard law will likely be needed to bring about real change. This suggests that shareholder stewardship may be used as a smokescreen by controlling shareholders and governments, sending a formal signal that they are addressing ESG when functional change is limited in practice.
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