Competing Voices, Persistent Gaps: Shareholder Proposal Activism and ESG Decoupling.

Area of Science:

• Business and Management
• Corporate Governance
• Sociology of Organizations

Background:

• Shareholder activism influences corporate environmental, social, and governance (ESG) practices.
• Heterogeneity in activist demands can complicate corporate responses.
• Understanding decoupling (gap between policy adoption and practice) is crucial for evaluating ESG effectiveness.

Purpose of the Study:

• To investigate the occurrence and persistence of ESG decoupling.
• To examine the role of shareholder proposal activism heterogeneity in ESG decoupling.
• To understand the conditions that drive or inhibit corporate symbolic responses to activism.

Main Methods:

• Analysis of firm responses to shareholder proposals with varying financial and social logics.
• Examination of the persistence of decoupling under different levels of activist heterogeneity.
• Contribution to symbolic management literature and shareholder impact on societal challenges.

Main Results:

• Firms are more likely to adopt non-fully implemented policies when shareholder proposals integrate financial and social objectives.
• ESG decoupling is more persistent in firms facing heterogeneous shareholder proposal activism.
• Activist heterogeneity not only triggers decoupling but also sustains it.

Conclusions:

• Heterogeneous shareholder activism can lead to persistent symbolic management and ESG decoupling.
• Firms may risk legitimacy by adopting superficial ESG policies in response to activism.
• The study clarifies conditions influencing corporate responses to shareholder activism regarding ESG issues.