A favourite myth is that shareholders regulate corporations. In fact, they are too weak to call corporate barons to account. Institutional investors are more focused on short-term returns and churning the markets. The people ultimately own the pension funds, but their managers ignore the concerns of members. Far from being a solution, many institutional investors are a source of problems by generating pressures for the quick buck brought in by mergers, take-overs, job shedding, financial massaging, closures and tax avoidance. None is concerned with representing the interests of employees and local communities.
It's almost right, but misses a fundamental point. Fund managers do what their clients pay them to do - deliver returns under the threat of being sacked if they don't generate the numbers over 3 years - hence the fixation on short-term numbers. And because most clients don't pay fund managers to represent the interests of employees and local communities they don't do that. We can't really blame managers for doing what we pay them to do, and for not doing what we haven't asked them to do.