Monday, 7 February 2011

Shareholders and public policy

Since the financial crisis started one of the things I've noticed is that investors are starting to pay more attention to public policy. There are a couple of things driving this I think. First, there have simply been a lot more public policy issues to contend with, as the number of consultations you feel you need to respond to has increased. Second, some have put forward the not unreasonable argument that you can achieve a lot more through policy engagement - which can raise standards for the market as a whole - than through company engagement.

I agree with this, and I personally find public policy engagement interesting, but it does make you feel like we've turned full circle sometimes. After all, the reason many 'progressive' (sorry...!) types end up in the corp gov/SRI world is because it seems like an effective way to influence companies. Pre-crisis you could see people effectively making the argument that this sort of activity would supplant state/regulatory intervention. Now whilst such arguments are not without merit, you do have to question the force behind them. And the fact that investors are now turning to public policy seems like a bit of a tacit admission that market forces often aren't enough to bring about the changes shareholders want to see.

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