Original Research

Reflecting on the changing landscape of shareholder activism in South Africa

Nadia Mans-Kemp, Marilee van Zyl
South African Journal of Economic and Management Sciences | Vol 24, No 1 | a3711 | DOI: https://doi.org/10.4102/sajems.v24i1.3711 | © 2021 Nadia Mans-Kemp, Marilee van Zyl | This work is licensed under CC Attribution 4.0
Submitted: 18 May 2020 | Published: 25 January 2021

About the author(s)

Nadia Mans-Kemp, Department of Business Management, Faculty of Economic and Management Sciences, Stellenbosch University, Stellenbosch, South Africa
Marilee van Zyl, Department of Business Management, Faculty of Economic and Management Sciences, Stellenbosch University, Stellenbosch, South Africa


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Abstract

Background: Investors around the globe are increasingly focusing on investing in a responsible manner by accounting for environmental, social and corporate governance aspects alongside financial performance. Shareholder activism is a prevalent responsible investment strategy that is gradually gaining traction among South African investors.

Aim: The primary objective was to gauge the views of selected local institutional investors on the nature of shareholder activism endeavours in South Africa. The secondary objective was to offer suggestions on the way forward for shareholder activism considering rapid technological development and the COVID-19 pandemic.

Setting: South Africa offers a well-developed framework for responsible investors. Given their substantial shareholding, institutional investors in particular have considerable power to influence the practices and policies of investee companies.

Method: Semi-structured interviews were conducted with 13 representatives of local institutional investor organisations. Thematic analysis was conducted to analyse the primary data.

Results: Interviewees mostly engaged in private with investee companies on corporate governance issues. They explained that more information is required to meaningfully engage on social and environmental considerations. Participants indicated that they consider and employ public activism mechanisms if private engagements are deemed unsuccessful.

Conclusion: Technology will play an increasingly important role to enhance shareholder activism in future, but also offers various challenges. Although social media might be a valuable avenue to disclose information, it should be cautiously managed. Selective engagement details could be published on institutional investors’ and companies’ websites to enhance transparency regarding the nature and outcomes of engagements. Virtual and hybrid annual general meetings are likely to enable more shareholders to become active owners in future.


Keywords

shareholder activism; institutional investor; fourth industrial revolution; periods of crisis; COVID-19.

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