Table of contents:
With their voting rights, shareholders have a trump card: they can influence the further development of companies and their sustainability at general meetings. The large asset management companies are particularly important.
Good and responsible corporate management, the sustainable and future-oriented orientation of companies and compliance with the ESG criteria in accordance with the Sustainable Development Goals of the UN are the fundamental values that are applied to ESG investments.
However, managers and board members of listed companies cannot simply attach themselves to compliance with the ESG criteria (environmental, social and governance). They have to be documented in sustainability reports and the management has to answer questions about them at the regular general meetings.
This is where the shareholders' hour strikes, because as the de-facto co-owners of the company, they have a say in business-critical decisions and also have the power to approve the actions of the members of the board of directors and supervisory board. The representatives of the asset management companies, which are often worth billions and hold significant shares in individual companies through their funds, are particularly important.
The relief of the management
The Austrian Stock Corporation Act (AktG) provides in Section 104 (2) line 3 that the general meeting - i.e. the shareholders - has to decide on the discharge of the members of the management board and the supervisory board for the previous financial year. If discharge is granted to a board of directors or a supervisory board, this means that the shareholders generally agree with its work in the past and express their confidence in it for the future.
Shareholders can also refuse this discharge if there are indications of breaches of duty by the management board or the supervisory board. And that's exactly what the representatives of large asset management companies do occasionally when there are violations of the SDG and ESG criteria and the management is unreasonable or has no intention of changing anything. In Austria, however, unlike in Germany, for example, the effect of the discharge is not regulated by law. This means that even in the event of discharge, claims for damages can still be made against the respective member of the management.
ESG engagement
Large asset management companies and fund companies try to influence companies not only at general meetings. Sue also do this in the context of informal dialogues in order to move the management of companies to more sustainability in the business model and in corporate governance. Even as holders of bonds, which, unlike shares, do not have voting rights, they can exert influence.
At the international level, Sustainalytics, which belongs to Morningstar, is an important player here. Sustainalytics pools the capital of various investors and thus increases the chances of getting involved on an equal footing.. Sustainalytics contacts companies (especially in emerging countries) if they violate sustainability criteria. Topics such as human rights, the management of environmental and sustainability issues, health and safety measures, employee rights and corporate ethics are addressed. Sustainalytics and other sustainability networks thus bundle the interests of investors who invest in sustainable products.
