ABSTRACT
Increasingly when institutional investors embrace responsible investing (RI), they declare that corporate engagement is their preferred strategy for raising environmental, social and governance (ESG) standards in the companies in which they invest (Principles for Responsible Investment, 2012). Such engagement is usually conducted privately, often through informal dialogue. The effectiveness of engagement, both in terms of enhancing shareholder value and improving corporate ESG standards, is often cited as a reason to maintain ownership of a company rather than to divest when ESG standards are below acceptable levels. However, even when companies respond to investor demands, they often are reluctant to acknowledge the role shareholders may have had in changing company policies. As a result, it remains difficult for those on the outside to judge the effectiveness of corporate engagement.
