Research: Shareholders Nudge Companies

The Dow Chemical Co. and Exxon Mobil Corp. got theirs. So did ConocoPhillips Co., International Paper Co., Weyerhaeuser Co., and Monsanto Co. Between 2004 and 2006, these companies received resolutions from shareholders pressing them to take better care of the environment. And then between 2006 and 2007, these businesses indeed made at least one eco-friendly move: They shared data with the Carbon Disclosure Project (CDP), a London-based NGO that compiles and publicizes the largest database of corporate greenhouse gas emissions in the world. These corporations’ tales are part of a larger trend, report Erin M. Reid and Michael W. Toff el of Harvard Business School. “We find that if a [Standard & Poor’s (S&P)] 500 company had a shareholder resolution in its recent past,” says Toffel, “it was more likely to disclose to the CDP.” The researchers also find that shareholder resolutions have a spillover effect: If one firm gets an environmental proposal from a stockholder, the rest of the firms in its industry become more likely to comply with the CDP. “Most of these resolutions initially lose, and lose big,” notes Toff el. “Managers don’t like to be told how to behave by shareholder activists.” But within a few…