Investigating a democratic mechanism for improving the societal regulation of corporations: A case study of socially responsible investor engagement on climate change

Submission note: A thesis submitted in total fulfilment of the requirements for the degree of Doctor of Philosophy to the Department of Accounting, La Trobe Business School, College of Arts, Social Sciences and Commerce, La Trobe University, Bundoora.

Socially responsible investment operates to allow investors to achieve both financial goals and social and environmental goals. Through engagement investors seek to affect corporate strategy. Corporate governance mechanisms facilitate monitoring and oversight by owners. Corporate engagement may be seen as holding the directors to account, of particular importance for investors’ social and environmental goals. Engagement by socially responsible investors seeking accountability for climate change impacts may be motivated by social and environmental sustainability concerns. A radical corporate engagement campaign on climate change led by Australian Ethical Investment Limited used shareholder resolution proposals. Such shareholder activism has the potential to effect social regulation of corporate activity. Investor engagement occurs within a social setting and may encounter entrenched positions and institutionalised practices that resist change. This thesis examines positions of power in corporate governance in Australia. Social constructivist critical discourse analysis is used to reveal identity and meaning. Socially responsible investors may represent social and environmental sustainability, and may seek to influence corporate action on climate change through contesting meaning. Socially responsible investors may take an antagonistic position to challenge the status quo. Interwoven and reinforcing social processes may provide resistance to change, forming a hegemonic array of forces likely to suppress opposition. The findings show, among other things, that socially responsible investors sought corporate action as a stakeholder for ecological sustainability. However distinctive investment practices are difficult to maintain when in conflict with the risk and return rationale, particularly important for the social and environmental goals of socially responsible investors. The struggle for meaning was lost as discourse on corporate impacts of climate change conformed to financial capitalism. The contradiction of corporate climate change impacts was obfuscated. Strengthening the democratic participatory features of the shareholder resolution mechanism could improve the societal regulation of corporate climate change externalities.