Shareholder Stewardship: Global Trends and Challenges

Abstract

The global financial crisis of 2007-8 gave definitive light to some worrying cracks that for years have plagued the global economy. In the UK, the remedy to the planetary collapse took the form of the stewardship code, issued in 2010 by the Financial Reporting Council. This initiative, as the name suggests, was nothing more than the material representation of stewardship, a doctrine founded on the rooting of increasingly virtuous corporate governance conduct thanks to the active contribution of the various parties involved, from managers to service providers, from financial intermediaries to institutional shareholders. The latter, in particular, were considered one of the fundamental factors of the British crisis, because of their lack of oversight of the investment dynamics performed by the respective investee companies. The UK was therefore a pioneer in the launch of the shareholder stewardship, the example of which was followed, in the following decade, by numerous world realities. However, while in the UK stewardship was used as a crisis-repelling technique, in other contexts the values expressed by this doctrine were used for the pursuit of goals sometimes far from the British prototype. Through the creation of an original taxonomy based on a cross-analysis of the various stewardship tools and the individual domestic contexts in which they were inserted, it was possible to appreciate this wide diversification. A variety in terms of content, objectives, results, and involved parties, also favored by the way stewardship is expressed. The latter, in fact, found the main propagation vehicle in soft-law models, which, thanks to their inherent malleability, made it possible to adapt a fundamentally unique doctrinal model to the many and varied national circumstances. Nevertheless, the positive flexibility of soft law contrasts with the general difficulty of enforcing it, which is the cause of a wide debate which is dealt with in the course of the research.

The research also takes into account the sometimes-unexpected results of stewardship and not pertaining to the economic spectrum, originally not planned at the time of the adoption of its values. In particular, the analysis seems to confirm that the adoption of an instrument designed to bring benefits in terms of corporate governance conduct can, at the end of the day, create the conditions for achieving further objectives. In the light of the elements considered, and subsequent to the proposal of some reform plans from time to time adaptable to each individual case, the conclusion is in favor of the adoption of stewardship values through soft-law models. But with one premise. It is not the intention of the writer to suggest that the solution of the problems of corporate governance that led the planet to collapse can lie exclusively in soft-tools that are impossible by nature to be effectively enforced. Soft law can never replace hard law in the role of regulating human dynamics. However, years of history have taught how impositions and constraints more often lead to entrenchment rather than openness. Therefore, even in the light of the results that begin to be admired, it seems reasonable to insist on the refinement of such soft(-law) stewardship tools rather than in their disposal.