The Impact of Borders on the Effectiveness of Active Ownership by European Asset Owners

Research Focus and Methodology 

Tereza’s research is focused on how businesses and investors approach the issue of sustainability – incorporating environmental and social issues into their strategies and practices. The first paper of her dissertation examines how company CEOs frame sustainability and make it actionable for their companies. Her second article discusses how companies experience sustainability-focused engagement by their shareholders, and to what extent it changes their practices. Her final paper switches to the perspective of investors, studying how pension fund board members describe the objectives and evaluate the outcomes of responsible investing. Tereza’s primary research method has been qualitative interviewing of professionals regarding their knowledge and experiences. She interviewed 95 representatives of 35 Dutch listed companies on topics such as sustainability governance, strategy, corporate culture, and external stakeholders. In her data collection efforts, Tereza has collaborated with institutions such as Eumedion Corporate Governance Forum and International Center for Pension Management (ICPM).

Relation to Borders 

The LIMES overarching topic of ‘borders’ has been present throughout Tereza’s research. On the one hand, the practices of sustainability management are transferred across country borders within multinational companies, while on the other hand, attitudes and approaches to sustainability vary across institutions depending on their geographic locations – this is particularly true for investment organizations. Their sustainable investing approaches are shaped not only by their legal context, but also by the culture and expectations of the societies around them. 

Findings and Takeaways

In her research, Tereza finds that the topic of sustainability has gained prominence in company strategies, but that implementing solutions is often riddled with constraints to be handled by the management. In their quest to grasp and operationalize sustainability, CEOs are driven by considerations of finding a business case, fulfilling stakeholder expectations, pursuing external impactorientation or internal self-improvement ambitions. Furthermore, managers perceive shareholders as having an affirmative, but rarely a transformative role in driving sustainability. Shareholders’ suggestions revolve around clarification of plans and increasing reporting rather than substantial changes. Nevertheless, companies still see investor support as essential for their sustainability efforts and identify possibilities how engagement can be improved. Overall, a theme of reciprocity emerges: responsibility for sustainability-oriented changes needs to be taken by companies, but also their investors. Investors could increase their expertise and the relevance of their questions and feedback, in order to make dialogue with companies more value-adding.

Researcher: Tereza Bauer (see profile)

Supervisors: Rob Bauer, Mieke Olaerts and Mike Simutin (see profiles)