In the U.S., company shareholders are afforded certain rights so they can protect or improve their profitability. These rights include attending meetings, communicating with executives, and voting on corporate agendas. Shareholders can also submit resolutions — formal proposals requesting that the company adopt specific policies or actions. Shareholder activism, where investors use their ownership to influence a company’s behavior and policies, is increasingly used to promote social and environmental responsibility. This report examines how shareholder activism can be applied to advance animal welfare reform.

Since the late 1990s, shareholder activism has grown in both practice and effectiveness. For example, in 2022, there were 511 recorded instances of shareholder activism in the U.S., a notable increase from 462 in 2021. While shareholder proposals often receive around 10% approval, the fraction of resolutions that gained majority support rose from 10% in 1997 to over 30% in 2003-2004. Low-cost activism, where shareholders with minimal ownership stakes initiate change, has been particularly effective. 

Shareholder activism has contributed to the success of major campaigns such as removing smoking from youth movies, retiring the Joe Camel mascot, and prompting action on corporate waste from companies like Apple and McDonald’s. The author also shares examples of existing campaigns impacting animal welfare. For example, World Animal Protection is pressuring Walmart to strengthen its policies on antibiotic use in farmed animals and urging Tesco to stop sourcing meat from pigs confined in gestation crates in Thailand. PETA is fighting chemical and pharmaceutical companies’ use of animal testing. On an individual level, billionaire investor Carl Icahn has used his investment power to pressure McDonald’s to stop using gestation crates. While the campaign was ultimately unsuccessful, it succeeded in bringing attention to the issue.   

The report highlights that shareholder activism can have significant positive effects on companies, particularly in improving environmental, social, and governance (ESG) ratings. ESG ratings are metrics used by investors to assess a company’s sustainability and ethical practices. Although shareholder activism’s impact on firm valuation is mixed, financial activism generally boosts shareholder returns, while social activism has a more variable effect on firm value. Larger-scale activism, whether financially or socially motivated, can lead to marked changes in valuation. Consequently, while social shareholder activism may not always directly affect firm valuation, it can still enhance shareholder value, particularly if it targets issues that are relatively inexpensive to resolve. 

According to the author, morally motivated campaigns without strong public support or additional financial or image-related advantages will struggle to succeed. Animal advocacy campaigns may find it difficult to gain the same level of support as more prominent issues like climate change, which is a center-stage public concern. However, environmental reforms tend to have lower success rates when pitched to shareholders because they often involve higher implementation costs. Conversely, many animal welfare reforms are relatively inexpensive and may therefore be more attractive through shareholder activism.  

There are several other strategic considerations for running an effective shareholder campaign: 

• Propose inexpensive and high-capacity reforms: Requests should be realistic and focused on  changes that are affordable and within the company’s capacity to adopt.
• Increase ownership share: Owning a larger share of the targeted company enhances the chances of success and provides more voting power.
• Team up and build public support: Effective campaigns often involve collaboration with broader efforts to raise public awareness and gain buy-in from other shareholders. Working with other advocacy groups diversifies external pressure, making companies more receptive to shareholder demands as societal change appears inevitable.
• Focus on local engagement: Engagements by investors from the same country as the targeted company are more likely to succeed.
• Involve influential investors: The participation of large, internationally renowned asset managers increases the likelihood of a successful campaign.
• Target companies with a favorable history: Companies that have previously complied with engagement requests or have high ESG ratings are more likely to respond positively to shareholder activism.

While shareholder activism holds promise, it may not be a practical or efficacious strategy for all advocacy groups. The cost of shareholder resolutions can be relatively low, but when combined with additional methods, such as targeted advertising, campaign costs can soar. Moreover, shareholder activism is predominantly a U.S. and European phenomenon, where stronger shareholder rights and economic power exist. In other regions, particularly Asia and the Pacific, weaker shareholder protection laws may limit the efficacy of this strategy. However, advocacy efforts that target U.S. and European companies can still create ripple effects that benefit other countries through global supply chains.

Shareholder activism has great potential in animal advocacy. However, its inherent challenges and risks make it crucial to pursue with careful coordination and planning. Animal advocates looking to start campaigns should work with other groups and employ professional help to have the greatest chance of success.