Organizing the collective action of institutional investors: Three case studies from the principles for responsible investment initiative
Institutional Investors’ Power to Change Corporate Behavior: International Perspectives
ISBN: 978-1-78190-770-2, eISBN: 978-1-78190-771-9
Publication date: 31 December 2013
Abstract
Purpose – This chapter investigates the role of enabling organizations in the processes whereby institutional investors collectively influence corporate managers on Environmental, Social and Governance (ESG) issues. We develop a framework combining stakeholder and collective action theory to explain how institutional investors influence corporations through collective engagement and to specify how enabling organizations influence this process.
Methodology/approach – To evaluate our framework, we investigate the role of the organizational platform provided by the United Nations-backed Principles for Responsible Investment (PRI) initiative in supporting institutional investors’ collaborative engagement with corporations on ESG issues.
Findings – Our findings clarify how investors enhance their sources of power, legitimacy and urgency and attract managers’ attention through collaborative engagement, and show how they manage these attributes to reshape the legitimacy and urgency of their claims in the eyes of managers. Our results also show how enabling organizations such as the PRI initiative facilitate the emergence of collective action by lowering barriers to entry and providing a mobilizing structure, support collaborative efforts by adding their own legitimacy, normative power and persistence to the collaborative engagement, and create conditions for a lasting dialogue between investors and managers by providing a hybrid organizational space.
Social implications – In explaining how to enhance institutional investors’ collective action on ESG issues, this paper shows how we could reorient financial market forces toward sustainability.
Originality/value of paper – The paper benefited from a unique access to confidential and internal data from the UN-PRI initiative and provides a new framework.
Keywords
Acknowledgements
Acknowledgement
Although it incorporates new empirical material and theoretical insights, this chapter builds on a prior paper published by the authors in Business and Society: Gond, J.-P. and Piani, V. (2013), Enabling Institutional Investors’ Collective Action: The Role of the Principles for Responsible Investment Imitative, 52(1), pp. 64–104. We thank Sage for granting us the permission to reuse some elements and figures from the original article, and we are especially grateful to Duane Windsor and Adele Hutchinson for their support. The authors are grateful to the PRI signatories interviewed and the PRI secretariat for having granted them access to an important set of data on the process of investors’ collective engagement. They also wish to thank Aurélien Acquier, Luciano Barin-Cruz, James Gifford, and Jameela Pedicini for their helpful comments on a prior version of the framework presented here.
Citation
Gond, J.-P. and Piani, V. (2013), "Organizing the collective action of institutional investors: Three case studies from the principles for responsible investment initiative", Institutional Investors’ Power to Change Corporate Behavior: International Perspectives (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 5), Emerald Group Publishing Limited, Leeds, pp. 19-59. https://doi.org/10.1108/S2043-9059(2013)0000005010
Publisher
:Emerald Group Publishing Limited
Copyright © 2013 Emerald Group Publishing Limited