Business Comment: Pressure groups have their uses

Perhaps predictably, the much-hyped Shell annual general meeting turned out to be a bit of a damp squib, a rather tedious and long drawn out affair at which the various resolutions on the environment and human rights were overwhelmingly defeated by proxy. The pressure groups did not come away empty-handed, however, and they can genuinely claim after yesterday's events that tactics of this sort work. Even Pirc concedes that three out of five of its demands have already been answered while the company is well on the way to addressing a fourth. Notwithstanding what Shell directors say, it seems unlikely this would have happened in the absence of campaigning shareholders.

The affair has raised a number of broader corporate governance issues. In the City, and to some extent at Shell, it became seen as an issue of principle about the board's right to manage. It is not the place of shareholders, the argument goes, to dictate to the board its policy on human rights and the environment, just as it is not the place of shareholders to dictate to the board on employment policy or the finer details of investment strategy. These are matters for management. In the event of poor or cavalier management, markets can properly exercise control either by clearing them out, or by depriving them of capital.

In the real world, however, nobody, even in the City, really believes in applying this rigid separation of ownership and management rights. Big institutional shareholders often become actively involved in management issues, if only by encouraging executives, sometimes through non-executives, to do certain things and discouraging them from others. The argument used by campaigners in this instance that there is a very good business case for applying the highest environmental and human rights standards is only a more broad-brush version of the same thing.

In truth, it is actually a thoroughly good thing for managements to be held to account for their actions over a wide range of different issues and practices. The chief executive of a large multinational possesses a form of absolute power which goes way beyond that of a government minister or official. Most of them exercise it responsibly, but it ill becomes these very highly paid people to complain about the usually legitimate concerns of campaigning pressure groups, or their increasingly effective attempts to hijack the ordinary rubber-stamping business of company meetings. Managements are unaccountable enough already. Attempts to make them more so, even by sometimes misguided and ill-informed pressure groups, are only to be applauded.

Life and Style
food + drink
Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
peopleAt least it's for a worthwhile cause
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
Arts and Entertainment
Ben Affleck stars as prime suspect Nick Dunne in the film adaptation of Gone Girl
filmBen Affleck and Rosamund Pike excel in David Fincher's film, says Geoffrey Macnab
Life and Style
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments