Introduction
Corporate activism entails the intention of the company to promote social change or enhance legislation. Usually, companies incorporate corporate activism in their operations to increase penetration of the company in a certain region thus constituting an increased audience that would facilitate an increase in sales. Eventually, such a stance would impact product consumption such that the customers may boycott the products or purchase more to increase the overall sales. This paper investigates corporate activism in Canada since 2010.
Corporate activism of the Royal Bank of Canada
Five banks in Canada have been recognized for their corporate efforts in funding fossil fuel projects to necessitate the production of oil, coal, and tar sands(Saminather 2022). The sale of such products has huge profit margins which would boost the performance of the companies through interests accrued from the funding activities. Ideally, funding fossil fuel companies would facilitate their expansion thus indicating an increase in the production and sale of products which would contribute to increased revenue to the financial institutions. The big five banks in Canada are among the 25 funders of fossil fuel companies across the world. Ideally,$825 billion has been provided to the fossil fuel companies after the signing of the Paris climate agreement(Fiset 2021). Such a huge amount of investment is 13 times more than the amount the federal government has spent on the climate plan in the same time frame. The bank of Canada is the main financier of the fossil fuel industry in Canada(Urban & Wójcik 2019). Usually, it has been implicated in the financing of the Coastal GasLink pipeline company(Saminather 2022).
Analysis of corporate activism scenario of the Royal Bank of Canada
Based on my analysis of the scenario, the corporate activism strategy of the royal bank of Canada did not succeed due to the boycotts and strikes that the bank received from the public. Ideally, the protesters decampaigned the funding of the fuel companies since it would contribute to a climate crisis that would be problematic to biodiversity and the natural environment. During the Glasgow climate summit, Prime minister Trudeau linked the devastating effects of climate ch to the situation of Lytton town which was characterized by damaged infrastructure as a result of wildfires caused by climate change(Saminather 2022).In addition to that, the residents of Southern British Columbia were impacted by the floods that swept through the region due to insufficient vegetation cover that would not reduce the surface runoff due to the action of fire. During the demonstration, the activists called upon the chief executive officers of various banks to come out of their offices and accept fragments of charred wood that had been collected from Lytton homes. The CEOs were to put the charred wood fragments on their desks to remind them about the consequences of their inconsiderate investment decisions(Saminather 2022).In addition to the public protests, there was shareholder activism against the corporate activism strategy of the bank. For instance, two shareholders of RBC urged the bank to refrain from investing in fossil fuel activities and any other projects that are opposed by the indigenous groups(Saminather 2022).
Despite the continued investment of the RBC in fossil fuels, its response to the protests and shareholder activism showed that it bowed to the imposed pressure. For instance, the CEO of the RBC said that the bank was committed to enhancing green technologies from the 2020s financial plan. As such, he called upon incentives to enhance the net-zero economy in Canada. Based on the government plan to reduce carbon emissions, tax policies and incentives would be reviewed to enhance green technology in most business operations in Canada. Such reactions suggest that the corporate activism of RBC was not successful in the long run. The success of the scenario was based on cost-benefit analysis as attributed to the responses of the shareholders and the public who believed that investment in the fuel companies was risky to the public and shareholders compared to the profits it would accrue to the bank which were not important to the public.
Positives and negatives of shareholder activism
Shareholder activism is ideal such that the shareholders have an influence on fundamental managerial issues within the company. The shareholders would exercise their voting power to enhance investment opportunities that may be profitable to the company and which would contribute to sustainable development(Fairfax 2019). As such, shareholders help the managers in decision-making. Despite several benefits of shareholder activism, there are associated drawbacks. For instance, some of the activist shareholders fight for their interests thus not sustainable for other shareholders. In addition, most companies perceive shareholders to be smart, and hence implementing all the opinions of shareholders may result in poor decision making especially when the shareholder has erred.
Opinion on shareholder activism in Canada
I think shareholder activism is ideal in Canada due to the potential benefits associated with it. For instance, the shareholder activism of the RBC aligned with the public protests against the bank due to the inconsiderate investment decisions(Saminather 2022). As such, shareholder activism would promote sustainability in the long run which would encourage investors to trade with the bank hence increasing its profit potential. Essentially, shareholder activism would help the management of different Canadian companies in decision making thus minimizing boycotts and protests from the public since the input of investors in decision making is strategic to increase the profitability of the company as they would be the main beneficiaries in the long run.
Conclusion
The paper aimed at investigating corporate activism in Canada since 2010. Based on the findings, the established corporate activism was that initiated by RBC by investing in fuel companies to increase profits(Saminather 2022). However, public protests and shareholder activism decampaigned the initiative and hence green technologies were embedded in the operations of the bank and were to be attained by 2030 to minimize carbon emissions.
References
Fairfax, L. M. (2019). From apathy to activism: The emergence, impact, and future of shareholder activism as the new corporate governance norm. BUL Rev., 99, 1301.https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=3388&context=faculty_scholarship
Fiset, M. (2021). Breaking: Greenpeace activists disrupt business as usual in Toronto’s financial district calling on Canadian banks to stop funding climate chaos and injustice. Greenpeace Canada. https://www.greenpeace.org/canada/en/press-release/51583/breaking-greenpeace-activists-disrupt-business-as-usual-in-torontos-financial-district-calling-on-canadian-banks-to-stop-funding-climate-chaos-and-injustice/
Saminather, N. (2022, April 7). RBC CEO defends pipeline funding, calls for net-zero incentives. Reuters. https://www.reuters.com/business/sustainable-business/rbc-ceo-calls-net-zero-incentives-even-bank-slammed-fossil-fuel-funding-2022-04-07/
Urban, M. A., & Wójcik, D. (2019). Dirty banking: Probing the gap in sustainable finance. Sustainability, 11(6), 1745.https://www.mdpi.com/2071-1050/11/6/1745/pdf
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