Shareholder Activism and ESG: From Locust to Green Knight? A Perspective from the Netherlands

In this article, we will answer the questions (i) what is the role and what are the rights of activist shareholders under Dutch law, (ii) how these rights relate to ESG developments, and (iii) whether the associated changes in shareholder activism will affect the existing negative image of activist shareholders and their limited rights. We will examine all of this against the backdrop of recent developments – both legislative and practical – around ESG and the broad public support for it. In other words: will the pendulum, that in recent years has placed the power in the company in the hands of the management board and the supervisory board, swing back a bit toward the shareholders? We will discuss these matters from the Dutch perspective and will focus on the rights of shareholders according to Dutch law. The structure is as follows. In Section 2, we first outline the current playing field. What and who are activist shareholders, what do they want, what strategies do they employ and what trends can be discerned in practice? In Section 3, we provide a brief overview of the legal and non-legal “tools” that activist shareholders use. In Section 4, we discuss some recent developments in the field of ESG legislation and examine whether those developments affect or should affect existing shareholder rights. In Section 5, we discuss some additional “routes of attack” that the ESG-oriented activist shareholder can take. In Section 6, we wrap up with a brief conclusion.