June 5, 2018 by National Association of Manufacturers

Leading Economists’ Research Finds No Evidence Proposals Benefit Shareholders
Research corroborates recent Department of Labor ‘ESG’ guidance

Washington DC, June 5: Leading economists Professor Joseph Kalt of Harvard University and Dr. Adel Turki, Senior Managing Director at Compass Lexecon, today unveiled a major new study exploring the impact of environmental, social and political shareholder resolutions on stock returns.

The paper, ‘Political, Social and Environmental Shareholder Resolutions: Do they Create or Destroy Shareholder Value?’ statistically examines the equity value of public companies before, during and after the submission of proposals of this kind. Contradicting the claims of their proponents, the study concludes that there is no evidence these proposals enhance shareholder value. Further, it finds that given the often high cost in time and resource involved for companies, these initiatives are not harmless.

Professor Joseph Kalt is the Ford Foundation (Emeritus) Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University. He said, “Companies targeted by these kinds of resolutions incur significant costs and burdens. The increased demands on management could perhaps be justified were proposals yielding material results, but the evidence suggests they are not.”

In recent years, the number of environmentally oriented proposals put before companies has grown substantially. Recognizing this trend, Professor Kalt and Dr. Turki’s paper specifically explores the impact of climate related-resolutions over the last 20 years, including those which call on target companies to perform additional assessments of the potential future impact of climate change on their operations.

The study concludes that there is no evidence to support the claim that additional disclosures add materially to the information required by shareholders to make appropriate portfolio decisions, particularly given the wealth of public information on climate effects already available from governments, academics, think-tanks and sophisticated observers.

Commenting on the statistical findings, Dr. Adel Turki said, “Companies where shareholder resolutions demanding additional disclosures passed, do not perform better than would be expected based on market benchmarks, either in the short run or the long run. Claims that management are systematically withholding information critical to shareholders are simply not supported by the data.”

Professor Kalt added, Our paper should not be interpreted as suggesting that shareholders should ignore the problems of climate change and other social issues. But effectively responding to such problems is more properly the role of public policy, not ad hoc shareholder resolutions. 
“While frustration with slow progress is understandably accompanied by the desire to ‘do something’, doing something effective is ultimately the task of our political institutions. The politicization of the shareholder proposal process is an ineffective substitute for policy making via the political institutions of democracy.”

These are consistent with a Department of Labor Field Assistance Bulletin issued in April, which specified that “fiduciaries may not sacrifice returns or assume greater risks to promote collateral environmental, social, or corporate governance policy goals when making investment decisions.”

The research has been developed by leading economic consulting firm Compass Lexecon under commission from the National Association of Manufacturers (NAM). The NAM is a partner of the Main Street Investors Coalition which advocates for retail investors and aims to ensure fund managers focus on maximizing performance.

Chris Netram, vice president of tax and domestic economic policy at the National Association of Manufacturers said, “When manufacturers can invest for growth, America prospers. Often that prosperity takes the form of higher wages and more jobs. Just as important is the financial security of hardworking families who depend on the value of stocks held in their retirement accounts. As this paper shows, politically-motivated activism does little to enhance shareholder value.”

A copy of the report can be found on the National Association of Manufacturers’ website.



About the National Association of Manufacturers
The National Association of Manufacturers (NAM) is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12 million men and women, contributes $2.25 trillion to the U.S. economy annually, has the largest economic impact of any major sector and accounts for more than three-quarters of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the Manufacturers or to follow us on Shopfloor, Twitter and Facebook, please visit

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